Shares in Oracle Power surged on Thursday after Chinese energy giant Beijing Jingneng Power Company (BJPC) took a majority stake in its key project.
Along with its other joint venture partner, PowerChina, Oracle is developing a 700MW coal-fired electricity plant in Pakistan’s Thar province.
BJPC, which is listed in Shanghai and is worth around $3bn, is replacing Sichuan Provincial, the last of the three original partners.
As part of the revised memorandum of understanding, BJPC will own 78pc of the project, Oracle will retain its 12.1pc stake, while PowerChina will hold the remaining 9.9pc.
Importantly for Oracle and its investors, the company’s historical spend on the project will be capitalised as a contribution towards its equity interest.
“We have signed a new MOU and are pleased to bring BJPC on as a partner in the project,” said Oracle Chief Executive Shahrukh Khan. “We remain grateful to PowerChina for their continued support throughout this process. We are mindful that this transaction has taken longer than many envisaged and would like to thank our shareholders for their patience.”
He said the inclusion of the company’s historic expenditure, several multiples of its current market capitalisation, as part of Oracle’s contribution to the project should help minimise dilution of shareholders in the PLC whilst retaining a significant interest in this sizeable asset.
After what he called a “frustrating period” with limited newsflow, Khan added that Oracle is now “firmly in a position” to press ahead with the project.
The initial phase of development carries a capital cost of $1.6 billion and is for a gross of 4 million tonnes per annum mine, feeding a 700MW power plant. Phase 2 of the project will see capacity expand to 1,400MW.