Cooperation Covenant for the Chandgana Power Project construction set

Prophecy Coal and Energy Authority agree on terms guaranteeing the delivery of the project by the 1st Quarter of 2016.

In a news release, Prophecy Coal Corporation announced that the Energy Authority of Mongolia has entered into a Cooperation Covenant with Prophecy to bring the 600 MW Chandgana Power Project online by 2016.

As the agency implementing governmental policy in the power and energy sector of Mongolia, the EA will monitor the entire Chandgana Power Plant construction process to guarantee the power plant is constructed within Mongolian regulations and approved technical and design specifications. The Chandgana Power Project is foreseen to satisfy the electricity energy demands of the central and eastern regions.

Aside from stating the provision of the required support for the construction and operation of the power plant in Mongolian central plains, the recently-signed Cooperation Covenant also describes the obligations and liabilities in the purchase agreement entered by Prophecy and the National Electricity Transmission Grid Company of Mongolia, NETGCO.

Among the highlights of the guidelines are the following:

Construction and commission of the Chandgana Power Plant will be done within the approved design and technical specifications set in the license issued by the government.

The scheduled start of electricity supply delivery to the Central and Eastern Energy Systems will begin with 100 MW Net Electric Output on the 1st quarter of 2016 to 200 MW on the 3rd quarter of 2016. In succession, electricity supply of 300 MW is set from the 1st quarter of 2017 and 400 MW from the 3rd quarter of 2017.

Another major development planned in the project is the linking of the Central and Eastern Energy Systems. This will be done by connecting the Chandgana power plant to the Baganuur 220 kV sub-station by 220 kV two-circuit overhead transmission lines to the west and with the Undurkhaan 110 kV sub-station by 220 kV overhead transmission lines to the east.

After a lengthy legal, commercial, and technical consultations with a designated working group of more than 20 government members, Prophecy has prepared and submitted the power purchase agreement with full schedules to the Mongolian government for its review and comment. The next step will be to reach an agreement on tariff, followed by execution of the PPA.

John Lee, Chairman and CEO of Prophecy states: “We are very grateful for the support from various Mongolian government agencies to help bring the Chandgana Power Plant project online and on schedule. This landmark agreement forms the basis of our continued discussion regarding a PPA”