The Asian Development Bank (ADB) said Friday it has approved a loan amounting to $450 million to build a 4,000-megawatt, energy-efficient coal power plant in India.
The Manila-based bank said it executed the loan agreement with Coastal Gujarat Power Ltd, which is to build, own and operate the Mundra Ultra Mega Power Project in the western state of Gujarat.
"The project will not only provide a significant volume of additional electricity to address shortages, it will also promote private investment in power and show good practice in building and financing large-scale power projects in India through public-private partnerships," said Takeo Koike, an investment specialist with the bank.
The lending institution said the power plant would use technology that improves the conversion efficiency of fuel to electric power to 44 percent compared with 34 percent to 36 percent for conventional coal-fired power plants.
"India will be dependent upon coal as fuel for a large portion of its power generation for the foreseeable future as it has no other practical alternatives," Koike said.
"The issue is thus to ensure cleaner coal technology is deployed to minimize environmental impacts, including emission of greenhouse gases," he added.
Ultra mega power projects were launched by the Indian government to achieve rapid additions to the country's electricity generation capacity and competitive tariffs through economies of scale.