US nuclear firms close in on Indian market - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 10 December 2009

US nuclear firms close in on Indian market

by Ajai Shukla
Business Standard, 11th Dec 09

India’s nuclear power generation programme is now amongst the highest stakes markets in the world. With plans to generate 60,000 MWe (megawatt electrical) by 2030, up from just 4120 MWe today, India will need more than 50 nuclear reactors, allowing for a generating capacity of 1000 MWe each.

With each nuclear reactor costing US $4-5 billion to set up, capital costs alone add up to $200-250 billion. Then there are fuel costs, nuclear waste disposal, reprocessing, consultants and advisors and, of course, the financial market aspects of raising all that money.

For the Russian and French state-owned nuclear power industries, the Nuclear Suppliers Group (NSG) waiver that followed the US-India nuclear deal opened the doors to the Indian market. But America’s private corporations --- including GE-Hitachi and Westinghouse, the technology source for two-thirds of the world’s operating nuclear reactors --- are still held back by US laws.

And so, even as Russia and India signed an agreement last week, in Moscow, on Cooperation in Peaceful Uses of Atomic Energy; an American delegation of 50 top executives from that country’s leading nuclear suppliers began a six-day visit to India.

Three steps to business

Just three steps remain to be taken before they can commence business with India: a US-India agreement on reprocessing nuclear fuel; a Part 810 Assurance that India must provide for safeguarding technology; and an Indian liability law to cater for nuclear accidents.

The first of these, the Reprocessing Agreement is not required by US law, but India insisted that both countries sign this agreement so that, even if Washington imposes sanctions, India’s fuel supplies remain assured. Both sides hoped to sign it during Prime Minister Manmohan Singh’s visit to the US last month; the final draft, however, is believed to be ready now. Washington has only signed reprocessing agreements with Japan and Euratom; both took years to negotiate.

The second step remains the Part 810 Assurance, which the US Department of Energy requires from foreign governments that wish to source nuclear materials or technologies through US companies. Licenses are issued to US suppliers only after the recipient government pledges to use the acquired technology exclusively for peaceful purposes and that it will not re-transfer it to another country without the consent of the US government.

The final step remains the enactment of a Nuclear Liabilities Bill, which has been passed by India’s union cabinet and will be introduced in parliament during the winter session. This domestic legislation is essential for India to join the Convention on Supplementary Compensation (CSC), a worldwide liability regime for paying enhanced compensation in the event of a nuclear accident or disaster. The CSC functions like an insurance mechanism, with member countries paying an annual amount based upon their nuclear power generation capacity. In the event of a major accident, the CSC assists in the payment of enhanced compensation from a global pool, which is maintained through annual contributions from member countries.

This legislation specifies that legal jurisdiction in the event of an accident will lie within India. The domestic liability bill forms the first tier of compensation, which is handled in country. Tier-2 compensation, in the event of a major accident, is paid through the CSC. While imposing a limit of approximately US $450 million on the compensation payable in an accident, this framework guarantees speedy disbursement of compensation.

"All three close to settlement"

Each of these three requirements, believes the US delegation, is close to settlement. Ted Jones of the US India Business Council (USIBC), which has brought this delegation to India, points out, “Though Washington and New Delhi signed the 123 Agreement a year ago, the process only began in July 09 because of elections in both countries. But since Hillary Clinton’s visit in July, we are already on the brink of resolving all three implementation issues.”

While Russian and French nuclear suppliers --- Rosatom and Areva respectively --- have begun early, the US delegation in New Delhi does not believe it is missing out in the Indian market. “We spoke yesterday to Mr R Chidambaram, the PM’s Scientific Advisor, and it is clear that there is space for everyone”, said one American executive. “India needs multiple sources, multiple partners and multiple technologies. India needs to do business with everyone to meet those needs.”


  1. "capital costs alone add up to $200-250 billion" for a 4-5 Billion Dollar Plant?

  2. Ajai sir

    Whatever you say is ok.

    But we know the Bhopal carbide plant had a unproven design, and as far as I remember no new nuclear plant for power generation has been setup in perhaps 2 decades in the US.

    Q1. So how can the US co. bid for setting up huge 1000 mw plant without experience.

    Q2 What will happen in case of a accident, similar to bhopal gas tragedy.

    Q3. In case its found that US companies are at fault, can we demand compemsation.

    Q4. Can we the same as we did with RAPS 1 or 2 sometime back with these imported reactors.

  3. Jerry:

    You're clearly the mathematician on the blog! 50 nuclear plants at 4-5 billion per plant equals what?


    Not installed in the US does not equal not installed anywhere!

    Why don't you google Westinghouse nuclear and get a feel of how many of their plants are being set up worldwide.

    Pay particular attention to the AP1000 reactor... that's what's going to power a considerable chunk of India starting 2018.

    To answer your questions about compensation, it is already impossible to win a compensation case in a foreign courtroom for an industrial accident in India. The Union Carbide case is a perfect example.

    So it's $450 million maximum per accident. Jurisdiction in India. You don't like it? Okay... don't do trade with the US. There are other options.

    Legally, the vendor of a plant is not liable for any damage caused by it. The operator is liable, i.e. the Nuclear Power Corporation of India will be liable, since they operate the reactors.

    And that is just as well, since most accidents can be traced back to the operators, not because of design flaws in the plant. Take the case of Kaiga...

  4. Ajai ji

    Well said regarding Bhopal Gas tragedy.

    Also,Any Updates regarding the MMRCA...long time no news anywhere in the media also :(

  5. ah ok, total capital costs for all reactors. sorry, somehow i thought you meant the capital costs per reactor. mea culpa!

  6. Ajai Ji,

    I am a new reader of your blog. Within this last 3 months, I have read almost all your previous articles.

    I recently heard that LCA achieved a speed of 1350 KM per hour. I think it was designed for 2150Km per hour. It is an engine problem or a design problem in other area.
    Is this one of the reason why IAF is asking for mark 2 versions?


  7. Jaya Prakash:

    The LCA Mk-1 achieved a speed of 1350 kmph at sea level. The max design speed that you are talking about can be achieved at very high altitudes. There is no problem here. Even the twin-engined Su-30 MKI has a max near ground speed of 1350 kmph only.

  8. Why don't we invest in solar power ?Its eco-friendly & India receives one of the highest incident solar radiation. Agreed that the initial capital investment is a little high & it requires more space,but it is way cheaper compared to nuclear power in the long run & there are no safety hazards. Also we don't have to worry about some stupid American or European sanctions.
    The government we have now just cannot think independently & is too eager to toe the USA's line. God save us


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