Excitement builds in India

Monday, 22 September 2008

Indian power companies eager to invest in nuclear are engaged in increasingly serious talks. Industry groups expect over $26 billion in business over the next 15 years.

 

Construction at Kudankulam, where  four AtomStroyExport units are  planned under special arrangements (Image: ASE)

India has relied on a virtually self-sufficient nuclear industry for decades, but under new rules issued by the Nuclear Suppliers Group earlier this month, the country should be able to buy and sell like any other in future. At present only firms at least 51%-owned by the state are allowed to engage in nuclear energy, but this is due to change in line with new trade rules - and a group of 40 power companies is lobbying the Indian government to address the change quickly.

 

Countless nuclear technology and services firms around the world should benefit, led by the major reactor vendors - Atomic Energy of Canada Ltd, Areva, AtomStroyExport, GE-Hitachi and Westinghouse - all of whom are in talks with potential Indian customers.

 

Indian shares went up by 4% on the news of the NSG rule-change. Power sector firms jumped between 4% and 10% as the Confederation of Indian Industry lauded the tremendous business opportunities presented by nuclear trade: "The NSG clearance has now instilled confidence of business opportunities worth $26.5 billion in the next 15 years which would add about 18-20 nuclear reactors at the cost of $1.1 billion to $1.3 billion each. The nuclear deal will also enable addition of new capacity and help fulfill the target of adding 63,000 MWe by 2030."

 

The Indian firm at the head of the nuclear queue is Nuclear Power Corporation of India Ltd (NPCIL), which owns and operates the 17 reactors currently in operation. The company is expected to have first bite at the new market and its chair, SK Jain told Bloomberg it is expecting to spend $14 billion next year. A priority for NPCIL will be to secure adequate supplies of uranium fuel for its reactors, which currently run below capacity.

 

India must sign bilateral nuclear cooperation argeements with governments representing any company that wants to trade. Major nations such as France, Russia and the UK are ready to make these deals, but it is understood that the USA is to be first. This timing will ensure that the USA is 'rewarded' for starting the whole initiative to bring India into nuclear trade.

 

When the government amends legislation, firms including Videocon, Tata Power, GVK Power, GMR Energy, Jindal and Reliance Power could join NPCIL as nuclear operators. The Indian power sector grows about 10% per year.

 

One major player interested in nuclear is NTPC, which said it is the fourth largest power supplier in Asia. With a market share of about 29% of Indian power it expects capacity to grow to 50 GWe in 2012 and 75 GWe in 2017.

 

In a May speech, NTPC chair RS Sharma said, "The benefits in terms of fuel security and clean power generation to be obtained through nuclear power generation make it an attractive option." He continued to explain that NTPC was "exploring the possibility of" having 2000 MWe of nuclear capacity in 2017.