Canadian energy firm Prophecy Coal Corp expects to raise $800 million in debt and equity financing by September to build a coal-fired 600-megawatt power plant in Mongolia, and expects to conclude a power purchase agreement with the Mongolian government by May, a senior executive said.
The price is expected to be slightly less than the 8 cents per kilowatt hour (kwh) the government currently pays for importing electricity from neighbouring Russia, said Joseph Li, a director and chief operating officer of Toronto-listed Prophecy Coal.
The agreement is expected to last at least 25 years. "The power will be initially sold to Mongolia. Electricity demand in Mongolia is expected to grow very quickly," said Li in an interview in Singapore on Wednesday. The power plant will be built next to and fuelled by Coal Prophecy Coal's Changdana coal deposit, which has an estimated 140 million tonnes of coal.
An engineering, procurement and construction (EPC) contractor will be selected from a group of six bidders by May. The contractor will be responsible for building and operating the plant, and will also make an equity investment that will result in a 50 or 51 percent stake in the project, Li said. Around 70-75 percent of the $800 million needed to fund the project will come from debt financing, another 15-20 percent from the EPC contractor's equity investment, with Prophecy Coal raising the rest from its existing shareholders.
Construction is expected to start in early 2013, with the first 150 MW of the plant due to start operations in September 2015. Another 150 MW will be added every 6 months thereafter in three phases until the 600 MW of full capacity is reached. Prophecy Coal has another mine at Ulaan Ovoo near the Russian border that sells coal to power producers in Mongolia and Russia. While Chinese buyers have been keen to access coal supplies from its northern neighbour, Li said the cost of transporting coal to China is too prohibitive.
Comments
Comments are closed.