REG - Oracle Power PLC - MOU for 1.32 GW coal power plant – Thar Block VI

Oracle PowerAnnouncement

16/05/2023 07:00

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RNS Number : 5461Z  Oracle Power PLC  16 May 2023

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:

 Oracle Power PLC

 Naheed Memon - CEO

+44 (0) 203 580 4314
 Strand Hanson Limited

(Nominated Adviser and Broker)

 Rory Murphy, Matthew Chandler, Rob Patrick

+44 (0) 20 7409 3494
 Buchanan (Financial PR)

 Bobby Morse / Oonagh Reidy/ Abigail Gilchrist
 +44 (0) 203 7466 5000

 

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