India Prepares to Pay Billions for Nuclear Reactors

May 22 - International Herald Tribune

India could pay suppliers like General Electric 1.8 trillion rupees for nuclear reactors to meet energy demand once an international ban on the sale of the technology ends, an Indian official said.

Areva of France, Electricite de France and Westinghouse Electric of the United States are among the possible providers of 25 to 28 reactors by 2020, the official, S.K. Jain, chairman of Nuclear Power Corp. of India, said in an interview in Mumbai last week. Such an investment would be worth $40 billion

President George W. Bush has asked Congress to end nuclear technology sanctions against India, while the Nuclear Suppliers Group, including Russia, Japan and Australia, could end a halt to the export of equipment and materials for atomic use. That would start a contest for contracts to install 40,000 megawatts of capacity, enough electricity for four cities the size of New York.

"We are very confident the deal and all the agreements will go through," Jain said. "As an outcome of that, India will have access to the global nuclear technology market."

India is turning to overseas nuclear-reactor builders after Prime Minister Manmohan Singh doubled the nation's 2020 capacity target from an initial 20,000 megawatts. India's own atomic power program, initially based on Russian technology, will not cope with the increased construction plan, Jain said.

The program was also limited because of a uranium shortage caused by the international embargo on sales of the reactor fuel. Once sanctions end, supplies of enriched uranium will be included in contracts to install reactors, Jain said.

The sanctions were prompted by India's testing of a nuclear weapon in 1974. The explosion in western India prompted the formation of the Nuclear Suppliers Group, of which the United States is also a member. Another round of tests by India in 1998 led to the United States choking trade with India by disallowing the Export- Import Bank and Overseas Private Investment Corp. to guarantee loans for projects in India.

The U.S. removed the economic sanctions in 2001 after the terrorist attacks on Sept. 11 to bolster support for its campaign against terrorism. The U.S. decision to give India access to civilian nuclear technology was initiated during Singh's visit to Washington in July and concluded during Bush's visit to India seven months later.

The agreement, which needs the approval of the U.S. Congress, will help India develop its nuclear power industry to increase energy generation. India is seeking to raise output at its atomic power plants, which account for about 3 percent of generation, to reduce reliance on oil and coal.

"We cannot depend on one source to meet all our energy needs," said V. Raghuraman, senior adviser on energy at the Confederation of Indian Industry, India's largest industry organization. "We need nuclear power as conventional sources are getting scarce and as environmental norms are getting stricter."

Indian demand for nuclear reactors is enough for all companies "to have a piece of the cake if they participate in our program," Jain said. "We are looking at huge investments, all by 2020."

Nuclear Power Corp. has held initial talks with Areva, the world's biggest builder of nuclear power stations, Electricite de France, General Electric, Westinghouse and the Russian government, Jain said.

India may open investment in nuclear power to other local companies, Jain said. The investor-owned Tata Power and Reliance Energy and the state-run NTPC have indicated interest.

"The Atomic Energy Act does not permit investments by other companies," Jain said. "The act will have to be changed because the business will require multiple players."

India is building two reactors with Russian help under an agreement signed by the two governments in 1988.

As a market for new nuclear reactors, India's only rival is China. China plans to increase its nuclear-power capacity to 36,000 megawatts by 2020 and will require an estimated 27 new 1,000- megawatt reactors costing about $2 billion each, according to an estimate by Yu Jianfeng, a director at China National Nuclear Corp.

In recent speeches, Bush has said India and China offer business prospects for Americans.

"India's growth is creating new opportunities for our businesses and farmers and workers," Bush said in February. "India's middle class is buying air conditioners, kitchen appliances and washing machines, and a lot of them from American companies like GE, and Whirlpool, and Westinghouse."

India plans to set up nuclear parks where it can house more than 8,000 megawatts of power generation capacity at one site. Nuclear Power Corp. has already selected a coastal site at Jaitapur in the western state of Maharashtra, Jain said.

Another three coastal sites will be chosen before the end of the year, he said. Nuclear Power Corp. has made provisions to add six more reactors of 1,000 megawatts each at its Kudankulam unit in the southern state of Tamil Nadu, where it is building two units of 500 megawatts. It can add two more units at its Tarapore site in Maharashtra, Jain said.

"Sites are available for setting up 14,000 megawatts right away," Jain said. "Land will not be a problem for foreign collaboration projects."

India will open all its new reactors for inspection by the International Atomic Energy Agency, Jain said.