Energy Development Corporation (EDC) was established March 5, 1976 via Presidential Decree 927 as a state response to the 1973 oil embargo. The crisis quadrupled crude prices and left the Philippines, which imported 95% of its energy as oil, facing gasoline rationing and widespread brownouts. The Lopez family's First Gen won a contested privatization auction on November 21, 2007 with a P58.5 billion bid, then sold 20% of its Meralco utility stake on March 13, 2009 for P20.07 billion to service EDC-related debts from the 2008 financial crisis. Rebranded First Gen Renewables in March 2026, the company now operates 16 geothermal stations with about 1,300 megawatts of capacity and faces a $5 billion takeover offer from Indonesian interests. The offer arrives as another Middle East conflict has closed the Strait of Hormuz, echoing the energy insecurity that prompted EDC's founding.
1973 Oil Embargo Triggers State Geothermal Program
In October 1973, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an oil embargo after the Yom Kippur War, and crude prices roughly quadrupled within months. The Philippine government created the Philippine National Oil Company (PNOC) in November 1973, then established EDC on March 5, 1976 as PNOC's geothermal exploration arm. Presidential proclamations in 1975 reserved the Tongonan, Palinpinon, and Bacon-Manito areas for geothermal development, and a 1978 decree created the service-contract framework. Under the Marcos-era arrangement, PNOC-EDC operated geothermal wells and steam pipelines while the National Power Corporation (Napocor) owned and ran most power plants, splitting steam production from electricity generation.
PNOC-EDC Built Tongonan and Palinpinon Plants in 1980s
The 112.5-megawatt Tongonan-1 plant in Leyte and the 112.5-megawatt Palinpinon-1 plant in Negros Oriental entered service in 1983. Through the late 1980s and 1990s the company added Bacon-Manito plants in Bicol and the Mt. Apo complex in Mindanao. By 1997 Tongonan was described as the world's biggest wet steam field. The plants were built in remote volcanic uplands because geothermal steam cannot be transported to convenient sites.
Lopez-Led Red Vulcan Won P58.5-Billion Privatization Auction in 2007
The government put its 60% equity stake in PNOC-EDC up for auction to cut national debt. The Joint Congressional Power Commission had endorsed a plan to sell each geothermal plant with a long-term steam contract, but the government abandoned that scheme after conditions were not met on time. Critics including then-senator Joker Arroyo and then-senator Miriam Defensor Santiago questioned whether the "control test" used to verify bidders' Filipino ownership complied with constitutional restrictions on foreign ownership of natural resources, arguing that a "grandfather rule" tracing ownership through each corporate layer should have been applied. Red Vulcan, 60% owned by Lopez-controlled First Gen Corporation and 40% by Dutch vehicle Spalmare (representing Icelandic geothermal firms Reykjavik Energy Invest and Geysir Green Energy), won the auction on November 21, 2007 with a P58.5 billion offer. No court voided the transaction.
2008 Financial Crisis Forced P20.07-Billion Meralco Sale in 2009
Within weeks of the auction, the Icelandic partners wanted to exit as their home banks failed during the 2008 financial crisis. First Gen bought their share using borrowed funds. First Philippine Holdings (FPH), the Lopez holding firm, had separately borrowed P19 billion in 2007 to buy a 9% Meralco stake from Spain's Union Fenosa as a defensive move against a takeover campaign by state pension fund GSIS chief Winston Garcia. When the 2008 global financial crisis froze credit markets, FPH could not refinance maturing loans. The FPH board approved the sale of 20% of the family's almost 35% Meralco stake to the PLDT group of Manuel Pangilinan on March 13, 2009 for P20.07 billion, cutting the Lopez holding to about 13%. Oscar Lopez, father of current First Gen chairman Federico "Piki" Lopez, called the sale a "necessary business decision" and acknowledged the difficulty for his brother Manolo, who had spent over 30 years at Meralco. At FPH's May 2009 annual stockholders' meeting, then-president Elpidio Ibañez stated that half the P20.07 billion went to trimming borrowings, cutting FPH's debts roughly in half. Then-chief finance officer Francis Giles Puno said the deleveraging would position the group to join government auctions of state-owned geothermal plants.
EDC Acquired State-Owned Geothermal Plants in 2009-2010
EDC won government auctions for the Tongonan and Palinpinon plants in 2009 for $220 million and the Bacon-Manito plants in 2010 for about P1.28 billion, reuniting the steam production assets it had owned since privatization with the power generation plants Napocor had historically operated. The acquisitions made EDC what it describes as the world's largest vertically integrated geothermal company.
First Gen and Macquarie-GIC Own EDC Under Split Voting-Economic Structure
First Gen sold a large minority position in EDC to a consortium of Australia's Macquarie and Singapore's GIC in 2017 for about $1.3 billion, and took the company off the stock exchange in 2018. First Gen controls 65% of votes in EDC's boardroom through a special class of shares carrying voting power but a small profit claim, while Macquarie-GIC holds just under 35% of votes but is entitled to about 54% of EDC's economic value, according to First Gen disclosures. EDC was rebranded First Gen Renewables in March 2026. The company runs 16 geothermal stations with about 1,300 megawatts of installed capacity, the 150-megawatt Burgos wind farm in Ilocos Norte, the 132.8-megawatt Pantabangan-Masiway hydro complex in Nueva Ecija, and a small solar fleet. Its flagship Tongonan plant in Leyte produces 637.2 megawatts. A P100-billion upgrade under environmental review would lift Tongonan to 967.2 megawatts, and a separate P25-billion program will drill up to 43 replacement wells at the Southern Negros field. Management told shareholders in May that more than P200 billion has been invested in the geothermal portfolio over the years.
FAQ
What did critics say about the 2007 EDC privatization auction?
Critics including then-senators Joker Arroyo and Miriam Defensor Santiago argued that the "control test" used to verify Red Vulcan's Filipino ownership should have been supplemented with a "grandfather rule" tracing ownership through each corporate layer to ensure compliance with constitutional restrictions on foreign ownership of natural resources. No court struck down the transaction.
Why did the Lopez family sell their Meralco stake in 2009?
The Lopez family's First Philippine Holdings sold 20% of its Meralco stake on March 13, 2009 for P20.07 billion to service debts incurred from acquiring EDC and the Icelandic partners' exit during the 2008 global financial crisis, when frozen credit markets prevented refinancing of maturing loans. Half the proceeds went to debt reduction.
How large is EDC's current geothermal capacity?
EDC operates 16 geothermal stations with about 1,300 megawatts of installed capacity as of 2026. Its Tongonan plant in Leyte produces 637.2 megawatts, and a P100-billion upgrade under environmental review would increase Tongonan's capacity to 967.2 megawatts.
