Big picture - Why invest in Oracle Power Plc
Oracle Power Plc Snapshot
Oracle’s strategy is to invest in energy generation where it has a competitive advantage, in a judicious manner and in line with all relevant professional and international standards. Our initial project is the development and delivery of one of the largest private sector integrated coal mine and power generation projects in Pakistan.
Whilst the Company’s key short term objective is to deliver shareholder returns by completing the current project in Pakistan, in the longer term the Company aims to explore investment opportunities in energy projects both in Pakistan and in other jurisdictions, where its project development expertise can add value, focusing especially on countries with a power shortage where there are available sources of international and domestic finance.
Pakistan continues to be affected by electricity shortages which are reducing the potential for economic growth. The Government of Pakistan’s National Power Policy 2013 states that the current shortfall in generating capacity is 5,500MW and projected to rise. The Government is committed to eradicating this shortfall and to diversifying the electricity supply market with particular support for the development of indigenous fuel sources including the Thar Coalfield, Province of Sindh.
The Company’s current activities are closely allied to the above objective which comes with the responsibility to maintain high standards in delivering the project and subsequently rewarding shareholders. The project is strategically placed in Pakistan’s energy mix and has been included in the ‘approved list’ of the China-Pakistan Economic Corridor (CPEC). The CPEC is a bilateral agreement between China and Pakistan, which provides access to Chinese funding for the development of infrastructure, including energy, in a corridor to be established from Pakistan’s North to the South.
World primary energy consumption is predicted to rise 34% by 2035 and this growth will be almost completely focused on the emerging economies with China and India representing 50%. Little growth in the OECD countries is predicted. Population and income are the main drivers behind increasing demand for energy. More than half of the increase in global energy consumption is predicted to be used for power generation as the long-run trend towards global electrification continues. The share of energy used for power generation is predicted to rise from 42% today to 45% by 2035 (source BP Energy Outlook 2016).
Pakistan will need to address its current generation shortfall as well as provide new generation capacity to grow its economy and serve the increasing population in the coming years. Our project has the potential to make a significant contribution in providing electricity for the country.
Oracle’s Board and management see many interesting investment opportunities in energy generation worldwide as power requirements continue to grow significantly, and believe that the knowledge and experience built up through the development of the project in Pakistan can be profitably applied to other projects, whether in Pakistan or further afield. When considering such opportunities the Company will rigorously assess their commercial attractiveness, their fit with the organisation’s skill set, partnership possibilities, and potential sources of funding, mindful of the principles agreed in the Paris conference on climate change.
Oracle Power main resource, Thar Block VI, is located in the Sindh Province, south eastern Pakistan some 380km east of Karachi’s sea port.
The Thar Coalfield is located 380 kilometres east of Karachi. It covers an area of 9100 square kilometres, with a total lignite resource in excess of 175 billion tonnes, the sixth largest in the world.
Block VI is located in the centre of the coalfield and covers an area of 66.1 square kilometres. The site has been extensively drilled and coal samples recovered and tested to international standards and a JORC compliant resource of 529Mt has been confirmed over a 20 square kilometre area.
Following the completion of the Technical Feasibility Study the Company’s Pakistan subsidiary Sindh Carbon Energy Ltd (SCEL) was granted a Mining Lease for Block VI by the Coal Mines Development, Government of Sindh (formerly Coal Mines Development) for a 30 year period extendable for a further 30 years.A pre-feasibility study by Mott MacDonald UK confirmed the suitability of the coal for thermal power generation and concluded the coal was suitable for either conventional pulverised coal or circulating fluidised bed plants.
The company engaged Wardell Armstrong International and Hagler Bailly of Pakistan to carry out the Environmental and Social Impact Assessment for the project and this was completed in May 2013 and approved by the Sindh Environmental Protection Agency (SEPA) in January 2014. The Company submitted its Resettlement Action Plan (RAP) to SEPA in April 2014 as required in the ESIA approval process. The RAP has been drawn up in line with with the Resettlement Policy Framework by the Government of Sindh.The RAP sets out the policy and procedures that will be employed to facilitate the eventual resettlement of the small local communities who will be affected by the mine and power plant development. This is being done in consultation with the local communities with the support of the Thar Coal and Energy Board and local government agencies.
