India Utilises Slowdown for Nuclear Shopping

Not only the economic meltdown will enable New Delhi to buy reactors at far lower costs, but also ensure the viability of existing, and future nuclear power plants

With the NSG opening up the global market, it is believed India has a wide choice of suppliers, and can source uranium for its 17 nuclear plants, and help sustain Plant Load Factor (PLF) from the current 54 per cent to 80 per cent.

But there are serious concerns as the capital costs for new projects is expected to be significantly higher than what has been seen in the global power industry so far.

Special envoy to prime minister Manmohan Singh and former foreign secretary Shyam Saran told Khaleej Times on Tuesday, “This (economic slowdown) is an opportunity India should cash in on before the window closes as the global crisis abates.”

He said in the current situation the nuclear deal would enable India to hammer out reliable, and sustainable deals with the NSG countries.

Terming the economic crisis as a ‘blessing in disguise’ for India’s nuclear power programme, Saran said the country would be able to source nuclear reactors, technology, and material at a far lower costs.

“There has been a significant slowing down of sourcing of nuclear plants by the advanced nations, particularly the OECD (Organisation for Economic Co-operation and Development) countries,” he said.

“We are seeing signs of softening of the uranium market. If we amend the Atomic Energy Act, and bring in legislative amendments to smoothen the pace of fuel and technologies supplies immediately, we will benefit enormously,” he said.

It is said the time was ripe to seize the opportunity for nuclear power investment that requires an investment of $160 billion over the next 10 years.

Though efforts are being made to liberalise the Atomic Energy Act, and harmonise export control regulations, difficult times for India cannot be ruled out. It is fairly acceptable that the nuclear industry has been hit much harder of late. The nuclear power plant construction around the world has dropped from 10 a year, before the Chernobyl accident, to less than four a year presently.

Credit-rating agency Standard & Poor has stated in a report that the nuclear construction industry is particularly prone to price spurts from transportation tailback and fuel-price swings because nuclear units require a significantly higher amount of material than other types of power assets.

The agency has asserted that the “regulatory constraints and resource mobilisation continue to draw attention to the perils and uncertainties of building new nuclear reactors, and as the (Indian) utilities start digging into the details they are finding expansion of their nuclear reactors would cost them much more than originally thought.”

S&P has pegged the latest cost of building a new nuclear reactor at $5,000 to $8,000 per kilowatt, which is much in line with the $7,000 per kilowatt figure that Moody’s Investors Service estimated in view of the Indo-US civilian nuclear agreement.

Also demand for India alone cannot spur production of reactors, at a time when there are doubts about the liabilities to worldwide nuclear power sector from US and Europe.

It is widely believed that the costs have jumped so quickly the suppliers no longer wanted to publicly commit to estimates. In such a case, the earlier India pay for reactors the better the bargain.

Its nuclear power projects are seriously plagued by incessant technological and fiscal delays. Nonetheless, this slowdown can bring in a cheer or two, if not three.

ravi@khaleejtimes.com