Daven Tamayo

Boardroom Tea: Razon's Power Play - The New Energy Kingpin

Article (news)

Salve Ibaňez

ABS-CBN News

<p>When Enrique Razon Jr. first entered electric distribution in 2020, industry veterans dismissed it as diversification theater from a ports and casino tycoon dabbling in utilities. Five years later, Razon has assembled what may become the Philippines&#x27; most vertically integrated energy empire—and he&#x27;s doing it while maintaining the lowest power rates in Western Visayas.</p><p>The numbers tell a compelling story: More Power delivers electricity at P11.13 per kilowatt-hour in Iloilo City, consistently undercutting surrounding electric cooperatives by P0.14 to P1.69 per kWh. Negros Power achieved seven consecutive months of lower rates than neighboring cooperatives since beginning operations in November 2024. Emergency response time dropped from 90-120 minutes under the old cooperative management to 15 minutes under Razon&#x27;s operation.</p><div><br/></div><div><span class="fr-img-caption fr-fic fr-dib" style="width:960px"><span class="fr-img-wrap"><img src="https://od2-image-api.abs-cbn.com/prod/editorImage/176053564609620140523-wef-razon-JC-IMGL7762.jpg" class="fr-fic fr-dib" style="width:960px"/><span class="fr-inner" style="text-align:left">Tycoon Enrique Razon. Jonathan Cellona, ABS-CBN News</span></span></span></div><p>But here&#x27;s what should really capture your attention: in June 2025, Razon&#x27;s Prime Infrastructure Capital acquired <a href="https://www.abs-cbn.com/news/business/2025/6/2/first-gen-sells-60-pct-of-gas-business-to-prime-infra-1036" rel="noopener noreferrer" target="_blank">60 percent of First Gen Corporation</a>&#x27;s natural gas assets for P50 billion, instantly transforming him into what China Bank Capital&#x27;s Juan Paolo Colet calls &quot;the leading natural gas power producer in the Philippines.&quot;</p><p>The acquisition includes the 1,000 MW Santa Rita, 500 MW San Lorenzo, 450 MW San Gabriel, 97 MW Avion plants, plus the proposed 1,200 MW Santa Maria facility and the Interim Offshore LNG Terminal—all in Batangas. Combined with his earlier investment in the Malampaya gas field (supplying 20 percent of Luzon&#x27;s electricity), Razon now controls critical nodes across the energy value chain: upstream gas production, midstream LNG terminals, gas-fired generation, and last-mile distribution through his growing network of electric cooperatives.</p><div><br/></div><div><strong>The Last Mile Revolution</strong></div><p>Boardroom Tea spoke with three well-placed officials who&#x27;ve witnessed Razon&#x27;s transformation strategy firsthand. Their accounts reveal why his entry into electric distribution represents more than routine market consolidation.</p><p>A provincial official spearheading renewable energy development in Negros initially approached Razon&#x27;s expansion with skepticism. Electric cooperatives across the Philippines have languished under political patronage systems, their management positions serving as rewards for loyal supporters rather than attracting qualified professionals. System losses soar beyond regulatory caps, getting passed to consumers. Brownouts become daily occurrences. Connection applications languish for months.</p><p>The turnaround came swiftly. Primelectric Holdings committed P4 billion to modernize and upgrade Central Negros&#x27; power distribution infrastructure. The investment immediately addressed decades of underinvestment while reducing rates—not through accounting tricks, but by eliminating operational inefficiencies.</p><p>“This is last mile distribution,” a second source explained. “Done better. More professional. Many of these electric cooperatives have been used to place political appointees versus good management.&quot;</p><p>The renewable energy potential amplifies Razon&#x27;s strategic positioning. Negros offers vast land suitable for solar installations, and household-level renewable energy costs continue declining. In July 2025, Primelectric partnered with Saudi Arabia&#x27;s ACWA Power to explore renewable energy and battery storage projects across Negros, Panay, and Palawan.</p><p>Recent developments underscore his momentum. In June 2025, the Supreme Court upheld with finality the constitutionality of Republic Act 11212, granting More Power an expanded franchise to serve 16 towns and one city in Iloilo province currently served by electric cooperatives.</p><div><br/></div><div><strong>The Batangas Battleground</strong></div><p>As if that’s not fascinating enough, there’s an even more compelling and dramatic power play (see what I did there) miles away in Batangas.</p><p>Meralco, under Chairman Manuel Pangilinan&#x27;s directive, has launched an aggressive expansion strategy targeting electric cooperative joint ventures. At The Monday Circle forum, Meralco senior vice president Arnel Casanova outlined their vision: partnering with cooperatives to improve reliability and drive economic growth, particularly in rural areas where GDP per capita averages P150,000-P200,000 compared to P500,000 in Meralco&#x27;s franchise area.</p><p>&quot;We have no intent of taking over the electric cooperatives,&quot; Casanova insisted. &quot;What we want to do is empower them and upgrade the skills of their employees.&quot;</p><p>Sound familiar? That&#x27;s precisely Razon&#x27;s playbook.</p><p>The collision occurs in Batangas, home to the Philippines&#x27; largest electric cooperatives by consumer count—BATELEC I and BATELEC II. In July 2025, both Meralco and Primelectric submitted competing proposals to partner with these cooperatives. The stakes extend beyond franchise fees: whoever controls Batangas distribution gains strategic positioning for the province&#x27;s concentration of gas-fired plants, LNG terminals, and industrial ecozones.</p><p>A veteran energy industry insider pointed out that previously, Meralco would have secured franchise extensions almost automatically through political connections and incumbency advantages. Now, electric cooperatives must evaluate multiple sophisticated proposals, forcing established players to sharpen their value propositions.</p><p>&quot;It is good in a way because finally someone is standing up to the old guard,&quot; the insider noted. &quot;Additional choices—that is good for consumers.&quot;</p><p>This competitive tension represents exactly what EPIRA envisioned: multiple qualified players competing for franchise areas, with consumers benefiting from improved service and competitive pricing.