Oracle signs MoU with major Chinese firms to advance the Thar project

The MoU specifies that the project will be funded in cash by the Parties, directly into the company's Pakistani subsidiaries and that it is proposed that SCIG, PowerChina and Oracle will have equity holdings in the project of 78%, 9.9% and 12.1%. respectively. SCIG may consider, as appropriate, at any time to invite other co-sponsors/co-investors to the investment of the project and SCIG will maintain the position of majority shareholder in each subsidiary of Oracle.

The Parties intend to develop the project in a two-stage approach. The first phase will include further legal and financial due diligence, led by SCIG.

The second phase is expected to involve SCIG endeavouring to secure the approval for the investment in, and the development of, the project from the Chinese government within three months of the completion of the first phase, after which a final development decision will be made, which is expected to take the project to financial close. It is anticipated that the Parties will then provide the equity funding to the project companies, proportionate to their proposed eventual equity holding in the project. Equity funding during the second phase is also expected to be contributed by the Parties in proportion to their proposed eventual equity holdings in the project. A further adjustment to the equity holdings of the Parties is expected, to reflect costs already incurred by Oracle in developing the project up to the date of the MoU.  It is anticipated that the financing of the project will be by way of both debt and equity, in the ratio of 75:25.  SCIG and PowerChina shall be solely responsible for arranging the debt, exclusively from Chinese banks. SCIG and PowerChina are expected to provide all security and guarantees that may be required as part of the bank debt.

The MoU specifies that SCIG is to have a majority of board positions at the project company level. Certain matters shall be reserved for unanimous agreement, including, inter alia, dividend policy and terms and costs of key contracts, such as Engineering Procurement and Construction (EPC) and Operations and Maintenance (O&M).  PowerChina shall be EPC contractor for the Project.  The O&M contracts shall be decided by SCIG.

Oracle will retain responsibility for applying for and obtaining all licences, approvals, permissions as may be required by the Pakistani Government authorities. SCIG and PowerChina shall be responsible for all liaison and approvals required through the Chinese authorities, including in relation to the China Pakistan Economic Corridor.

Shahrukh Khan, CEO of Oracle, said: "I am delighted to confirm the formal signing of the MoU. This development is a transformational step for Oracle and the culmination of months of work between the various Parties. We are very pleased to have formalised our relationship with both PowerChina and SCIG and look forward to working with them to develop this significant project.”

"As evidenced with the recently announced power plant proposal to the Pakistani power industry regulator, further steps required to achieve financial close are firmly moving forward and the company hopes to reach financial close in the first half of 2018. I look forward to updating shareholders on subsequent developments as they arise,” Khan added.

Read the article online at: https://www.worldcoal.com/power/21112017/oracle-signs-mou-with-major-chinese-firms-to-advance-the-thar-project/