Wednesday, February 2, 2011
Nations Seek Out India's Nuclear Mart
Fears over nuclear liability bill don’t materialize
Following the lifting of a 35-year old ban on civil nuclear trade in 2008, India has concluded bilateral nuclear technology and fuel agreements with the countries as diverse as the United States, France, Namibia, Mongolia, Russia, Angola, UK and the European Atomic Energy Community.
The lifting of the ban, engineered by former US President George W Bush, opened a nuclear market expected to total US$140-150 billion in India, which imports almost 80 percent of its energy requirements. Most of that energy is supplied by coal, which is a major contributor to climate change.
It appears that fears have been assuaged over India's newly-enacted nuclear liability law, put in place out of widespread public outrage over the lack of liability in the Bhopal poison gas case. In that case, an estimated 25,000 people died and 500,000 were affected in what has been described as the world's worst industrial disaster. Last June, during deliberations over the nuclear liability law, seven ex-employees at the plant, formerly owned by Union Carbide of the US, were finally convicted of negligence and sentenced to two years in prison, considered a slap on the wrist. American officials of the company were out of reach.
US manufacturers in particular said they would be unable to do business in India because of the law then being considered. As enacted, liability has been capped at US$325 million although it can be passed onto the supplier.
Giving into pressure from America and others, India last November 2010 signed the Convention on Supplementary Compensation for Nuclear Damage (CSC), which aims to structure a uniform global legal regime to channel liability in the event of a nuclear accident
Russia also expressed reservations about India's nuclear liability statutes. A senior executive of Atomstroyexport, Russia's state-owned firm that handles overseas nuclear projects, said: "A decision has not been taken to accept liability. It is a very complicated issue. It is not easy to reflect in the contract documents."
However, during a meeting with French President Nicolas Sarkozy and Prime Minister Manmohan Singh in India in December, Anne Lauvergeon, the CEO of Areva, said that the liability needs only to be "clarified" and is not a "deal breaker."
"It is very important for us to know the rules of implementation (of the liability law)... and the responsibility of the suppliers comes a lot of years after the start of a nuclear power plant," she said. Thus it looks likely today that liability issues are unlikely to stem the flow of investments.
While the US, France and Russia continue to make good progress in inking deals with India in the sector, Canada and South Korea are intent on accessing India's big nuclear market as well. Japan, which has been gingerly entering the market because of its history, in which atomic bombs were dropped on Hiroshima and Nagasaki by the Americans during World War II, is also looking to work out an agreement soon.
US nuclear salesmen are coming off the successful visit to India by President Barack Obama last November, in which more than US$10 billion worth of business deals were signed between US and Indian companies in a wide range of defense and civil aviation fields. Next week, representatives of 24 US businesses, including nuclear power majors, are to accompany US Commerce Secretary Gar Locke back to India to seek more deals.
Australia, however, continues to stick to its stand of not selling uranium to India as the latter is a non-signatory of the nuclear non proliferation treaty. It is unlikely that India will sign the treaty anytime in the near future, however, as it feels that the treaty is biased towards those who already possess nuclear weapons. India's global "nuclear exception" status is courtesy of a US government under President George W. Bush, which pushed the country's case as a "responsible democracy" – apart from the rich business prospects.
India aims to produce 20,000 MW of nuclear power by 2020 and 63,000 MW by 2032. India's atomic energy market is estimated in the range of US$150-200 billion predicted to rise to US$500 billion if plans are implemented. By 2050, 25 percent of India's total energy is expected from nuclear sources. Currently, it is a low 3 percent.
India and Canada should be nuclear partners soon, Canadian High Commissioner Stewart G. Beck said in January. The two countries signed the Nuclear Power Agreement (NCA) in June 2010 that ended the three-and-a- half decade moratorium in civil nuclear cooperation. Beck said that the NCA is likely to be ratified by the Canadian Parliament in February.
"Once in place, the agreement will allow India access to Canadian nuclear technology, equipment and fuel," the envoy said.
Canada slapped sanctions on India after the country tested atomic bombs at Pokhran in 1974 and again in 1998. However, India's multi-billion dollar atomic energy market offers Canadian nuclear industry immense opportunities that it does not want to lose out on.
Two weeks ago, South Korea's Finance Minister, Yoon Jeung-hyun, said his country is also anxious to conclude a civilian nuclear power agreement with India very soon. Yoon was in New Delhi and met his Indian counterpart Pranab Mukherjee to discuss the issue.
The two nations have in principle agreed on atomic trade but still need to formalize an agreement with discussions ongoing between the Korean Nuclear Power Corporation and the state owned Nuclear Power Corporation of India.
South Korea has recently entered the global reactor market. Yoon said that Seoul hopes New Delhi will give its nuclear firms "a fair opportunity as South Korea nuclear reactors are competitive in terms of quality, value and safety as underlined by our US$40 billion reactor contract with the United Arab Emirates."
Last week, former Japanese Prime Minister Yukio Hatoyama said that India and Japan are close to inking a civil nuclear cooperation pact.
"India and Japan have come to a stage of concluding the nuclear cooperation agreement," said Hatoyama, adding that he hoped that India would uphold its unilateral moratorium on nuclear weapons tests.
As US, French and Japanese firms (Areva-Mitsubishi, GE-Hitachi and Westinghouse-Toshiba) are interlinked investors, approval from Tokyo is necessary before enacting nuclear business with India. Thus India and Japan have been holding several rounds of high-level talks to work out a pact. Tokyo's stringent anti-nuclear laws prohibit trade with India because it is has not signed dual use non-proliferation treaties such as NPT and CTBT.
Pressure on Australia
New Delhi, meanwhile, continues to pressure Canberra to revisit its ban on selling uranium to India. On an official visit to Australia earlier this month, India's foreign minister S.M. Krishna said that access to uranium is a "core" issue between the two countries. Australia is one of the world's biggest suppliers of uranium,
"The strategic partnership will not reach its full potential without some progress being made in the area of nuclear energy," Krishna told his counterpart Kevin Rudd, who became foreign minister last September after being deposed as Prime Minister by Julia Gillard. "I would like to hear how the issue evolves in Australia over the next few months."
India Nuclear Progress
Earlier this month, the fourth unit of the 220 MW Kaiga nuclear power plant (NPP) located in the southern state of Karnataka was connected to the southern power grid.
With this, India's nuclear power capacity stands at 4780 MW, with 20 reactors in operation. The installed capacity of Kaiga NPP is 880 MW, making it India's third largest after Tarapur (1400 MW) and Rawatbhata (1180 MW).
Over the last few months New Delhi has been in talks with firms from France, the US, Japan and Russia for the first lot supply of equipment for reactors. The companies include Areva, GE Hitachi, Westinghouse and Rosatom.
Last month, France and India signed framework agreements to set up the first two of the six reactors of 1650 MW each in Jaitapur. The deals were signed between Areva and NPCIL in the presence of visiting French President Nicolas Sarkozy and Prime Minister Manmohan Singh
The total investment at Jaitapur will be in the range of US$25 billion to produce 10,000 MW. Meanwhile, Russia's Atomstroyexport recently said that construction of India's first large NPP at 1000 MW has been completed at Kudankulam in Tamil Nadu.
(Siddharth Srivastava is a New Delhi-based journalist. Asia Sentinel