The Private Power and Infrastructure Board has approved the issue of a Notice to Proceed (NOP) and Letter of Intent (LOI) to the company's subsidiary Thar Electricity (Private) Limited (TEPL).
These approvals are for the development of a 700MW coal based power plant, as the first phase of a 1,400MW power plant.
Originally, the plans were for a 660Mw first phase, but this been increased slightly to reflect new requirements in Pakistan for more efficient technology.
Shahrukh Khan, Oracle’s chief executive, said the LOI is a major step towards completing the first stage of the Memorandum of Understanding with SCIG and PowerChina, its two Chinese partners.
Due diligence is being undertaken by the Chinese firms ahead of the next stage of the MoU, which will frame their final development decision.
At that point, EPC contracts and definitive agreements will be entered and the Chinese partners will start investing in the project.
Next steps will be the formal issue of the LOI and the NTP, which will require a performance guarantee of US$700,000.
That will be followed by tariff and generation licence applications, which will require a performance guarantee of US$3.5mln.
Oracle will contribute an equity share of 12.1% to these.
Following that, the consortium will agree a 30-year Power Purchase Agreement; a coal supply agreement and implementation agreement with the Pakistan government.
Khan added today’s news added to the inclusion of the project in CPEC (China Pacific Economic Corridor) should assist fast-tracking of the project to financial close.