Coal power project worth $1.6bln: UK’s Oracle, Chinese firms sign accord

KARACHI: UK energy developer Oracle Power signed a memorandum of understanding (MOU) with two Chinese companies to develop $1.6 billion worth of combined lignite coal mine and mine mouth power plant in Thar.
The company on Thursday said it signed a MOU with Sichuan Provincial Investment Group Co. Limited (SCIG) and PowerChina International Group Limited, two Chinese state-owned enterprises.
Oracle, along with the two companies, would collaborate to invest, set up, construct, own and operate a 600-megawatt coal power plant in Block VI of Thar desert, situated in the south-east of Sindh.
Shahrukh Khan, chief executive officer of Oracle, said this development is a transformational step for Oracle and the culmination of months of work between the various parties. “We are very pleased to have formalised our relationship with both PowerChina and Sichuan Provincial Investment Group Co. Limited and look forward to working with them to develop this significant project,” Khan said in a statement.
“As evidenced with the recently announced power plant proposal to the Pakistani power industry regulator, further steps required to achieve financial close are firmly moving forward and the company hopes to reach financial close in the first half of 2018.”
Under the agreement, SCIG, PowerChina and Oracle will have equity holdings in the project of 78 percent, 9.9 percent and 12.1 percent, respectively. SCIG may consider, as appropriate, at any time to invite other co-sponsors/co-investors to the investment of the project and Sichuan Provincial Investment Group Co. Limited will maintain the position of majority shareholder in each subsidiary of Oracle, according to the agreement.
Oracle’s Pakistan subsidiary Sindh Carbon Energy Ltd has a 30-year mining lease for Block-VI of Thar, while Oracle set up a subsidiary Thar Electricity (Private) Ltd (TEPL) to promote the development of the Block VI mine-mouth power plant.
TEPL has registered the Thar Block-VI power plant with the Private Power Investment Board for the project of up to 1,200 megawatts production capacity and has made an application to construct initially a 600 megawatts plant at the site.
Both Sichuan Provincial Investment Group Co. Limited and PowerChina would solely be responsible for arranging the debt, exclusively from Chinese banks, including provision of all security and guarantees that may be required as part of the bank debt.
It is anticipated that the financing of the project will be by way of both debt and equity in the ratio of 75:25. Oracle will retain responsibility for applying for and obtaining all licences, approvals, permissions as may be required by the government authorities.
Sichuan Provincial Investment Group Co. Limited and PowerChina will be responsible for all liaison and approvals required through Chinese authorities, including in relation to China Pakistan Economic Corridor.