Oracle coalfields selling 70pc stakes to Chinese consortium

Thar project

KARACHI: The UK-based Oracle Coalfields, developing a mine and power plant in Thar, is in negotiations with a Chinese consortium to offer 70 percent equity stakes in the project along with the engineering, procurement, construction (EPC) contract.

According to a Shareholder Framework Agreement signed in June this year, a consortium of new and existing Chinese partners will take 70 percent equity in the company's subsidiaries in Pakistan, in order to advance the development of the project.

Under this agreement, it is proposed that the Chinese partners will take a 70 percent equity interest in the project and will act as EPC contractors for the mine and the power plant.

"Following the signing of the Shareholder Framework Agreement, we, with our Chinese partners, are currently in the process of agreeing a Shareholder Agreement and details of EPC contracts for both the mine and the power plant," said Shahrukh Khan, CEO of Oracle.

The Chinese partners are taking the lead in discussions on debt financing with Sinosure, the Chinese Export and Credit Insurance Corporation. However, the company did not disclose the names of their Chinese partners.

“There will be a lot of news flow on the subject. Now is; however, not the appropriate time to disclose these details,” Khan told The News on Thursday. The governments, federal and provincial, have put in place fiscal incentives and also a cost-plus arrangement under which holders of mining leases in the Thar desert are allowed a coal price and electricity tariff that give developers a project-based internal rate of return (IRR) of 20 percent, in dollar terms.

Another consortium led by Engro and the Sindh government had already achieved the financial close for their open-pit mine and mine-mouth power plant in Thar.  The National Transmission and Dispatch Company (NTDC) is responsible for the construction and operation of high voltage transmission lines to link Thar power plants with the national grid.

The government of Sindh is responsible for the provision of water, where there is a shortage and also for the evacuation of any surplus. The construction of a fresh water supply from the River Indus is also in progress.

“Inevitably, projects of this nature take time to bring to fruition. The development of Thar is a significant and sustainable element in Pakistan's long-term solution to the country's present energy crisis; speedy implementation is in the national interest,” the company added.