The Chinese contract for building four nuclear reactors at an estimated cost of $8 billion to Westinghouse, now owned by Toshiba Corporation, is a good template to view the potential business implications of the lifting of the Nuclear Suppliers Group (NSG) embargo on India.
The Expert Committee report on Integrated Energy Policy approved by the National Development Council last year has two estimates for India’s nuclear power industry in 2020. The higher one of 29,000MW is based on 8,000MW capacity coming from imported pressurized water reactors (PWR), two of which are already being set up by Russia in Koodankulam, Tamil Nadu. As of now, the import estimate is six more reactors, though this could be revised.
Till now, nuclear technology and material denial have been the Indian nuclear power industry’s main hurdles but it will now have to confront more humdrum problems — managing the financial negotiations and management of nuclear power plants which could be in the private or joint sector. G Balachandran, technology consultant, points out that till now, foreign equity for nuclear power plants was banned “but I don’t see foreign or even domestic private capital coming in without power purchase agreements”. Gurarateed purchase of power at a certain cost needs better management of the power sector.
The Russians have the first mover’s advantage with their two 1,000 MW PWRs coming up. Their $2.5 billion loan will be enough to cover some 85 per cent of its cost. Four more reactors can come up at the site and the existing deal could be the base to facilitate another for four more reactors.
Countries like the US will not be able to avoid the lengthy process of negotiating the price and financing of the deal, and the issue of local content and technology transfer. Only then will they reach the stage of environmental and other clearances, design, land acquisition and construction.
On a recent visit to India, US Undersecretary for International Trade Franklin Lavin was accompanied by 250 US businessmen, of whom 30 were directly linked to the nuclear industry. During the visit, officials like Ron Summers of the US-India Business Council were cited as saying that there could be at least $100 billion worth of investment in the nuclear energy field in India over the next 20 years.
A more realistic estimate in the report of the Senate Foreign Affairs Committee in July 2006 said that benefits to the US would "depend on the number of reactors India imported from the US, the ability of US reactor vendors to compete with foreign suppliers… and the US content of any reactor supplied by non-US vendors”.
French nuclear major Areva is also in the race. It’s chief Anne Lauvergeon was in India in July and the company t has reportedly identified some potential sites. The French advantage lies not only in their high-technology and high-capacity 1,600 MW PWR, but in the fact that they already have a presence in the Indian market through a subsidiary.
Most countries expect that once the NSG lifts it’s embargo, the field will be level for all major nuclear exporting countries. Yet, says Balachandran, in besting the French and Russians in China, the US has shown it can’t be written off.
Their strength is in financial closures and big construction management and they could use the joint venture route to smoothen their passage into India. Changed US export control laws can enable them to set up or export the non-reactor part of nuclear power stations — generators, transformers control panels and the like, even before the actual reactor and nuclear fuel issues are clinched.