The Financial Express, a major Indian daily newspaper, reports that despite intense efforts from both sides, the Westinghouse-Toshiba nuclear reactors deal is not expected to be closed by the time Prime Minister Narendra Modi reaches the US on June 7, to meet with US President Barack Obama.
Progress was expected last January when two things happened. First, India signed off on an international convention that sets boundaries for liabilities in the event of a nuclear accident. Second, Japan said that despite the fact that India has not signed the Nuclear Nonproliferation Treaty, that it would agree for businesses, including Toshiba / Westinghouse, to ink deals for nuclear technology with India.
Last January, Westinghouse CEO Daniel Roderick told Reuters that he hoped to be able to sign the deal in March. That didn’t happen. Then in March he said the deal would be signed in June.
The deal would be the first nuclear commercial power project since India and the US agreed in 2008 to cooperate in the civil nuclear arena.
Negotiations appear to be stuck on the issue of the Nuclear Supplier Liability law passed by the Indian parliament and sponsored by Indian PM Modi’s own BJP political party. In the event of an accident, suppliers of major components can be held liable for hundreds of millions of dollars in damages long after the components have been installed and operated by NPCIL.
If there is no deal it will be third time the two leaders will have met and come away without an agreement to allow U.S. nuclear firms to do business with NPCIL, the Indian nuclear reactor operator.
Westinghouse has plans to build a nuclear power station in Gujarat with total capacity of 2,300 MW. Two additional sites have been identified for GE-Hitachi plants in Andhra Pradesh with an initial capacity of 3,200 MW. Both projects envision expansion to up to six reactors at each site.
Insurance Pool Seen as Not Deep Enough
Last year India unveiled an insurance plan for nuclear plants that aims at shielding equipment suppliers from liability in the event of an accident by transferring the risk to insurers. The plan is still in development, but generally it creates a $226 million) insurance pool. The insurance may be bought by the suppliers who would then recoup the cost by charging more for their services or the NPCIL would take out insurance on behalf of these companies.
While the whole process looks circular from a financial perspective, it has been criticized by as falling short in terms of coverage. Also, the pool does not place a limit on liabilities that might be assigned to a supplier.
Diplomat Cites Continued Uncertainties
U.S Diplomats pushed comfort cookies in response to India’s continued support of its liability law. Reuters reported that a U.S. State Department official assured lawmakers that India has addressed concerns over liability that had for years kept U.S. corporations from signing nuclear power contracts in the country.
“We believe that the steps that India has taken have addressed by and large the key concerns that have been in place,” Assistant Secretary of State for South and Central Asian Affairs Nisha Desai Biswal told the Senate Foreign Relations Committee on May 12.
She noted that India has now signed on to the International Convention on Supplentary Compensation which set standards for assigning damages in the event of a nuclear accident. However, India’s domestic political / economic environments are disconnected from these types of global developments with heated opposition still firmly in place to any U.S. nuclear company entering its markets.
In addition to the usual “nonaligned” interests who only want to see construction of a domestic reactor design, a 700 MW PHWR, the nation’s enormous coal interests have no intention of allowing nuclear reactors to cut into their market share for power generation.
Back in DC Biswal declined to say that all U.S. companies would now be comfortable doing business in India. “Those are going to be individual determinations that companies are going to have to make,” she said.
Bargaining Chips Ahoy
The senior state department diplomat also said the United States supported India joining the Nuclear Suppliers Group (NSG), a 48-member group of nuclear trading nations.
China, along with Pakistan, have blocked India’s membership.
India may be using carrot of opening its markets to U.S. nuclear reactor firms in return for U.S. support of its membership in the NSG. If approved it would settle forever India’s problems in obtaining enough uranium to fuel its civilian reactors.
India’s arch enemy Pakistan sees NSG membership as a force multiplier for India to boost its nuclear weapons capability. Both India and Pakistan have nuclear arsenals.
India was shut out of uranium supplies for decades because of its weapons program. A 2008 agreement with the United States gave it access to foreign suppliers without giving up arms primarily meant as a deterrent against nuclear-armed China.
In November 2015 India signed an agreement with Australia to buy uranium under condition that it would be strictly limited for use in civilian reactors.
EDF to Pursue Deal for Six 1600 MW EPRs at Jaitapur
Reuters reports that EDF has said it will deliver a proposal to the Indian government by year’s end to build six nuclear reactors, a in what could be the world’s biggest nuclear deal to date.
Last January EDF announced a preliminary agreement with Nuclear Power Corp of India Ltd (NPCIL) to build six EPR nuclear reactors at Jaitapur in western India.
“India has asked us to present a complete technical and economic proposal for six EPRs by the end of this year. We are working hard on this,” Xavier Ursat, EDF head of new nuclear, told shareholders at their annual general meeting.
Ursat said many countries are interested in building nuclear plants or upgrading their existing fleet and that EDF – which is acquiring the reactor building arm of Areva – is positioning itself in this market.
EDF CEO Jean-Bernard Levy told shareholders that EDF needs growth in international markets because European power markets are stagnant.
The Jaitapur project, first announced nearly six years ago, has been bogged down in local disputes over land use, technology transfer, and the use of Indian heavy industry firms to supply components to the reactors. Progress was made on all three fronts this year which could lead to the project breaking ground in 2017.
Unlike American firms, which are publically traded, EDF is French government concern. This means that with regard to the supplier liability law, it self-insures and can take on the risks that U.S. firms cannot accept.
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