Prophecy Development Corporation has signed an Engineering, Procurement and Construction (EPC) agreement, equity investment agreement and share purchase Agreement with China-based Shandong Electrical Power Construction No2 Company (SEPCO2) to invest in and build the 600MW Chandgana power plant in Mongolia.
The Chandgana project, under the development of Prophecy’s wholly-owned Mongolian subsidiary Prophecy Power Generation LLC (PPG) since 2011, has secured power plant land use rights and the construction licence, and is included on the Mongolian Government concession list.
SEPCO2 was founded in 1952 and is wholly-owned by the Power Construction Corporation of China, a Global Fortune 500 company with 200,000 employees as of June 2015, specializing in engineering, construction, design consultation and equipment manufacturing in the global energy sector. SEPCO2 has 6400 employees and has constructed power plants in 11 countries, including Saudi Arabia, Zambia, India, Malaysia and Sudan.
The signing ceremony took place at the Canadian Embassy in Ulaanbaatar and was witnessed by the Senior Trade Commissioner from the Embassy of Canada to Mongolia. SEPCO2 president Zhang Shitao and Prophecy’s executive chairman John Lee executed the agreements.
The Chandgana power plant is strategically located in Khentii province, 150km east of Baganuur, to provide power to both Mongolia’s Eastern Energy Grid and Central Energy Grid. It will be a coal-fired mine-mouth power plant where coal will be supplied from Prophecy’s wholly-owned Mongolian subsidiary Chandgana Coal LLC’s adjacent open pit coal mine.
The total capital investment necessary to complete the plant is expected to be approximately US$1 billion and the proposed investment for Phase 1 (150MW x2) is estimated to be US$600 million. Phase 1 is to be completed within three years from the start of construction.
Mongolia currently imports approximately 20% of its electric power from Russia and China. Prophecy proposes to build a modern power plant to provide a stable 20-year power supply in Mongolia, with 100% private funding and with no up-front payment or subsidies from the Mongolia government.
Prophecy is offering a fixed, long-term tariff that is lower than those of foreign import to assist Mongolia to save money, create employment and establish its energy independence. The Chandgana power plant and coal mine are expected to employ more than 600 fulltime skilled local staff, cause the start of many new support businesses and revitalize Khentii province.