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Rediff.com  » Business » Loan denial to Rel Power: Obama urged to reverse decision

Loan denial to Rel Power: Obama urged to reverse decision

June 30, 2010 14:14 IST

Barack ObamaAn influential Republican lawmaker on Wednesday urged US President Barack Obama to reverse a recent decision of the EXIM Bank against financing Reliance Power's ultra-mega power project in Madhya Pradesh.

The Exim Bank of the US denied loan guarantees to Reliance's coal-fired power plant and a mine in India last week, citing adverse environmental impact as the reason.

The plant was projected to emit close to 26,000-27,000 tonnes of carbon per annum.

In a letter dated June 29 to Obama, Congressman Jim Sensenbrenner said, "Denying jobs to American workers is no way to address climate change or energy independence."

Sensenbrenner, who is ranking member of the Select Committee on Energy Independence and Global Warming said that the denial, which was recommended by the administration, has nothing to do to with reducing emissions or promoting new technologies or energy sources.

"India will still build the coal-fired plant, just not with US money or equipment," he said.

The mining equipment will still be manufactured, but it will likely be built in China where the associated emissions are much higher, he said.

The Indian power company had already contracted with US-based Bucyrus International for purchasing mining equipment worth approximately $600 million over three years, he said.

The sales agreement was contingent upon the Indian company receiving United States Export-Import Bank-supported financing.

"The Bank, however, denied the loan guarantee despite the fact that the project was within the bank's own limits for greenhouse gas emissions," he said, adding that after the decision, the bank's chairman released a statement citing the administration's 'commitment to transition away from high-carbon investments.'

The immediate effect will be a loss of 1,000 US jobs for Bucyrus International, and its suppliers, Sensenbrenner said.

"The reduced spending from these job losses will ripple much wider--all the result of a single flawed decision stemming from a failed climate policy," he said.

"I urge you in the strongest possible terms to help reverse the decision by the Export-Import Bank. We can and will diversify our energy portfolio and increase US energy independence, but we must do so with common sense, and we must do so in a way that creates US jobs and strengthens the US economy," the lawmaker said in his letter to Obama.

Image: Barack Obama
Lalit K Jha in Washington
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