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World Bank approves $180 million `clean power' loan for India news
19 June 2009

The World Bank has approved a $180 million loan to India for renovation and modernisation of its old, inefficient and polluting coal-fired power plants. The project, which is expected to lower carbon emissions and boost power production at these plants, is co-financed with a 45.4 million grant from the Global Environment Facility (GEF).

The planned modernisation, spread over a 10-year period, would bring these power plants to energy efficiency levels comparable to similar units in OECD countries, the World Bank said in a release.

The project will rehabilitate and modernise around 200-220 MW of capacity at each of the three coal-fired power plants at Bandel in West Bengal, Koradi in Maharashtra, and Panipat in Haryana, under the first phase.

Under the National Renovation and Modernisation Programme, India proposes to rehabilitate old and inefficient power plants with a cumulative capacity of 27,000 MW, or almost one-fifth of the country's installed power capacity of 145,000 MW, over the next decade.

"Modernization of these plants can improve their efficiency by about 10 to15 per cent," said Mikul Bhatia, World Bank energy specialist and project team leader. "The bank-supported project alone will help India reduce its direct greenhouse emissions by almost half a million tonnes of CO2 equivalent each year. If scaled up effectively to the remaining similar units needing rehabilitation, India could be looking at emissions cuts anywhere between 10 to 13 million tonnes of CO2 equivalent each year," he added.

In addition to helping reduce carbon emissions from these units, the project will also support efforts to control particulate emission, and improve water treatment and ash disposal at the plants, leading to better environment conditions for people living in the vicinity, the bank said.

"A parallel focus on better operations and maintenance practices in the plants will help sustain the improvements made through the renovation and modernisation effort," it said, adding, "This combined emphasis will allow India to adopt a lower-carbon path to energy generation by modernising its coal-fired plants and enabling them to add cheaper and cleaner electricity to its grid."

The loan from the International Bank for Reconstruction and Development (IBRD) has a 30-year maturity, including a 5-year grace period.

This would be the first step in a decade-long Government of India plan to augment power supply by rehabilitating a range of old coal-fired plants even as the country moves to more climate-friendly options for energy generation in the long term.

India hag a huge power shortage. More than 40 per cent of Indian homes do not have electricity and 60 per cent of Indian industrial consumers are forced to make their own arrangements for securing a reliable power supply.


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World Bank approves $180 million `clean power' loan for India