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Unleashing India’s nuclear potential

February 10, 2009 Leave a comment Go to comments

Bhaskar Balakrishnan in The Hindu Businessline

February 10, 2009

Major players in India and abroad are gearing up for participation in the nuclear power sector. The Government needs to carry out major policy reforms in consultation with the industry and other stakeholders to harness the full potential after the end of India’s nuclear isolation, says BHASKAR BALAKRISHNAN.

The signing of the India specific safeguards agreement with the International Atomic Energy Agency (IAEA), and the MoUs concluded between Nuclear Power Corporation of India Ltd (NPCIL) and Areva of France on uranium supply, and the construction of two advanced reactors are a welcome start to the momentous Indo-US nuclear deal and the NSG waiver.

NPCIL has secured the badly-needed fuel for its power plants. Major players in India and outside are gearing up for participation in India’s nuclear power sector, which seems set for massive growth in the future. But more steps are needed to unleash the tiger of the Indian nuclear industry.

The new upgraded target of 63 GW of nuclear power by 2032 from the present 4 GW represents an ambitious undertaking. The present total electricity production is 147 GW, with heavy transmission and distribution losses depriving the economy of its full value. The previous modest target of 20 GW by 2020 was raised to more ambitious levels following the end of India’s nuclear isolation.

China, in comparison, has 11 operating power reactors of 9 GW capacity (2 per cent share of total power generation) and plans to raise this to 70 GW (5 per cent share) by 2020 and further to 250 GW (16 per cent share) by 2030. Plants now under construction represent additional 27 GW capacity. China plans to open up the sector to foreign investment with controlling interest to remain in government hands. Russia has also indicated it will open up this sector to domestic and private investors.
European Pressurised Reactor

The MoU just inked is for Areva’s latest third-generation European Pressurised Reactor (EPR) of 1,650 MW capacity, eight times larger than NPCIL’s current range of 220 MW units.

Its features include increased safety and economic competitiveness; use of 5 per cent enriched uranium oxide fuel, optionally with up to 50 per cent mixed uranium plutonium oxide fuel; four independent emergency cooling systems, each capable of cooling down the reactor after shutdown; a two-layer concrete wall with total thickness 2.6 metres designed to withstand impact by airplanes and internal overpressure; and a service life of 60 years significantly reducing costs of decommissioning.

The first EPR, being built by Areva-Siemens consortium in Olikuoto, Finland, since 2005 has faced technical and other problems resulting in cost- and time-overruns. Completion is expected by 2012 with a three-year-delay and the cost has increased by over 25 per cent resulting in the case going into arbitration. The second Areva EPR is being constructed in Flamanville, France, since 2007, at a project cost of €3.3 billion, and is expected to be completed in 2012, despite anti-nuclear protests.

In late 2007, a major $12 billion contract was signed for the construction of two EPRs at Taishan, Guangdong province, China, as well as for fuel supplies of 600 tonnes of uranium per annum from start-up in 2014 to2026. This deal also includes EDF of France financing 30 per cent of the project in return for an equity stake.
Challenges for NPCIL

The proposed mega nuclear power complex at Jaitapur is planned to be implemented by NPCIL and Areva. Two EPRs of 1,650 MW each are envisaged in Phase I, with the addition of four EPRs at a later stage. Some 940 hectares of land are being acquired for the project near the small fishing hamlet of Madban in Rajapur taluk of Ratnagiri district.

A nuclear reactor of the type to be built by Areva (the latest generation European Pressurised Reactor of 1,650 MW capacity) is likely to cost about $5 billion and take around six years to build, from the start of construction.

Environment impact

Construction can start after land acquisition, environmental clearances, and financial closure have been achieved. These are no easy tasks for a mega project of this nature, as India’s previous experience indicates. The Jaitapur-1 EPR reactor will pose challenges for NPCIL.

The National Environmental Engineering Research Institute (NEERI), Nagpur, is preparing an environmental impact assessment study covering 25 km radius from the site, based on which NPCIL will seek clearance from the Ministry of Environments and Forests for the project. The site falls in seismic zone four, not far from Latur, which had a major earthquake in 1993.

Opposition to the nuclear plant at Jaitapur is likely to come from environmental activists supported by anti-nuclear groups from abroad. Issues such as impact on marine ecology of coastal Ratnagiri due to warm sea water discharges of approximately 60 cubic metres per second from each EPR at a speed of 4 metres per second, which could affect the ecology of 3-5 sq km of the sea, will need consideration.

The way these issues are handled will have an important bearing on the future growth of the nuclear industry in India. NPCIL would be well advised to deal with such issues through transparent and open discussions with stakeholders well in advance to clear the air.

The AERB will need to gear up to play a crucial role in generating public confidence that environmental concerns are adequately met.
Financial closure

Financial closure for the two EPRs at Jaitapur will involve large investment of around Rs 45,000 crores spread over a period of six-seven years. In addition there are other ongoing projects being executed by NPCIL, for which resources have to be provided. Financial closure is intimately linked to various factors, such as interest and exchange rates, tariffs, and guarantees, and is likely to pose problems, especially in a turbulent economic scenario. The experience of the first EPR project in Finland needs to be kept in mind.

Financing for India’s ambitious nuclear power programme cannot be provided by the government or public sector alone. The sector has to be opened up to private participation and investment by domestic and foreign companies. This will ensure the healthy growth of the industry, with access to latest technology, and competition among the various players.

Indications are that the government is considering allowing up to 49 per cent share to private partners, but even raising resources for the 51 per cent shareholding is difficult, and this issue may have to be revisited.

We will have to compete with China for investment and fuel supplies. The DAE would have its hands full in dealing with the strategic programme, and in implementing the FBR — thorium-based fuel cycle, in which India alone has key interests.
Gaps to be plugged

The absence of a legal framework for civil nuclear liability is another constraint to growth. India is not so far a party to the relevant international conventions. There is also no specific domestic legislation on civil nuclear liability or insurance coverage of comparable scope, as in the case of the US or China. This gap needs to be addressed to improve the climate for foreign participation in the sector.

The nuclear power sector is part of the overall power market. Therefore, tariff-fixing mechanisms need careful consultation and discussion among all stakeholders to be independent, fair and transparent, with mechanisms for redress. In broader terms, the existing Atomic Energy Act, 1962, as last amended in 1987, will need to be comprehensively reviewed and updated.

The Government needs to carry out major policy reforms in consultation with the industry and other stakeholders, in keeping with the possibilities opened up after the end of India’s nuclear isolation. Only then will we be able to unleash the tiger of the Indian nuclear industry.

(The author is former Ambassador to Cuba and Greece.)

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