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Power ministry secretary M M C Ferdinando said a location study is now being conducted following concerns raised about the site.
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"This is a very clean plant where there will be no fly ash and it will be eco-friendly," he said.
The plant is expected to use modern pollutant recovery technology and is expected to cost up to 600 million US dollars, for which funding is expected from Japan.
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It will use 'super-critical' technology where steam is generated at higher temperatures, which will be more efficient (more electricity generated from the same amount of coal) than 'sub-critical' plants that are currently in use.
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