Oracle Coalfields has signed an MoU with China’s SEPCO Electric Power Construction Corporation relating to development of a 600MW coal-fired power plant. Oracle proposes to build the plant in conjunction with Block VI of the Thar Coalfield in Sindh province.
AIM-listed Oracle continues to make significant progress towards delivering the commercial potential of the lignite resources at Block VI. The MoU is for an initial period of six months during which technical feasibility and environmental impact studies will be prepared.
The MoU provides for:
- Plans to develop a coal-fired power plant of 600MW of power generation, including its design, construction and operation;
- Plans to finance up to 70% of the debt for the power plant and provide significant equity funding for majority shareholding in the newly incorporated power company which is to be registered in Pakistan with Oracle taking a minority stake; and
- Plans for SEPCO to provide equity funding in Oracle’s coal mining subsidiary, Sindh Carbon Energy Limited (SCEL), to secure a significant minority shareholding.
Through SCEL Oracle owns the mining lease for Block VI in Thar Coalfield for mining lignite coal. Oracle plans to develop a mine and to sell coal to an integrated power station at the mine.
Under the terms of the MoU, SEPCO will develop plans for a 600MW (2 x 300 MW) integrated power station at the Block VI site that would annually require about 5 million tonnes of lignite coal. It is intended that a newly incorporated power company shall be registered in Pakistan to build, own and operate the power station.
SEPCO provides engineering, procurement and construction (EPC) contracting for power station projects in China and around the world. With total assets in excess of RMB25 billion and more than 19,000 employees, SEPCO is the largest construction corporation of conventional power projects in China.
The MoU with SEPCO represents another step forward for Oracle following the signing in September of a joint development agreement with CAMCE, a subsidiary of the major Chinese state-owned enterprise China National Machinery Industry Corporation (SINOMACH), for development of the coal mine.
Oracle’s CEO Shahrukh Khan says, “Oracle has been successful in securing the participation and support of these impressive partners because we believe we have the makings of a very impressive project. Emerging economies depend on the stable supply of cost effective power to fuel their industrial growth and economic development. Once developed, Oracle’s project at the Thar Coalfield will be uniquely placed to be a major supplier of power to Pakistan for the next 20 years and beyond.
“Oracle is pleased to be partnering with SEPCO, a major industrial group that shares our belief in the potential for the Thar Coalfield to supply the future power needs of Pakistan. We look forward to working with SEPCO on the development of a sizeable power generation project where they will bring not only their technical construction experience but also provide the project with access to equity and debt funding.”