Washington, D.C./New Delhi, April 8, 2008
- IFC, a member of the World Bank Group, today received approval from its Board of Directors to invest in Coastal Gujarat Power Limited’s Tata Mundra project, helping expand access to electricity in five states of western and northern India. The project’s 4,000-megawatt, coal-fired power plant is expected to supply affordable power to industrial and agricultural users and serve 16 million domestic consumers.
The World Bank Group’s Clean Energy Investment Framework highlights that better access to energy services and higher energy use by developing countries are fundamental to the development goals of the Bank Group and our client countries. The Bank Group is working to balance these energy needs with concerns about climate change.
Within this framework, IFC is prioritizing investments in renewable energy around the world: it is tripling its renewable energy and energy efficiency investments over the next three years, supporting improvements in energy efficiency through financial intermediaries, and helping increase efficiencies in transmission and distribution. With fossil fuels likely to remain a key contributor to the world’s electricity needs, IFC intends to support only highly efficient coal-fired projects, such as Tata Mundra, that have a relatively lower carbon footprint than existing coal plants.
India faces power shortages that leave more than 400 million people without access to electricity, mainly in poor rural areas. The country needs to expand generation capacity by 160,000 megawatts over the next decade, and this new project helps address this gap. While the plant will emit 23 million tons of CO
2,
its use of supercritical technology will make it India’s most efficient coal-fired plant. The intensity of the plant’s carbon emissions is expected to be 40 percent less than the average of existing coal-fired plants in India and 16 percent less than the average of coal plants in OECD countries. Its competitive tariff will also improve access to energy for many low-income people in the country.
Rashad Kaldany, IFC Director for Infrastructure, said, “This is an important project because we believe it will encourage other developing countries to make responsible choices, using best available technologies and applying higher environmental and social standards. India should be commended for requiring the use of super-critical technology for very large coal-fired power projects.”
Paolo Martelli, IFC Director for South Asia, said, “We are pleased to support this project, which reflects the World Bank Group’s strategy to help India’s power sector increase energy access and rural connectivity, while improving transmission and distribution efficiency.”
The first of the power plant’s 800-megawatt units is expected to be commissioned in mid- 2011, with the other units launching at intervals of four months each. The plant will create 5,000 jobs during construction and 700 jobs once it is operational.
IFC has played a lead role in structuring this large and complex transaction and meeting the project’s funding needs. Of the total project cost of $4.2 billion, IFC will provide $450 million with a 20-year tenor—long-term financing that improves the risk profile of the project and complements the commercially available financing from local banks of around 15 years maturity.
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information about IFC, visit
www.ifc.org
. For more about the project, visit
www.ifc.org/southasia
.
About Coastal Gujarat Power Company
Coastal Gujarat Power Company is wholly owned by Tata Power. Tata Power is active in the India’s power sector through the ownership and operation of independent power producers, captive power plants, transmission lines, and distribution systems under a partnership with the public sector.
