Oracle and SEPCO collaborate on coal mine and power plant

Oracle Coalfields PLC has made significant further progress towards delivering the commercial potential of Block VI in the Thar Coalfields.

The company has signed an Engineering Procurement and Construction (EPC) Framework Agreement in Beijing with SEPCO Electric Power Construction Corporation (SEPCO), following the receipt from SEPCO of outline bids for the construction of the integrated coal mine and power plant.

SEPCO has additionally proposed a financing structure to potentially securitise up to 85% of the cost of the two EPC contracts, which would be provided by Sinosure, the China Export & Credit Insurance Corporation, and certain Chinese banks.

Highlights

• SEPCO has been selected as preferred contractor to enter into two lump sum turnkey EPC contracts for both the 4.2 million tpa coal mine and the 600 MW Power Plant; the combined EPC price or transaction value is approximately US$ 1.3 billion.
• SEPCO has delivered an outline of the financing proposal for project finance loans under which Sinosure would consider securitising up to 85% of the cost of the two EPC contracts.
• SEPCO has agreed to consider taking an equity stake of 10% in EPL, which is to be formed in Pakistan by Oracle.
• A comprehensive EPC Term Sheet for the coal mine and power plant is expected to be agreed between Oracle and SEPCO the end of 2014 in preparation for the final investment decision, for groundwork to commence in mining and power plant development in 2015.
• Oracle has appointed leading international project consultants and managers with expertise in China, Turner & Townsend and Mott MacDonald, as technical advisers for the coal mine and power plant respectively to manage the process of entering into EPC term sheets and contracts with SEPCO.
• Oracle and SEPCO aim to finalise the necessary documents within six months of this agreement and have entered an exclusive agreement for this period with possible extension by mutual agreement.

Thar coalfield lease

The project will be implemented through two Pakistani incorporated subsidiaries of Oracle, Sindh Carbon Energy Limited (SCEL) and a company currently under formation to operate the power plant, provisionally named Electric Power Limited (EPL).

Through SCEL, Oracle owns the mining lease for Block VI in Thar Coalfield, for the mining of lignite coal. Oracle plans to develop the mine and to sell coal to EPL at an integrated power station adjacent to the mine. The EPC Framework Agreement confirms the intention of SEPCO to purchase minority equity interests in EPL and to potentially make an investment in SCEL.

Comments

Adrian Loader, Chairman of Oracle

"I am delighted that Oracle and SEPCO have signed this EPC Framework Agreement for the construction of the integrated coal mine and power plant, which is a major milestone in the development of the Block VI project in the Thar Coalfields. Oracle looks forward to working closely with SEPCO in bringing this important project to fruition".

Shahrukh Khan, CEO of Oracle

"Entering the EPC Framework Agreement with and receiving a financing proposal from one of China's largest State-Owned Enterprises in the energy sector is another step towards bringing the project to reality. Both SEPCO and Oracle are eager to succeed in the development of our integrated coal mine and power plant project and to play an effective role in addressing Pakistan's energy crisis."

Liu Chuanming, Chairman of SEPCO

"We at SEPCO are confident of Oracle's endeavours to develop one of Pakistan's largest energy projects and are delighted to be Oracle's preferred EPC contractor and partner for the coal mine and power plant project. Oracle has demonstrated its high standards in taking their project to this level that complements SEPCO standards in project execution and financing."

Adapted from press release by Katie Woodward

Read the article online at: https://www.worldcoal.com/coal/25092014/oracle-makes-progress-on-thar-coalfield-potential-1351/