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Oracle Power arranges finance to tide it over until formal agreement for Thar

  • Oracle Power is developing a 700Mw coal-fired electricity plant in Pakistan’s Thar province.

  • Government has confirmed support for indigenous coal-fired power generation in Pakistan and the Thar Desert in particular.

  • China Pakistan Economic Corridor has placed Thar on priority list of energy and infrastructure projects

  • Oracle has partnered with Chinese groups Beijing Jingneng  and PowerChina and is working towards a formal agreement to build and operate the Thar project.

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OVERVIEW: ORCP The Big Picture
Thar is an important project for Pakistan

Significant progress has been made as per recent updates and we expect the funds under this Loan Agreement will be sufficient to reach Definitive Agreements with the Chinese Partners later this year.

Naheed Memon, chief executive

How is it doing

At project level, Oracle is awaiting the formal approval of a notice to proceed and letter of intent from Pakistan’s Private Power Infrastructure Board.

When that is issued Oracle will be required to lodge a performance bond of US$700,000.

After that, a full EPC (construction) and O&M (operation & maintenance) proposal from its Chinese partners is needed.

That will be followed by an electricity tariff petition submission and completion the Environmental and Social Impact Assessment approval.

The consortium (TEPL) will seek a 30-year Power Purchase Agreement (PPA) with Pakistan’s Central Power Purchasing Authority.

A coal supply agreement between TEPL and Sindh Carbon Energy Limited, Oracle's subsidiary which owns and operates the mine, is also required as is an Implementation Agreement between TEPL and Pakistan government. 

Once all the approvals, permits and tariffs are in place, Oracle’s partners will arrange the finance.

The initial phase of development carries a capital cost of US$1.6bn and is for a gross 4mln tonnes per annum mine, feeding a 700MW power plant.

Phase 2 of the project will see capacity expand to 1,400 Mw.

Under the terms of the MoU, Oracle will hold a 12% equity stake while Beijing Jingneng  (BJPC) and PowerChina will own 73% and 15% respectively.

BJPC, which is listed in Shanghai and is worth around US$3bn, replaced Sichuan Provincial.

Finances

In May, Oracle entered into a loan agreement with Brandon Hill Capital to provide a working capital facility of up to £250,000.

Subsequent to an initial £50,000 drawdown, it added, the company will receive up to £50,000 per month.

The firm said the proceeds from all draw-downs will be applied to operational and general working capital purposes.

Inflexion points

  • Formal agreement to proceed with Chinese partners
  • Engineering, Procurement and Construction (EPC) contract and Operation and Maintenance contract (O&M) contracts.
  • For the power plant, a Letter of Intent by the Private Power Infrastructure Board to secure a generation licence is needed.
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