17 January 2019
ORACLE POWER PLC
("Oracle" or the "Company")
Oracle Power PLC (AIM:ORCP), the UK energy developer of a combined lignite coal mine and mine mouth power plant located in the Thar desert in the south-eastern Sindh Province of Pakistan, today provides an update on recent operational and macro developments.
· Block VI maintained as Priority Project in 8th Joint Cooperation Committee ("JCC") meeting;
· China Pakistan Economic Corridor ("CPEC") approve Oracle proposed expansion to 700MW;
· Consortium partnership change noted in CPEC.
The 8th JCC meeting took place on 20 December 2018 in Beijing. This is an intra-Government meeting between China and Pakistan, jointly chaired by the Vice-Chairman of China's National Development and Reform Commission and by Pakistan's Minister of Planning Development and Reform, which oversees the initiatives of CPEC. The meeting has confirmed the following:
· Oracle's project retained its status as one of the Priority Projects of the CPEC Energy initiative.
· The Company has been granted approval for the proposed increase in capacity from 660 MW to 700 MW. This approval includes the upgrade to supercritical technology.
· As part of a broader drive to indigenous power generation, the JCC reconfirmed 19 other Energy Projects promoted under CPEC, totalling 13,630MW, noting 7,240MW of which were currently under construction. The remaining 6,390MW, including Oracle's Block VI, were working towards financial close.
· The Pakistan government also committed that all transmission lines for the evacuation of power from CPEC projects would be operational before the Commercial Operation Date of each project.
Following the signing of the Memorandum of Understanding ("MOU") on 19 December 2018 with Beijing Jingneng Power Company Limited ("BJPC") and PowerChina International Group Limited ("PowerChina") (See Company RNS of 20 December 2018 for further details on terms of the MOU) all parties are working to achieve financial close as soon as is feasible. The principal outstanding areas now required to reach financial close include, inter alia:
· Engineering, Procurement and Construction ("EPC") contract and Operation and Maintenance contract ("O&M") contracts;
· For the power plant, issue of a Letter of Intent by Private Power Infrastructure Board to secure a Generation Licence;
· Between the MOU partners, finalisation of Definitive Agreements, including agreeing Oracle's equity interest;
· Agreement of project financing with Sinosure, the Chinese export credit agency;
· Finalisation of the Power Purchase Agreement and the Implementation Agreement which includes a sovereign guarantee of payment.
There has been renewed emphasis from the new Government in Pakistan on the development of indigenous coal in Pakistan, as an integral element of the country's energy mix.
Oracle's project has been significantly derisked by the progress in the neighbouring integrated open-pit coal mine and power plant project in Thar, Block II, with initial power plant trials understood to be taking place in the near future. Block II is a joint venture between the provincial Government of Sindh (as majority shareholder) and private Pakistani interests.
The Board recognises that 2018 was a challenging year for the Company and its shareholders, particularly given the delays surrounding financial close. Oracle and the newly formed consortium are advancing the project to financial close in an expeditious manner. The Company now expects a steady stream of newsflow as the various requirements mentioned above are met. Shareholders will be updated on subsequent progress in due course.
For further information:
Oracle Power PLC
+44 (0) 20 3580 4314
Strand Hanson Limited (Nominated Adviser)
Rory Murphy, James Harris, Jack Botros
+44 (0) 20 7409 3494
Brandon Hill Capital Limited (Joint Broker)
+44 (0)20 3463 5000
Peterhouse Corporate Finance (Joint Broker)
+44 (0)20 7220 9791
Tim Blythe, Camilla Horsfall, Megan Ray
+44 (0) 20 7138 3204
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