|
|
S P E C I A L R E P O R T S
Downside of Nuclear Power - 4
The fourth and last part of a series on the risks and high cost of India's ambitious civilian nuclear programme.
15 January 2009: Finally, in view of the global credit squeeze, how will it affect India's ambitious nuclear power generation plans?
The picture is muddled. On the one hand, Indian officials like Shyam Saran (special envoy to the prime minister on the Indo-US nuclear deal) are optimistic that the global economic downturn will favour India's nuclear plans. At a FICCI and Forums of Parliamentarians' seminar in October last year, Saran said, "There has been a significant slowing down of sourcing of nuclear plants by the advanced countries, particularly the OECD countries, and there are signs of softening of the uranium market. This is an opportunity India should cash in on before the window closes as the global crisis abates."
But the view abroad is fairly the opposite. Oxford Analytica in a 10 January 2009 research paper says that "(new power reactors) do not look viable in current market conditions. State support is needed and may be more forthcoming from governments faced with recession." Oxford Analytica includes India with South Korea, China and Russia among the countries constructing power reactors with predominantly state-led financing.
But India is unlike China with substantial cash reserves with which to build many more nuclear plants. India will need over one-sixty billion dollars in investments to finance its imported power reactor programme, and in present market conditions, that is a daunting sum to raise. In another context, CII's principal energy advisor, V.Raghuraman, said that "As the government has no money for (nuclear) expansion, so it becomes necessary to import technology". But imported nuclear reactors have also become costlier despite little or no demand for them. So Saran's thesis that India's import-driven civilian nuclear programme will come on the cheap goes out the window.
Before the global credit squeeze, India was banking on international financing for its expanding nuclear programme. This was also the time when it was fashionable to speak about a "nuclear renaissance", nuclear power being paraded as solely able to counter rising carbon emissions and meeting energy security goals. This vision is not entirely invalid, but the market is not conducive for financing nuclear construction with extended exposure.
In a Carnegie Endowment discussion in November last year, Stephen Maloney of Towers Perrin, an US risk and financial services firm, said that the current market conditions were motivating investors to focus on short-term investments than on extended exposure financing nuclear construction. Since India is looking for the same investors to finance its imported power reactor programme, the response will be lukewarm at best and cold at worst. As Oxford Analytica puts it, "For project financiers working in energy, wind, solar or natural gas-fired plants remain much safer investments than nuclear."
Even prior to signing the nuclear deal with the US, India had gotten off to a good nuclear start with the Russians, aside from the earliest post-Independence nuclear technology transfers under, among other things, the US's Atoms For Peace programme. With Russia, the six Kundankulam reactors' project is on, but this is financed by fifty-four per cent Russian soft loans. Further nuclear projects with Russia may not come on similar easy terms, because Russia is cash-starved like the rest of the world bar China. Russia's oil revenues have taken a hit because of the global recession hurting demand. As a foretaste of what to expect, Russia has been raising the price of contracted defensive acquisitions, including the aircraft carrier Admiral Gorshkov under refurbishment for India, citing spikes in production cost. On the other hand, India has signed no reactor deal yet with France's Areva Corporation, but it is unlikely that state-controlled Areva will match the earlier magnanimity of the Russians. Which leaves private nuclear suppliers like GE and Westinghouse, and they will go entirely by prevailing market conditions, which are not favourable to anybody, least of all India.
At writing, The Economic Times has reported that NPCIL could raise fifty thousand crore rupees via tax-free bonds to "realize its target of twenty-two thousand megawatt by 2022". This may be inevitable given the credit squeeze worldwide, but raising it won't be easy. The earlier assumption that the world would automatically and generously aid India's nuclear power generation programme was always fatuous. India has to seriously and strenuously market its nuclear plans to get anywhere with the targets set, and this is not happening.
Concluded
Anupama Arora is a reporter with NewsInsight.net.
|
|
|