Work is continuing in 2016 to establish current land ownership within the block and to identify areas suitable for resettlement.In 2015 Oracle set up a subsidiary Thar Electricity (Private) Ltd (TEPL), a company registered in Pakistan, 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 (PPIB) for a plant up to 1200MW capacity and has made an application to construct initially a 600MW plant at the site. The Central Power Purchasing Agency issued a “Letter of No Objection” for the 600MW power plant in November 2015 and NTDC also confirmed that power from the project will be accommodated within the planned high voltage transmission line.
Reserves and Resources
Following the award of the Block VI Exploration Licence additional drilling has been carried out to define the coal resource to JORC standards.
The original drilling was carried out by the China Northeast Geological Bureau (CNGB) and additional drilling was carried out by Dargo Associates to accurately define the coal resource in Block VI. Cored holes were drilled to recover coal and overburden samples for testing and all holes were geophysically logged.
The coal resource was defined in compliance with the JORC Code and economic mining areas defined by strip ratios and pit optimisation programmes. Additional coal samples were recovered for testing. The in-situ coal for Block VI was confirmed as 1.4 billion tonnes and the coal resource for the Phase One and Two mining areas was assessed at 529 million tonnes, as shown in the table below.
Chairman and Senior Independent Non-Executive Director
Mr Scutt is a qualified Chartered Secretary and a Certified Internal Auditor with the US Institute of Internal Auditors. He has over 30 years of financial management experience with Shell International Petroleum and has worked in many parts of the world, including the Malagasy Republic, East and Central Africa, South Vietnam, Cambodia, the Philippines, Gabon and latterly as the Chief Internal Auditor of Shell UK. Mr Scutt then went on to become an investment analyst, writer and investor. Mr Scutt is a Non-Executive director of AIM-listed Starvest plc.
Chief Executive Officer
Mr Khan was educated in the USA and UK. He was awarded a BA in Business administration and Economics at Richmond, the American International University in London. He has specialist expertise in large and complex projects, including project valuation and investment appraisal, feasibility studies and other project finance related services. Mr Khan has project finance experience in the natural resource and infrastructure related sector, predominantly in the Middle East, South Asia and China.
Mr Mordacq is the founder and manager of ECYM, an advisory boutique based in France. Prior to this, he was Managing Director of Fairview Asset Management, overseeing its small-cap multi-thematic fund, focused on sectors including natural resources, biotech and renewables. From 2002 to 2010, Mr Mordacq was the Deputy Head of the European Equity team at Generali Investments France with assets under management of up to €5 billion. Prior to his role at Generali Investments France, Mr Mordacq managed ING Investment Management’s natural resources fund. Mr Mordacq has a Masters in Agriculture from Montpellier SupAgro and an MBA from ESSEC, France and Fundamental Geology degree from Conservatoire National des Arts et Métiers (CNAM). He is a member of the Société Francaise des Analystes Financiers and was a visiting professor at the Ecole des Mines de Paris.
Mr Steed has been involved in major projects both in the UK and in emerging markets. He has over 35 years experience in the Securities industry and is a member of the Institute of Chartered Accountants, The Chartered Institute of Securities & Investment and the Chartered Institute of Marketing.
Mr Migge has had a career in Investment Banking and Private Equity with a focus on energy and natural resources. He has an international background, having worked in the US, Europe, Asia and the Middle East.
Post-graduation Mr Migge joined JP Morgan, where he executed capital markets and M&A transactions. He served as an Investment Manager at Alpinvest Capital Partners and as a Director of GE Capital in London. Subsequently, he worked in the UAE as a Principal in the Special Situations group at the Abu Dhabi Investment Council, focused on the power sector. Mr Migge is currently the Chief Financial Officer of Pelletasia Holdings Pte Limited.
Mr Migge has considerable international transaction experience, notably leading the acquisition of the power plants Lalpir and Pakgen in Pakistan, which was voted “Deal of the Year Asia”. In 2014, he was a founding investor and member of the sponsor team for the Reata Prospect, an on-going shale oil exploration project in the Permian Basin in the US. Mr Migge has also led investments in power projects in Iraq and coal mining restructuring projects in the US.
He served in the Special Forces of the German Air Force and holds an MBA from Yale University.
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