</p><div><br/></div><div><strong>The Monitoring Gap</strong></div><p>Yet understanding Razon&#x27;s rise requires examining the broader energy landscape transformation that&#x27;s occurred largely outside public attention.</p><p>In March 2024, Meralco PowerGen Corporation and Aboitiz Power Corporation forged a $3.3 billion joint venture with San Miguel Global Power Holdings to acquire two gas-fired power plants totaling over 2,500 MW, plus the Philippines&#x27; first integrated LNG import and regasification terminal in Batangas.</p><p>An energy sector veteran described this as a huge milestone that many people don&#x27;t recognize &quot;because it is cloaked in ordinary clothes, in a manner of speaking.&quot; The deal fundamentally reshaped the Philippine energy landscape, creating an integrated natural gas value chain controlled by three conglomerates.</p><p>The Philippine Competition Commission approved the transaction in December 2024, subject to conditions designed to ensure fair competition and transparency: transparent bidding procedures, independence measures requiring acquired companies to operate separately from parent firms, mandatory reporting of unplanned outages, and the appointment of competition compliance officers.</p><p>Critically, the PCC also required an independent third-party monitor to oversee implementation—similar to appointing Smith &amp; Williamson to monitor Grab&#x27;s voluntary commitments following its Uber acquisition, which cost perhaps P10-15 million for one year.</p><p>However, nearly a year since the December 2024 approval, industry insiders report no such independent monitor has been appointed for the $3.3 billion natural gas consolidation.</p><p>The challenge? Finding genuinely independent monitors in the Philippines&#x27; tightly interconnected business ecosystem. &quot;When you try to find someone independent of San Miguel, Aboitiz, and Meralco—who qualifies?&quot; one insider asked. &quot;And if you bring in a foreign firm, they charge too much.&quot;</p><p>For a $3.3 billion transaction involving companies with combined market capitalizations exceeding $20 billion, the monitoring cost question raises eyebrows.</p><p>Another concern involves trading behavior: &quot;Among the conditions that need monitoring is how this merged entity trades in the wholesale electricity spot market. But who&#x27;s qualified to monitor that? Until now, no one has been appointed.&quot;</p><p>Without independent oversight, the carefully constructed PCC safeguards risk becoming what one regulator called &quot;corporate theater&quot;—impressive in press releases but absent in practice. This is the high-stakes industry that the disrupter-turned-power-titan is playing in.</p><div><br/></div><div><strong>The EPIRA Test</strong></div><p>The Electric Power Industry Reform Act of 2001 represented the Philippines&#x27; landmark commitment to competitive electricity markets. EPIRA&#x27;s architects envisioned transparent pricing, operational efficiency, and consumer choice replacing old monopolistic structures.</p><p>Twenty-four years later, the law&#x27;s promises and challenges play out simultaneously. The regulatory framework exists: EPIRA limits any company to controlling no more than 25 percent of national grid capacity and 30 percent of regional grid capacity. The Philippine Competition Act provides tools to prevent anti-competitive behavior. The PCC possesses authority to impose substantial daily fines of up to P2 million per violation for breaching voluntary commitments.</p><p>But as the saying goes, regulations without enforcement are merely decorative.</p><p>One source posed a provocative question about Razon&#x27;s expanding empire: &quot;So far, he doesn&#x27;t have cross-ownership between generation in Luzon and distribution in Luzon. His generation is in Luzon, his utilities are in Visayas. But if they start operating utilities in Luzon, then they start to be buyers in Luzon—you become like Meralco, buying what you sell. So far, that line hasn&#x27;t been crossed. But it needs to be watched.&quot;</p><p>The observation applies equally to all major players: vertical integration creates efficiencies but also requires vigilant oversight to prevent abuse.</p><div><br/></div><div><strong>Bottom Line Up Front</strong></div><p>Razon has demonstrably improved service quality and reduced rates in every franchise area he&#x27;s entered. The competitive pressure he creates forces established players to justify their value propositions rather than relying on incumbent advantages.</p><p>The broader challenge transcends any single player: Can Philippine regulatory institutions maintain genuine competition as the energy sector consolidates? The phantom monitoring of the $3.3 billion natural gas deal suggests conditional approvals risk becoming public relations exercises rather than enforceable safeguards.</p><p>The critical test isn&#x27;t whether private capital improves upon poorly managed cooperatives—clearly it does. The test is whether regulators can prevent market foreclosure and anti-competitive behavior as major players control increasing portions of the value chain, regardless of who those players are.</p><p>EPIRA promised competitive electricity markets. Two decades later, we&#x27;re watching whether that promise materializes or remains perpetually just beyond reach. The answer depends less on which companies dominate the sector than on whether regulatory oversight has genuine teeth.</p><p>The lights are on. The rates are competitive. Now regulators must ensure the competition that produced those benefits doesn&#x27;t disappear once consolidation concludes.<br/><br/><em>Editor&#x27;s Note: This corrects an earlier version that lists Terra Solar as part of Enrique Razon&#x27;s energy portfolio. The billionaire has exited that joint venture with Solar Philippines. Terra Solar Philippines is now owned by Meralco&#x27;s subsidiary MGen Renewable Energy, Inc.</em></p><div><br/></div><div><em>Boardroom Tea comes out every Wednesday. The views expressed in this article do not necessarily reflect the views of ABS-CBN News. </em></div>

<p>Tycoon Enrique Razon has assembled what may become the Philippines' most vertically integrated energy empire.</p>

Tycoon Enrique Razon has assembled what may become the Philippines' most vertically integrated energy empire.