Oracle Power has received approval from its Chinese partner Sichuan Provincial Investment Group (SCIG) to proceed with the development of a combined lignite coal mine and mine mouth power plant in the south-east of the Sindh Province of Pakistan.
The project is located in Block VI of the Thar desert.
Oracle has received the approval following a memorandum of understanding (MoU) that the company signed with SCIG and PowerChina International Group in November last year.
The MoU aims to formalise a deal for cooperation regarding investment in the project and subsequent construction plans.
The partners will be required to secure all necessary approvals and licences from the Chinese and Pakistan governments, as well as complete due diligence before proceeding with the development.
Oracle Power CEO Shahrukh Khan 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.
“We now enter into an exciting new stage in Oracle’s evolution.”
Oracle is anticipated to hold a minimum of 12.1% equity in the project, which will be developed at an estimated cost of $1.6bn.
The Chinese firms will be responsible for arranging financing for the development, which has a proposed debt to equity ratio of 75:25.
The project is set to be developed in two stages in accordance with the MoU. The receipt of approval by the SCIG board represents part of the first stage.
All parties will need to obtain approval from the Chinese Government once the first stage is completed.
The partners are then scheduled to arrive at a final development decision to take the project through to financial close.