Thursday, September 28th 2023

Oracle Power Plc

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By William Turvill

“The Oracle Of Aim”

When it comes to business partners, an Aim-listed minnow could probably do worse than team up with a multi-billion-pound Chinese behemoth and a member of the United Arab Emirates’ royal family.

And so it was no surprise last week when shares in Oracle Power shot up nearly 70 per cent after the Pakistan-focused firm unveiled a tie-up with the China National Coal Development Company and the private office of Sheikh Ahmed Bin Dalmook Juma Al Maktoum.

What has happened?

In December, energy developer Oracle’s share price leapt following a report in Pakistan’s Dawn newspaper that it was in talks with China Coal and the sheik about working on a project together. 

After confirming the discussions were ongoing, Oracle had signed a joint development agreement with the duo within days.

And on Wednesday last week, the energy developer revealed an agreement had been signed with China Coal and Sheikh Ahmed Bin Dalmook Juma Al Maktoum, who is already a major shareholder in Oracle and agreed a lock-in deal for his stock earlier this month.

What is the agreement?

Together, the parties plan to develop a lignite coal mine in Pakistan’s Thar desert – already Oracle’s geographical area of focus – to support a 1,320-megawatt mine-mouth power plant. 

It is believed the project will produce cheap and sustainable energy for Pakistan and also satisfy the nation’s demand for gas, primarily for the production of fertilisers. 

The consortium also believes coal-to-liquid production can help make fuel cheaper for Pakistan by reducing the necessity for imports.

What Oracle says

Oracle’s chief executive, Naheed Memon, said the agreement was the result of “two months of extensive work from all of the parties”. 

She described her partners as “one of the largest coal mining and development companies in the world and a prominent member of the UAE Royal Family, who bring with them the financial and technical wherewithal to bring a project of this stature and size to fruition”.

She added: 

“Today’s development marks a major step for Oracle and enables us to progress on our journey, with the LOI being the next major step, in developing the Project and, we believe, demonstrates that the Parties are united in their focus to make this project a modern and first-class mining development to build, own and operate 2x 660MW (totalling 1,320MW) coal-based power plant, with the potential for coal to gas and liquid and coal production for trade, recognising Pakistan’s growing needs for power, gas and liquids from coal.”

What happens now?

Oracle, which will hold a 12 per cent interest in the project – China Coal takes 73 per cent and Sheikh Ahmed Bin Dalmook Juma Al Maktoum’s office 15 per cent – is now responsible for obtaining all necessary licences and approvals from the Pakistani government. China Coal will source necessary financing from Chinese banks.

So there are still details to be ironed out. But Memon is extremely bullish about the prospects of the project and her company’s future. 

The project is included on a “priority list” for the China-Pakistan Economic Corridor (CPEC) agreement, which seeks to develop close economic ties between the nations.

Memon believes is a “huge plus”. And as a former chief executive of Manzil Pakistan, a public policy think tank based in Karachi, Memon appears to be well placed to make judgments on politics in the nation. 

In an interview with Share Talk, she said: “I think nothing can hold us back. Nothing can hold Pakistan back. And hence nothing can hold back the development of commodities and the execution of projects such as ours.”

Naheed Memon, CEO of Oracle Power PLC recently spoke to sharetalk here

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The author was remunerated but does not hold shares in the company