U.S. Ex-Im Bank weighs loan to major India coal project

WASHINGTON Fri Jul 4, 2014 4:35am IST

Related Topics

Stocks

   

WASHINGTON (Reuters) - The U.S. Export-Import Bank is considering financing a massive coal-fired power plant in India despite the fact the Obama administration has called on domestic and global public lenders to stop funding coal-plants in his climate change strategy.

The board of the Ex-Im Bank, the United States' export credit agency, voted last December to stop funding coal plants overseas - except in certain circumstances - in response to President Barack Obama's Climate Action Plan, which called on U.S. and international lenders to do so.

"We are currently reviewing the application, which we received last month, to determine if it satisfies our criteria of 'reasonable assurance of repayment' and to ensure that it adheres to our environmental and other policies," an Ex-Im official said.

The Ex-Im bank helps finance foreign purchases of U.S. exports. Its future is currently in question as Congress debates whether or not to re-auhtorize the 80-year-old institution, whose funding expires Sept 30. House Republicans are divided on the question while Democrats largely support it.

Democratic Senator Joe Manchin from coal state West Virginia plans to offer compromise legislation to renew the bank's charter by five years on the condition that it permanently removes the restrictions on lending to coal projects.

The Ex-Im Bank in January temporarily suspended enforcement of a lending ban to high-carbon intensity projects until September due to a provision of a House appropriations bill that defied the president's climate action plan.

This opened the window for the India project to apply for an Ex-Im loan guarantee.

The coal project being reviewed by the bank is a 4,000 MW integrated power plant and coal mines located in Jharkand.

It had initially been proposed by India's government as part of a strategy to add an additional 100,000 megawatts of generation capacity by 2017. Residents surrounding the coal mining and power project have protested against it.

The supercritical plant, which uses more efficient boilers than traditional coal-fired power plants, is owned by Reliance Power, Tata Power and coal mining company NTPC.

The Ex-Im Bank does not disclose which U.S. vendors have applied for the loan until the loan is approved.

In 2010, the bank agreed to $900 million in loan guarantees from Reliance Power to buy mining equipment from Wisconsin-based Bucyrus, now owned by Caterpillar to build a power plant in central India.

Last month, the United States presented a plan to the Organization for Economic Cooperation and Development's exports credits group that would require any new power plant that gets public funding to meet an emission performance standard, emitting low levels of carbon dioxide.

Multilateral institutions such as the World Bank and the European Investment Bank have also pledged not to finance coal-fired power plants under most circumstances.

(Reporting By Valerie Volcovici; Editing by Bernard Orr)

FILED UNDER:

REUTERS SHOWCASE

2015: India Outlook

2015: India Outlook

India in 2014: A dream run for markets  Full Article 

Funding Woes

Funding Woes

Co-founder of SpiceJet seeks time to finalise rescue  Full Article 

Regulating Airfares

Regulating Airfares

India considers temporary cap on airfares - government official  Full Article 

Flying Back on Course

Flying Back on Course

The inside story of the new Airbus A350 jet  Full Article 

Oil Price Forecast

Oil Price Forecast

Oil prices likely to rebound in second half of 2015: poll  Full Article 

Cyber Attacks

Cyber Attacks

China condemns cyberattacks, but says no proof N.Korea hacked Sony  Full Article 

Connecting Markets

Connecting Markets

China stock connect scheme scorecard throws up surprises  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage