MOU signed with Karachi Electric Supply Company
16/12/2009
GB00B23JN426/GBP/PLUS-exn
Oracle Coalfields Plc
("Oracle" or the "Company")
MOU signed with Karachi Electric Supply Company
The Board of Oracle Coalfields PLC (PLUS: ORCP), the UK developer of a 1.4 billion tonne coal
deposit in southern Pakistan, is pleased to announce that the Company has entered into a
Memorandum of Understanding (MOU) with the Karachi Electric Supply Company (KESC), a local power
utility company.
KESC is a major supplier of electricity in the Sindh Province, particularly Karachi, a city of
almost 17 milion people. KESC is fast-tracking the development of a number of new power plants in
order to overcome existing and projected energy shortages in Karachi.
Brief background on KESC
KESC is a fully integrated power utility involved in the generation, transmission and distribution
of 1,400 MW of electricity and is one of Karachi's largest employers, with some 17,000 employees.
It is also one of the oldest companies in Karachi, incorporated on September 13, 1913, under the
Indian Companies Act of 1882. The company was nationalised in 1952 but subsequently re-privatised
on November 29, 2005. KESC now has a new and dynamic management team following a capital injection
by Abraaj Capital, a large Dubai-based private equity firm, which holds a significant shareholding
in the power utility. KESC is listed on the Karachi, Lahore and Islamabad stock exchanges.
Salient features of the MOU
- KESC is embarking on a fast-track programme to overcome the existing and projected energy
shortage within its licensed area. These cover Karachi and its suburbs up to Dhabeji and Gharo in
Sindh as well as Hub, Uthal, Vinder and Bela in Baluchistan. The utility has declared its
intention to develop and implement several power projects including, but not limited to, coal-
fired power plant(s).
- Oracle has proposed to KESC the establishment of a coal-fired power plant, with an initial
capacity of 300MW and the potential to increase this to 1,100 MW. The power plant will be fuelled
by lignite coal to be mined from the Company's Block VI project in the Thar Coalfield in the
Province of Sindh. Sindh Carbon Energy Limited, Oracle's local subsidiary, will operate the Block
VI coal mine.
- Oracle has agreed to secure and provide to KESC long-term coal supply at competitive
prices and of quality and specification as desired for the initial operation of a 300MW coal-fired
power plant - with a suitable configuration to be setup in accordance with the terms emerging
subsequent to this MOU.
- Oracle and KESC will share technical information to assist each other in the completion of
their respective work, including the Environmental & Social Impact Assessment for the coal mine
and power plant respectively. The ultimate objective is to enter into a Joint Venture (equity
participation) or Joint Development Agreement to establish a mine-mouth power plant at the
Company's Block VI project.
- KESC has entered into exclusivity with Oracle and shall not during the validity of the MOU
or Joint Development Agreement enter into an arrangement to develop a mine-mouth power plant at
Block VI with any other entity so far as Oracle and/or its local subsidiary, Sindh Carbon Energy
Limited, are in a position to meet their requirement for the delivery of the required coal in the
desired time frame mutually agreed between Oracle and KESC at a price which does not affect the
economic viability of the mine mouth power plant.
Shahrukh Khan, Chairman of Oracle Coalfields commented:
"We are delighted to be working with the Karachi Electric Supply Company as we progress with the
development of our flagship Block VI project in Pakistan.. By engaging with KESC now, we hope to
announce details of a Joint Development Agreement by mid-2010 with the aim of fast-tracking
development of a coal-fired power plant. Furthermore, Oracle will be able to enter into a long-
term coal supply agreement with KESC.
"We are blessed with a large coal resource which can satisfy the volume of coal required by KESC
for a mine-mouth power plant. Together, Oracle and KESC will work on the configuration of the
mine, coal production rates, power plant capacity, timing of first coal production and
commissioning of the power plant. As part of this, a number of studies will need to be completed
in the coming months to ensure the timely completion of feasibility studies for the purpose of
mine development and power plant construction, respectively.
"This is a significant step for Oracle and also highlights the confidence in our goal to establish
a major coal mining operation at our Block VI project in Thar, Sindh Province fuelling Pakistan's
electricity requirements and economic prosperity."
The Directors of Oracle are responsible for the contents of this announcement.
ENQUIRIES:
Oracle Coalfields PLC
Shahrukh Khan, Chairman
Telephone: +44 (0) 1366500722
Email: s.khan@oraclecoalfields.com
St Helens Capital Partners LLP
Duncan Vasey or Mark Anwyl
Telephone: +44 (0) 20 7368 6959
Lothbury Financial
Michael Padley / Ron Marshman
Telephone: +44 (0) 20 7011 9411
Email: michael.padley@lothburyfinancial.com
WEBSITE:
www.oraclecoalfields.com
About Oracle:
Oracle Coalfields plc is a UK-based resource exploration and development company with an 80 per
cent owned subsidiary (Sindh Carbon Energy Limited) operating in Pakistan. The Company's shares
are quoted on the PLUS markets (symbol: ORCP). The Company's flagship project is the Block VI
coal project which is located on the Thar coalfield in the eastern Sindh province, Pakistan.
Block VI is host to a JORC compliant resource of 1.4 billion tonnes of lignite coal including 371
million tonnes in the proven category.
The Company also owns the Indus East coal project in Pakistan. A pre-feasibility study carried
out by Dargo Associates confirmed an inferred resource for the area (in line with the JORC Code)
of 365 million tonnes, of which the boreholes KHW-1 and KHW-2 give an indicated resource of approx
24 million tonnes.
Oracle Coalfields plc
Oracle Coalfields plc
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