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Oracle Power shares leap as partners ratify memorandum for Thar development

The MoU was originally signed in November between Oracle and SCIG and PowerChina, its two co-developers

coal
Thar is a coal-fired power station

Oracle Power PLC (LON:ORCP) shares jumped nearly 17% higher on Friday after its Chinese partners ratified a memorandum of understanding to proceed with the development of the Thar power station project in Pakistan.

The MoU was originally signed in November between Oracle and SCIG and PowerChina, its two co-developers.

The next step will be the completion of due diligence early in the next quarter.

Details of the development agreement are as follows

  • Thar is forecast to cost US$1.6bn
  • Proposed debt : equity ratio 75:25
  • Oracle to hold a minimum 12.1% equity
  • Oracle's historic development costs to be recognised as part of its equity holding and contribution in the project
  • The Chinese partners to be exclusively responsible for arranging project financing.

Thar is being developed in two stages. This approval by the board of SCIG, the Chinese companies, is a key step forward as part of the first stage. 

On completion of the first stage, the next step will be to seek approval from the Chinese Government, after which a final development decision will be made to take the Project through to financial close.

The project has priority status in the China Pakistan Economic Corridor.

Shahrukh Khan, Oracle’s chief executive, said: "I am delighted to announce the approval of the SCIG Board to proceed with the project.

“Since signing the MOU in November 2017, all parties have worked hard to advance the project.”

In late afternoon trading, Oracle Power shares were 17% higher at 1.55p.

 -- Adds share price --

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