US Exim Bank rejects Reliance Power's plan

Reliance Power’s request for $650 million (Rs 3009.5 crore) in financing to build a coal-fired power plant in India has been rejected by the US Export-Import (Exim) Bank’s board, spokeswoman Stephanie O’Keefe said. “We’re not doing the deal,” she said.

The request was turned down during the lender’s preliminary consideration of projects that would generate high levels of carbon emissions, and followed complaints from environmental groups such as the Sierra Club that giving government-backed funds would undercut the Obama administration’s pledge to limit export financing on projects that might harm the environment.

Reliance Power of Mumbai was awarded the project to build a power plant in Sasan, central India, in July 2007, using coal that’s mined nearby. The company expects to have 1,320 megawatts of capacity at the plant by March 2012, Chief Executive Officer Jayarama Chalasani said in December.

Environmental groups said the annual estimated amount of emissions from the Sasan plant was more than double the level from all projects funded by the US-government-backed lender last year.

“This is an important precedent,” said Doug Norlen, policy director for Pacific Environment, a San Francisco-based watchdog of government financing bodies such as Exim Bank. “It’s the first time Exim ever turned down a project based on the climate implications.”