The Asian Development Bank (ADB) has leant US$ 450 million to Coastal Gujarat Power Limited (CGPL), a subsidiary of Tata Power, to help build and operate the Mundra Ultra Mega Power Project. The coal-fired plant will be the first of several proposed large, high efficiency ‘Ultra Mega Power Projects' (UMPPs) designed to increase India's electricity generating capacity to 100 GW by 2012.

Located in the state of Gujarat, the Mundra scheme will comprise five 800 MW plants, using the latest energy generation technology. According to the ADB, this will mean a conversion efficiency from fuel to electric power of 44%, compared with 34% to 36% for conventional coal-fired plants. This should translate to annual savings of 3 million tonnes of coal, and the avoidance of more than 28 million tonnes of carbon dioxide emissions in the first 10 years of operation.

Takeo Koike, the ADB's Investment specialist in its Private Sector Operations Department said, "This 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."

He continued, "India will be dependent upon coal as a fuel for a large portion of its power generation for the foreseeable future as it has no other practical alternatives. This issue is thus to ensure cleaner coal technology is deployed to minimise environmental impacts including the emission of Greenhouse gasses."

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