Slight cost hike by N-liability, says expert

Inflation likely to lead to nuclear energy price rise

A week after the government claimed a breakthrough in the thorny nuclear liability issue by creating an insurance pool for risk cover, nuclear scientists said the increase in per unit cost of electricity because of the insurance premium would be marginal.

“The cost escalation due to nuclear liability would be marginal. It should be few paise per unit of electricity,” Anil Kakodkar, former secretary in the department of atomic energy, said here at a conference.

During the visit of US President Barack Obama, New Delhi announced its success in resolving the contentious nuclear liability issue under the Indian law. It was one of the factors holding back the implementation of the 2008 Indo-US nuclear deal.

The government proposed to create a General Insurance Company-led insurance pool of Rs 1,500 crore by roping in four Indian public sector units to cover the liability of operators and suppliers. A White Paper from the insurance sector, detailing the scheme, is expected shortly.

The increasing capital cost for nuclear energy, Kakodkar said, would be due to the inflationary factors rather than liability. For instance, inflation pushed up the price of Kudankulam nuclear power project Unit-3 and 4 to Rs 39,849 crore, which is almost double of Rs 17,270 crore price tag of Unit 1 and 2.

Four upcoming 700 Mwe pressurised heavy water nuclear reactors at Gorakhpur (Haryana) and Kaiga would cost close to Rs 44,000 crore, almost double the cost of similar units under construction elsewhere in the country. For comparison, four 700 MWes reactors under construction at Rawatbhatta (Rajasthan) and Kakrapar (Gujarat) cost Rs 23,759 crore.

“Even with liability, nuclear energy would remain competitive without requiring any subsidy. The capital cost, however, would be higher and can be brought down only by increasing the indigenous content of the reactors,” said Kakodkar, who was one of the architects of the India-US civil nuclear deal and the new liability regime.

Sources said the annual insurance premium for the operator Nuclear Power Corporation of India Limited, operating 24 nuclear power plants, would be in the tune of Rs 36 crore a year.