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 India’s Jharkand state in northeastern India.
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 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 (RPOL.NS) to buy mining equipment from Wisconsin-based Bucyrus, now owned by Caterpillar (CAT.N) 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