Responding to green commitment from Reliance Anil Ambani group, the US Exim bank today gave a preliminary approval for $600 million in loan guarantees to the supplier to Rs 20,000 crore power project at Sasan in Madhya Pradesh.
The proposed estimated Rs 2,800 crore loan guarantee will support the sale and export by US firm Bucyrus International. The approval would result in saving about a 1000 jobs in the US. Jobs are believed to have been behind Exim Bank's reversal of earlier decision of rejecting the arrangement.
"This transaction was also made possible because of Anil Ambani's leadership and vision in diversifying Reliance Power's production portfolio of energy projects in India," Exim bank Chairman and President Fred P Hochberg said in a statement soon after a Board meeting.
Commenting on the development, Bucyrus International President and CEO Tim Sullivan said: "We are confident that the remaining steps of this process, including financial review, will be completed expeditiously in order to allow Reliance Power to proceed with its poject plan."
The Export and Import Bank of US reversed its earlier decision and approved the financing arrangement after Reliance Power committed to cap the emission from the about 4,000 MW project to 850 grams of CO2 per kilowatt hour.
Besides, the firm also agreed to develop a 250 MW renewable energy facility in India.
"We are pleased that Reliance is making this commitment to renewable energy, which allows us to sustain US jobs and promote both conventional and renewable energy exports," said Hochberg.
The bank said the Board of Directors has approved a full financial, technical and environmental review of an application by Reliance Power for financing its coal-fired power plant.
Reliance Power's application is, however, still subject to final review and approval, it said.
On the other hand, Sullivan said: "On behalf of all the employees of Bucyrus, we would like to praise the US Exim Bank for approving the environmental aspects of the Reliance Power Project application, which will allow us to provide mining equipment to the Indian project moving forward."
This is the first step in the process to provide financing, which will create nearly 1,000 jobs across 13 states in the US, as indicated by a study conducted by the Metropolitan Milwaukee Association of Commerce, he added.
On June 24, the Board of the bank had voted not to proceed with further review of the application for the Sasan project, based on environmental concerns.
It, however, reversed its decision on July 1, after Reliance Power's commitment for developing renewable energy and cut emissions.
The bank said it reviewed information about the effects of financing on US energy exports and related employment.
"This data, along with the executed MoU with Reliance, led the Board to conclude that a full review of the project should proceed. This vote paves the way for a full financial, technical and environmental due diligence process," it said.
A day before the Board meeting, US environmentalist alleged that the US Export Import Bank succumbed to intense lobbying despite high emissions, a charge contested by Reliance Power whose officials said that emission from the project would be at 832 grams of COs/KWh, way below the Exim Bank norms
Environmental groups led by Friends of the Earth have said that the reversal of the Sasan decision would set a dangerous precedent for other coal projects in the Exim Bank pipeline, including the 4,800 megawatt Kusile coal power project in South Africa, which would emit 30.5 million tonnes of carbon dioxide annually.