Tag: Reliance Power

Ex-Im Bank: Starting to Get Things Right, Slowly

From The Milwaukee Journal-Sentinel and reporter Rick Barrett, who have done an excellent job with this story, “Snail’s pace of Bucyrus loan worries officials“:

The U.S. Export-Import Bank on Wednesday took the first step toward reversing an earlier decision that had put up to 1,000 U.S. jobs and $600 million in Bucyrus International Inc. sales at risk. But the process is taking so long, Bucyrus’ chief executive is worried the contract still could disintegrate, sending the orders – and jobs – to China. 

The bank, which earlier had refused to finance the sale of Bucyrus coal-mining equipment for a power plant in India, on Wednesday voted 3-0 to put the sale back on track. Two more votes remain – one on the project’s financial aspects, and the other for final approval. There’s also a 35-day period during which the deal will be sent to Congress for comments. 

The delays are a concern, said Bucyrus CEO Tim Sullivan, who says the Indian power plant operator, Reliance Power Ltd., could grow frustrated and turn to China or another country for mining equipment since it needs the shovels, draglines, trucks and other gear in early 2011. South Milwaukee-based Bucyrus also needs to start making the equipment soon to meet Reliance’s timeline. 

The story quotes the NAM’s Pat Mears, recounting how the Ex-Im Bank is less aggressive than its foreign counterparts in promoting exports.

Here’s the Export Import Bank’s news release, “Ex-Im Bank Approves Preliminary Review of Export Financing Application for India’s Sasan Power Plant.” Unfortunately, the official statement shows the Bank to be still paying obeisance to the self-imposed environmental dictates that sidelined the project in the first place.

“We are pleased that Reliance is making this commitment to renewable energy, which allows us to sustain U.S. jobs and promote both conventional and renewable energy exports,” said Ex-Im Bank Chairman and President Fred P. Hochberg.

Chairman Hochberg also noted that, “this transaction was also made possible because of Anil Ambani’s leadership and vision in diversifying Reliance Power’s production portfolio of energy projects in India. Reliance Power’s efforts will benefit the people of India and Ex-Im’s efforts will benefit U.S. energy exporters.”

So Reliance Power in India is also doing just enough in the way of alternative energy projects to give the board cover for voting for this specific financing. But the loyalty to environmentalism remains, institutionally limiting the Export-Import Bank’s ability to carry outs basic mission — supporting U.S. exports.

How in the world could the Ex-Im Bank vote down financing for a solid project in the first place, costing a potential $600 million in sales and 1,000 job? Especially now, as the Milwaukee Business-Journal reports, “Milwaukee loses one-third of manufacturing jobs in 10 years: “The Milwaukee metropolitan area has lost 54,800 manufacturing jobs over the last 10 years, the 15th-biggest drop among the largest 100 metros in the country, according to a new Business First of Buffalo analysis.”

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Disputed Loan Guarantees Aside, Ex-Im Bank Should Do More

The National Association of Manufacturers has been vocal in calling for the Export-Import Bank to reconsider its 2-1 vote denying loan guarantees for a power generation project in India, a denial that could cost Bucyrus, the Wisconsin-based equipment manufacturer, and its suppliers some $600 million in sales and 1,000 jobs. (See earlier posts.)

This one, misguided decision aside, there are bigger issues affecting the Export-Import Bank that need to be addressed. NAM President John Engler addressed some of them in a new op-ed published at The Hill, “Rejecting U.S. deals and jobs undermine goal of doubling exports“:

Governments of other nations operate similar export-financing programs, but with more substantial government backing and without attaching as many anti-competitive restrictions to projects.

Ex-Im Bank’s financial support for exports reached a record $21 billion last year. But its counterpart north of the border, Export Development Canada, provided $80 billion to support Canadian exports, an even more impressive number when you consider the relative size of the U.S. and Canadian economies.

Japan’s equivalent agency did nearly $140 billion in support last year!

The Export-Import Bank is also is saddled with restraints that its competitors are not — environmental impact studies, economic impact tests, requirements that U.S.-flagged vessels carry the financed cargo, etc. These non-trade objectives are well-meaning but surrender advantages so other countries get their power plants and other equipment but from non-U.S. suppliers using non-U.S. financing.

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Ex-Im Bank Decision Costs Jobs, Does Nothing for the Environment

From The Milwaukee Journal-Sentinel, “U.S. agency’s action may kill Bucyrus deal, cost 1,000 jobs

MILWAUKEE — Up to 1,000 jobs at Bucyrus International Inc. and its suppliers could be in jeopardy as the result of a decision by the U.S. Export-Import Bank, funded by Congress, to deny several hundred million dollars in loan guarantees to a coal-fired power plant and mine in India.

About 300 of those jobs are at the Bucyrus plant in South Milwaukee, where the company has 1,410 employees and its headquarters. The remaining jobs are spread across 13 states, including Illinois, Minnesota and Indiana.

On Thursday, the Export-Import Bank denied financing for Reliance Power Ltd., an Indian power plant company, effectively wiping out about $600 million in coal mining equipment sales for Bucyrus, chief executive Tim Sullivan said.

NAM President John Engler spoke to the Export-Import Bank chairman, Fred Hochberg, on Monday, and issued a statement following the conversation:

This is a case of ideology winning over common sense and one thousand American jobs. The mine will be dug and the plant will be built. Advanced technology will be put to use to minimize the environmental impact. The only question is whether U.S. companies will supply the equipment or if Reliance Power will turn to non-U.S. suppliers.

In Wisconsin and all across the country, American workers think the answer to that question should be clear.
(continue reading…)

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