Oracle’s giant Pakistan lignite mine moves closer after Chinese partners give go ahead

Posted by Paul Moore on 9th March 2018

Oracle Power PLC, the UK energy developer of a combined lignite coal mine and mine mouth power plant located in Block VI of the Thar desert in the south-east of the Sindh Province of Pakistan has announced it has been advised that Sichuan Provincial Investment Group (SCIG) has formally approved to proceed with the project, subject to obtaining all necessary approvals and licences required by the Chinese and Pakistan Governments and satisfactory due diligence.

This follows the signing of the Memorandum of Understanding (MOU) in November 2017 between Oracle along with SCIG and PowerChina. It specified that the project will be funded in cash by the parties, directly into the company’s Pakistani subsidiaries and that it was proposed that SCIG, PowerChina and Oracle will have equity holdings in the Project of 78%, 9.9% and 12.1% respectively.

SCIG and PowerChina International Group Ltd, Oracle’s Project development partners as outlined in the MOU, have conducted their preparatory work on the project and have now agreed to proceed towards completion of  due diligence, which the Company believes will be completed in early Q2 2018.

Key details of the Project:

  • MOU signed by the company with SCIG and PowerChina, together the “Parties”;
  • Gross project cost estimated at $1.6 billion;
  • Proposed debt : equity ratio 75 : 25;
  • Oracle to hold a minimum 12.1% equity.
  • Oracle’s historic development costs to be recognised as part of the company’s equity holding and contribution in the project;
  • The Chinese partners to be exclusively responsible for arranging project financing.

“As previously advised, the parties have entered into a two-stage approach to develop the project and this approval by the Board of SCIG is a key step forward as part of the first stage.  On completion of the first stage, the next step will be to seek approval from the Chinese Government, after which a final development decision will be made to take the Project through to financial close. Given that the Project has priority status in the China Pakistan Economic Corridor, the Oracle board expects the approval by the Chinese Government to be in a timely fashion.”

Shahrukh Khan, CEO of Oracle, said: “I am delighted to announce the approval of the SCIG Board to proceed with the Project. Since signing the MOU in November 2017, all parties have worked hard to advance the Project. We now enter into an exciting new stage in Oracle’s evolution.”