Oracle Power Regulatory News (ORCP)

Oracle signs EPC Framework Agreement with SEPCO for coal mine and power plant



25 September 2014

Oracle Coalfields PLC

("Oracle", the "Company" or the "Group")

EPC Framework Agreement with SEPCO for Coal Mine and Power Plant

Oracle Coalfields PLC (AIM:ORCP), the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, is pleased to announce that the Company has made significant further progress towards delivering the commercial potential of Block VI in the Thar Coalfields.

Oracle today signed an Engineering Procurement and Construction ("EPC") Framework Agreement in Beijing with SEPCO Electric Power Construction Corporation ("SEPCO"), one of China's leading power and construction groups, following the receipt from SEPCO of outline bids for the construction of the integrated coal mine and power plant.

At the same time SEPCO has proposed a financing structure to potentially securitise up to 85% of the cost of the two EPC contracts which would be provided by Sinosure, the China Export & Credit Insurance Corporation, and certain Chinese banks. 

Highlights:

· SEPCO has been selected as preferred contractor to enter into two lump sum turnkey EPC contracts for both the 4.2 million tonnes per annum Coal Mine and the 600MW Power Plant; the combined EPC price or transaction value is circa US$1.3 Billion. This figure is subject to modification during the finalisation of the detailed contracts.

· SEPCO hasdelivered an outline of the financing proposal for project finance loans under which Sinosure would consider securitising up to 85% of the cost of the two EPC contracts.

· SEPCO has agreed to consider taking an equity stake of 10% in EPL, which is to be formed in Pakistan by Oracle, after due diligence has been completed.

· A comprehensive EPC Term Sheet for the coal mine and power plant is expected to be agreed between Oracle and SEPCO by year-end 2014 in preparation for the final investment decision, as defined by Oracle, for groundwork to commence in mining and power plant development in 2015.

· Oracle has appointed leading international project consultants and managers with expertise in China, Turner & Townsend and Mott MacDonald, as technical advisers for the coal mine and power plant respectively to manage the process of entering into EPC term sheets and contracts with SEPCO. The EPC contracts will be developed to comply with Oracle's technical requirements, Power Purchase Agreement, Coal Sales Agreement and other agreements to be entered with Oracle's Pakistan subsidiaries, and Pakistan authorities.

· Oracle and SEPCO aim to finalise the necessary documents within six months of this agreement and have entered an exclusive agreement for this period with possible extension by mutual agreement.

The project will be implemented through two Pakistani incorporated subsidiaries of Oracle, the coal mining subsidiary Sindh Carbon Energy Limited ("SCEL") and a company which is currently under formation to operate the power plant and is provisionally called Electric Power Limited ("EPL").

Through its local coal mining subsidiary SCEL, Oracle owns the mining lease for Block VI in Thar Coalfield, for the mining of lignite coal. Oracle plans to develop the mine and to sell coal to EPL at an integrated power station adjacent to the mine. The EPC Framework Agreement confirms the intention of SEPCO to purchase minority equity interests in EPL and to potentially make an investment in SCEL.

Adrian Loader, the Chairman of Oracle, said "I am delighted that Oracle and SEPCO have signed this EPC Framework Agreement for the construction of the integrated coal mine and power plant, which is a major milestone in the development of the Block VI project in the Thar Coalfields. Oracle looks forward to working closely with SEPCO in bringing this important project to fruition".

Shahrukh Khan, CEO of Oracle, said: "Entering the EPC Framework Agreement with and receiving a financing proposal from one of China's largest State-Owned Enterprises in the energy sector is another step towards bringing the project to reality. Both SEPCO and Oracle are eager to succeed in the development of our integrated coal mine and power plant project and to play an effective role in addressing Pakistan's energy crisis."

Liu Chuanming, Chairman of SEPCO, said: "We at SEPCO are confident of Oracle's endeavours to develop one of Pakistan's largest energy projects and are delighted to be Oracle's preferred EPC contractor and partner for the coal mine and power plant project. Oracle has demonstrated its high standards in taking their project to this level that complements SEPCO standards in project execution and financing." 

For further information:

Notes to Editors

About Oracle Coalfields

Oracle Coalfields PLC (AIM:ORCP), is the developer of a lignite coal mine and power plant project located in the south-eastern desert of Sindh Province, Pakistan. Oracle, through its subsidiary Sindh Carbon Energy Limited ("SCEL"), owns the mining lease of Block VI in Thar Coalfield, Sindh Province, Pakistan for mining lignite coal. Oracle is looking to develop the Thar coal deposit through the construction of an integrated power station at the mine to be held through its subsidiary Electric Power Ltd. (EPL), currently under formation. The Company has a significant JORC Compliant lignite coal resource at its Block VI site that would be able to supply sufficient lignite coal for up to 1,100 MW power generation.

In November 2013, Oracle signed a binding Memorandum of Understanding with SEPCO for the development of a coal-fired power plant project at Oracle's coal project.

About SEPCO

SEPCO provides EPC contracting for power station projects in China and around the world. With total assets in excess of RMB 25 billion (approximately £2.5 billion) and over 19,000 employees, SEPCO is the largest construction corporation of conventional power projects in China. SEPCO is also active internationally with power plant projects namely in Asia, Africa and South America.

SEPCO is affiliated to Power Construction Corporation of China, and provides a one-stop solution for the EPC contracting for power station projects, including the survey work, design, equipment completion, building and construction, commissioning and their overall operation.

With total assets in excess of RMB 25 billion (approximately £2.5 billion) and over 19,000 employees, SEPCO is the largest construction corporation of conventional power projects in China. Since 1952, SEPCO has completed construction of 560 power generation units with a total installed capacity of over 93,000MW, substations with a total transforming capacity of over 45,000MVA, transmission lines with a total length of over 18,000km.

SEPCO has actively implemented the strategy of internationalization since the year 2000. In this time, it has undertaken 32 projects with a total contract amount of approximately US$20 billion in more than ten countries and regions of Asia, Africa and South America. Among them, 23 power projects with a total capacity of 26,867MW are contracted on EPC basis with a total contract value in excess of US$18 billion.

This information is provided by RNS

The company news service from the London Stock Exchange

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