MOU for 1.32 GW coal power plant – Thar Block VI
Tuesday 16 May 2023
Oracle Power PLC
("Oracle Power" or the "Company")
Thar Block VI - MOU to develop 1.32 GW coal power plant
Oracle Power PLC (AIM: ORCP), a developer of energy projects, has signed a Memorandum of Understanding ("MOU") for the off-take and development of its 1.32 GW Thar coal fired power plant in the Sindh Province, Pakistan, with the following consortium parties (together, the "Parties"):
· Energy Department, Government of Sindh ("Sindh Government" or "SEM")
· Thar Electricity (Private) Limited ("TEPL"), a 100% owned subsidiary of Oracle Power
· K-Electric Limited ("KE"), the largest privately owned vertically integrated power utility in Pakistan
· PowerChina International Group Limited ("PowerChina International"), a leading hydropower, electricity, and infrastructure construction company
Oracle Power has been engaged with the development of its 1.32 GW coal-fired project at Block VI at Thar ("Thar Project") through TEPL, the Company's wholly owned special purpose vehicle for the Thar Project. The Thar Project has achieved significant milestones since its inception. It was included in the China Pakistan Economic Corridor ("CPEC") in 2014 and elevated to priority project status in the CPEC in 2017. The Thar Project continues to be in the list of CPEC projects and its progress was discussed in its last Joint Cooperation Committee (JCC) meeting held in 2020.
Through this MOU, TEPL will assess the viability of developing: (i) the power project at Thar Coal Block VI as originally planned ("Project Option 1") or (ii) relocating the power project to KE's owned land located at Port Qasim, Karachi ("Project Option 2"), if found technically and commercially suitable and subject to obtaining all required approvals and consents.
KE, as per its long-term generation plan, has a strategy to build a base load capacity of over 2,000 GW by 2033 dependent on the demand/supply position in KE's territory ("KE's Power Demand"). To fulfil this requirement and if Project Option 1 is followed, KE could potentially become the [sole] off taker for Oracle Power's 1.32 GW power plant, via a direct power purchase agreement ("PPA"), subject to its feasibility, viability and securing all internal and external approvals.
PowerChina International, a leading power and infrastructure construction company has declared its interest to be part of the development and execution of either of the Project Options.
In order to produce the 1.32 GW of electricity, the Thar Project would require 7.6 million tonnes per annum of Thar coal which may be secured from one of the two operational mines in Thar. The Parties are of the firm belief that the consequent expansion of Thar mines will help in establishing the Province of Sindh as the energy hub of Pakistan.
The primary objective of this MOU is to establish a framework for collaboration between the Parties for the development of either of the Project Options, to fulfil KE's Power Demand, in one or two phases. The development activities include all tasks required to be carried out by the Parties with respect to or in connection with the investment, development, financing, construction, and operation of either of the Project Options. The Parties will also work together to secure financing [for development of either of the Project Options] in CPEC and negotiate all necessary permissions and contracts with government and stakeholders.
The MOU, which is for an initial 12 month term, provides that the Sindh Government will have an option to be an equity partner (for either of the Project Options), will support sourcing local coal at the Thar Project and provide financial guarantees for arranging the financing, if required. KE will also have the option to be an equity partner for either of the Project Options. The Parties will also seek to bring in external equity investors.
Naheed Memon, CEO of Oracle Power, commented:
"The Thar Project is a key part of Oracle Power's stated strategy of monetising its asset base. By partnering with KE through this MOU, Oracle Power will seek to further de-risked the Thar Project with a strong potential off-take partner which has a strategy to build a base-load energy capacity of 2,000 GW. The Thar Project's 1.32 GW could provide a significant proportion of that strategy. Furthermore, the participation of the Government of Sindh in the consortium underpins the strength of this collaboration and speaks to the Government of Sindh's commitment and complete support for the development of the Thar Project. We are also separately working on the development of the 1 GW solar plant at Block VI, as announced on 14 April 2023, which is independent of this 1.32 GW coal to power plant. Oracle Power is committed to turning Block VI into a vital hub for Pakistan's growing energy needs as well as delivering value to all of our stakeholders."
For further information:
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Oracle Power PLC Naheed Memon - CEO |
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Strand Hanson Limited Rory Murphy, Matthew Chandler, Rob Patrick |
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Buchanan (Financial PR) Bobby Morse / Oonagh Reidy/ Abigail Gilchrist |
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