Oracle signed the EPC framework agreement in Beijing with Shandong Electric Power Construction Corporation (SEPCO) to progress Block VI in the Thar coalfields in Pakistan.
SEPCO, a leading power and construction group in China, has also proposed a financing structure to potentially securitise up to 85% of the cost of the two EPC contracts.
The EPC is for both the 4.2 million tonnes per annum coal mine and the 600 megawatt power plant.
SEPCO has also proposed a financing structure that would act as security for up to 85% of the $US1.3 billion cost, with Sinosure, the China Export and Credit Insurance Corporation and other Chinese banks putting up the money.
SEPCO has delivered 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, with SEPCO also agreeing to consider taking a 10% equity stake in Oracle’s subsidiary Electric Power Limited, which is to be formed in Pakistan by Oracle, after due diligence has been completed.
Oracle has appointed Turner and Townsend and Mott MacDonald, international project consultants and managers with expertise in China, as technical advisers for the coal mine and power plant respectively and to manage the process of entering into EPC term sheets and contracts with SEPCO.
SEPCO chairman Liu Chuanming said his company was confident of Oracle's endeavours to develop one of Pakistan's largest energy projects.
“Oracle has demonstrated its high standards in taking their project to this level that complements SEPCO standards in project execution and financing,” he said.
Oracle CEO Shahrukh Khan 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 was a milestone 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,” he said.