Oracle Power gets approval for next step in coal, power plant development

JOHANNESBURG (miningweekly.com) - The Private Power and Infrastructure Board (PPIB) of Pakistan has approved the issue of notice to proceed (NTP) and letter of intent (LoI) for a coal mine and mine-mouth power plant in Block VI of the Thar desert, UK-based Oracle Power reported on Monday.

The project is being developed in a consortium, which also includes Chinese State-owned enterprises Sichuan Provincial Investment Group (SCIG) and PowerChina International Group. Oracle subsidiary Thar Electricity is overseeing the project.

The issue of the NTP and LoI is for the development of a 700 MW coal-based power plant at Thar Block-VI, as the first phase of a 1 400 MW power plant.

The power plant size, originally submitted as first phase 660 MW, has been increased to 700 MW of a total plant size of 1 400 MW, to comply with new requirements in Pakistan, which the board understands is to apply more efficient super critical technology.

The PPIB's approval is subject to this change in size, any resultant change in shareholding and the implementation of the project in two phases being approved within the China Pakistan Economic Corridor.

The issuance of the LoI was the next major step required of Oracle in the first stage of the memorandum of understanding (MoU) signed with SCIG and PowerChina.

SCIG and PowerChina are currently undertaking their legal and financial due diligence as part of the first stage of the MoU. This would then lead into the second stage in which SCIG and PowerChina would make their final development decision, and engineering, procurement and construction contracts and definitive agreements would be entered into with the Chinese partners start investing in the project.

The consortium is now required to submit its tariff application and its application for a generation licence to the National Electricity Pricing Regulatory Authority (Nepra) within three months of the issue of the LoI, whereafter Nepra would issue a tariff determination and generation licence.

The consortium is then required to put in place a performance guarantee for $3.5-million against completion of the power plant. 

Oracle said that it would contribute its equity share of 12.1%, noting that it still had the potential to further increase its interest before financial close.

PPIB will then issue a letter of support as its final approval of the power plant, which would lead to a 30-year power purchase agreement between TEPL and Central Power Purchasing Authority, a federal government agency.