New Delhi: The US Export-Import (Exim) Bank is inquiring into construction safety, community resettlement and greenhouse gas emissions from Reliance Power Ltd’s Sasan power project after concerns were raised by local residents and environmental groups such as the Sierra Club.

The bank had authorized $917 million (around 4,869 crore today) in financing in October 2010 for the 3,960 megawatts (MW) Sasan project being built in Madhya Pradesh, but the amount was subsequently reduced to $650 million. While the transaction has been authorized, it is not yet operative, according to the bank.

“We have received correspondence from local stakeholders in India and US NGOs (non-governmental organizations)," a spokesperson of the bank wrote in an email on 2 October. “The correspondence expressed various concerns, including the project’s level of greenhouse gas production, the quality of local-resident resettlement, and project construction safety."

There was some early reluctance over providing the funding. On 24 June 2010, the bank had held back approval on concerns over greenhouse gas emissions from the coal-fired project but later relented after the Reliance Group led by Anil Ambani gave assurances of developing green energy projects near the plant, PTI news agency reported in August 2010.

The Sierra Club, the largest US environmental group, opposes the plant because it wants the money to go towards clean energy and help the world’s poor, Washington representative Justin Guay said over phone on 12 October.

“The Sasan project doesn’t meet any of these criteria. There have been serious issues raised about safety, local environment and social impacts and displacement of people with regard to this project," Guay said.

A Reliance Power spokesperson didn’t respond to queries emailed on 9 October.

The funding at attractive interest rates involves Reliance buying mining and associated equipment from US firms that include Wisconsin-based Bucyrus International Inc.

Since the US wasn’t building any new coal plants, it didn’t make any sense to give outdated technology to the rest of the world, according to Guay. “US administration and US dollars shouldn’t support such a project," he said.

Reliance Power has already started mining coal at fields associated with the Sasan project.

“Forests have been destroyed. Water sources are being exploited to extract all the water. The farming in the area has been affected in a big way," Awadhesh Kumar, president of Srijan Lok Hit Samiti, a local non-governmental organization, said over the phone on Monday. The disposal of fly ash generated by the plant will also create a problem for local people, Kumar said.

Whatever the merits of the concerns at Sasan, US-based NGOs shouldn’t campaign on issues that could make it harder for India to increase its energy capacity, said Kushal P.S. Yadav, programme director for renewable energy at Centre for Science and Environment, a New Delhi-based activist group.

“I am not saying coal is good but if the US wants us to have solar and wind, then they should pay the incremental cost for it," Yadav said. “I am not saying Sasan is perfect. The Indian authorities should make sure that lives and livelihoods are not affected and that’s an internal issue."

This isn’t the first Indian utility that has come under the emission scanner. The Washington-based Center for Global Development, a policy and research organization, has identified state-run NTPC Ltd as one the largest polluters among the world’s power utilities.

India wants to set up 16 big power plants capable of generating some 4,000MW of electricity each to help bridge the country’s power deficit. Four of these have been awarded—Mundra in Gujarat to Tata Power Co. Ltd, and Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand to Reliance Power.

“We continue to monitor the project to ensure that the sponsors are adhering to environmental guidelines, which contain criteria established by the World Bank Group that addresses resettlement and labour and working conditions," the US Exim Bank spokesperson said on 2 October.

“We have initiated inquiries into the concerns raised and continue to monitor the project sponsors’ compliance with our environmental guidelines."

Reliance Power has sued HT Media Ltd, publisher of Mint, in the Bombay High Court over a 12 May 2010 front-page story in Mint that it disputed. HT Media is contesting the case.

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