The US export-import bank has given a preliminary approval to a loan guarantee of $600 million for the sale of mining equipment for the 3,960 MW power plant of the Anil Dhirubhai Ambani Group firm, Reliance Power, in Sasan, Madhya Pradesh.
The board of the bank had on June 24 voted not to give the loan guarantee for the proposed sale and export of the equipment by Milwaukee-based Bucyrus International Inc. because of environmental concerns.
However, it changed its decision following a memorandum of understanding (MOU) signed between Reliance Power and the bank, indicating the ADAG firm's intent to develop a new 250 MW renewable energy facility, which when built will rank among the largest renewable energy projects in India.
"This proposed transaction for the Sasan project would support hundreds of jobs at Bucyrus and its sub-suppliers. Today (Wednesday) the Board reviewed new information about the project’s CO2 emissions, which Reliance has agreed to cap at 850 grams of CO2 per kilowatt hour," said the bank in a statement.
Ex-Im is a US federal government agency which provides export financing that helps create jobs in the country.
"We are pleased that Reliance is making this commitment to renewable energy, which allows us to sustain U.S. jobs and promote both conventional and renewable energy exports," said Ex-Im Chairman and President Fred P. Hochberg.
Ex-IM provides a variety of financing mechanisms, including working capital guarantees to U.S. businesses, and export-credit insurance to protect against non-payment by foreign buyers.
"Ex-Im also reviewed information about the effects of Ex-Im financing on U.S. 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," it added.
This vote paves the way for a full financial, technical and environmental due diligence process. Following that, the Board will vote on whether to approve the application.