Indo-French nuclear ties go beyond Jaitapur

Nuclear Power Corporation of India Limited (NPCIL), India’s sole nuclear utility, and Areva SA signed a ‘framework agreement’ recently, overseeing the setting up of two EPRs at Jaitapur, Maharashtra.

This has come on the heels of the ministry of environment and forests granting its clearance to the site. While these developments certainly augur well for the Jaitapur project they are but one aspect of a much larger Indo-French nuclear strategic relationship.

Media reports suggest that the contract value for the two initial EPRs is $9.3 billion or roughly 7 billion euros. However, NPCIL’s project director for Jaitapur, C V Jain, maintains that ‘negotiations on the final price point are still on and the framework agreement merely serves as a guideline provider for the final contract’.

Nevertheless, it is believed that the indigenous content in the reactors will be higher than 30 per cent and the cost of power supplied by these units will be competitive with other sources of generation. Indigenisation is central to making the EPR supply power at a cost of less than Rs 4 per unit which, as Areva CEO Anne Lauvergeon recently identified, is a redline for the any foreign or domestic power-generating station set up in India.

The reported contract value, if confirmed, compares favourably with the 8 billion euros that the Chinese paid for the two EPRs presently being constructed at Taishan under the aegis of a joint venture between Chinese nuclear utility CGNPC and the French nuclear utility EDF.

The Chinese example is also important because it seems that these EPRs will be completed on schedule. It’s important to note that the EPR has come in for a lot of criticism in the past due to the cost and schedule overruns associated with Finland’s Oilkuto-3 EPR which began construction in 2005 and is set to see commercial operation only in 2013.

The EPR, with an operational life of 60 years, is regarded as a Gen III+ design ie it is deemed state of the art by the nuclear industry, and features multiple redundant active safety systems as opposed to older designs which are characterised by passive safety systems. However, this does add to the cost of the EPR which, going by Taishan, requires about $2,750 per kw to build. India’s indigenous Pressurised Heavy Water Reactors (PHWRs) in comparison have initial costs of only about $1,600 per kw.

As observed earlier, Indo-French cooperation in the field of nuclear energy goes way beyond the setting up of the two EPRs at Jaitapur. France is arguably India’s most important partner in the latter’s quest to build a strategic stockpile of uranium which would safeguard India’s civilian nuclear programme in the event of a disruption of fuel supplies. Indeed, the Indo-French nuclear cooperation agreement signed in 2008 specifically enjoins upon the French side to do so.

Areva, although lacking any domestic sources of uranium, literally owns some of the world’s prime uranium estates in Canada and Niger. Recently Areva-supplied fuel has helped India’s indigenous PHWR fleet revert to the high capacity factors they were known for in the late ’90s.

Fuel supply

Being able to source uranium and enrich it gives companies an edge in the nuclear sweepstakes because buyers typically look for lifetime fuel supply guarantees along with any reactors they buy. And it is no wonder therefore that Areva is one of the leading reactor suppliers in the world. Cooperation with France thus goes beyond securing fuel for just the reactors India sources from Areva. In fact, it is crucial to India’s overall nuclear sector, especially in light of the worldwide competition that India is engaged in with China to tie up finite land-based uranium resources.

France is also keen to kickstart industrial collaboration with India on the manufacture of nuclear components. India is seen as a low-cost manufacturing destination with a number of mature players such as L&T, BHEL, Bharat Forge etc who are in a position to ramp up forging and casting capability quickly.

In 2009, Areva announced a joint venture with Bharat Forge to set up a facility by 2012 which may consist of a 15,000 tonne press capable of forging single ingots in excess of 500 tonnes necessary for fabricating the nozzle shell ring of the EPR.

The Indian side is quite keen to engage France as well because simply put, interaction with France is seen as bereft of unnecessary entanglement with self-serving non proliferation lobbyists, as, say, in the case of the United States. It was after all the French who helped India kickstart its now robust fast breeder programme when they gave the ‘Rapsodie’ design which forms the basis of India’s Fast Breeder Test Reactor (FBTR) at Kalpakkam. The French were also understanding of India’s nuclear tests in 1998 and notably did not press sanctions.

These high points notwithstanding, kinks do remain in the relationship. The greatest impediment to full nuclear co-operation for the French is the poison pill clause in India’s recently passed ‘Civil Liability for Nuclear Damages Bill 2010’ which extends nuclear liability to the supplier.

Currently the French like the Americans and Russians are looking for an intergovernmental agreement which they feel could supersede India’s domestic liability law on the point of supplier liability. Areva is also looking to get a better price for its wares. Nevertheless, indications are that the nature of the Indo-French strategic ties will help paper over these differences.

(The writer is a consultant on energy and author of ‘The Upside Down Book of Nuclear Power’)

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