DOE keeps close watch on $5-B EDC takeover bid

MANILA, Philippines — Indonesian conglomerate Barito Group’s $5-billion bid for the Philippines’ largest geothermal company is set to face government scrutiny over its potential impact on power supply.

“So we are looking at what the impact of that would be. I just have to check what their deal is,” Energy Secretary Sharon Garin said, referring to the proposed takeover of Energy Development Corp. (EDC).

First Gen Corp. last week confirmed PT Barito Renewables TBK’s (BREN) unsolicited, indicative and non-binding offer to acquire EDC, although the proposed deal remains subject to due diligence and regulatory approvals.

The Lopez Group’s power arm said the parties have yet to hold discussions, sign any agreements or appoint advisors for the transaction.

While the deal remains preliminary, Garin said the Department of Energy (DOE) would ensure that the potential takeover does not affect the country’s power supply.

Should the deal proceed, the DOE will also require the new owner to comply with the government’s energy plan and support the expansion of geothermal and renewable power projects.

“They (parties) haven’t presented it (proposed deal) to us formally, so we’ll just wait,” the energy chief said.

Currently, EDC and its subsidiaries own and operate geothermal, wind and solar power plants with a combined installed capacity of more than 1,400 megawatts, according to First Gen data.

Notably, the company’s massive portfolio accounts for more than half of the Philippines’ total geothermal capacity.

Geothermal facilities play a key role in the country’s energy security by providing clean baseload power or the steady supply of electricity needed to meet continuous demand.

If BREN’s acquisition of EDC brings in more geothermal investments into the Philippines, Garin said this would be a “welcome change” as long as all legal requirements are followed.

EDC, acquired by First Gen in 2007, was born amid the global oil crisis of the early 1970s. Since then, the company has firmly placed the Philippines on the global geothermal map.

The Philippines had been the world’s second-largest geothermal producer for years until Indonesia overtook it in 2018.