US Exim cites green concerns to not finance R Power project

At a meeting held here on Thursday,the three-member Board of Export and Import Bank — chaired by Fred Hichberg – voted two to one against financing the Sasan project,a senior US Exim Bank official said.

The other two members of the board,which has two vacancies,are Diane Farrell and Bijan R Kian.

“The USD-4.5 billion Sasan Power Project has achieved financial closure and this development will have no adverse impact on the project progress and timelines. The funding proposal from US Exim was solely to support export of US-manufactured coal mining equipment and give the project refinancing flexibility,” a Reliance Power spokesperson said in New Delhi.

However,sources in the power industry said that the decision could deter the US power and mining equipment industry from participating in Indian projects.

The Sasan Ultra Mega Power Project (UMPP) is a Government of India initiative to develop a large ‘environment-friendly’ power plant in India. UMPPs,with a capacity of 16,000 MW,are under construction and another 12,000 MW projects are currently in the process of being awarded by the Government of India.

The US Exim Bank had recently established and implemented a carbon policy that requires its board of directors to carefully consider the potentially adverse environmental impact of high-carbon intensity transactions.

Noting that Reliance’s Sasan plant is projected to emit close to 26,000-27,000 tonnes of carbon dioxide per year,the official said that the board,“after careful consideration,viewed that the environmental impact of the project would be too adverse”.

This comes in the backdrop of US President Barack Obama determining that power projects of the kind should move away from carbon-based fuel towards renewable ones.

“The board felt that the environmental impact of the facility is such that they could not support it,” the Exim official said.

However,rejection by the Exim Board does not necessarily mean that the Bank wouldn’t approve of transactions of the kind ever again,the official said.

“We were just looking at the size and scale of this particular transaction,and the board feels it is not in good faith to proceed — given the projected adverse environmental impact it would have,” he said.

If approved,the transaction would have supported 52 to 100 direct jobs and 100 to 200 indirect ones.

On Friday,shares of Reliance Power ended 0.30 per cent higher at Rs 167.70 on the Bombay Stock Exchange.