Power ministry secretary M M C Ferdinando said a location study is now being conducted following concerns raised about the site.
"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.
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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