Every day that I have been Prime Minister of India, I have tried to remember that the first 10 years of my life were spent in a village with no drinking water supply, no electricity, no hospital, no roads and nothing that we today associate with modern living. This nation gave me the opportunity to ensure that such would not be the life of our children in the foreseeable future,” Prime Minister Manmohan Singh was planning to say in Parliament during the trust vote.
It was never a cakewalk.” However, on August 1, it turned out to be precisely that as the IAEA endorsed the India-specific safeguards agreement. Now, the crucial Nuclear Suppliers’ Group (NSG), which is expected to meet on August 21, needs to give its nod.
That means more hectic days ahead for the PMO. But leaving aside the strategic and political implications, the nuclear push by India has significant economic consequences.
Although few are willing to put a figure on the business potential of Npower in India, BT had estimated in an earlier story (A $9-Billion Blast, Business Today, December 31, 2006) that potentially, a $9-billion (Rs 38,700 crore at current exchange rates) market is waiting to be addressed over the next five years. The multiplier effect of this investment has not been assessed.
The nuclear numbers
India’s N-power capacity will rise 10-fold if the Indo-US nuclear deal goes through
One of the authors of the report, Vipul Tuli, Partner, McKinsey & Co., believes that while “coal will continue to dominate our fuel mix for a long time to come, nuclear energy will be a critical option a few decades later as India’s emissions rise”.
In the short term, high prices of oil and natural gas may improve the economic viability of coal-fired generation for coal-rich India. Simultaneously, emissions, too, will rise—both in absolute and per capita terms—as the economy trots along (See Energy at What Price?). Adi Godrej, Chairman of the Godrej Group, says: “It’s very important that India reduces its dependence on hydrocarbons.” Other clean energy sources, such as wind or solar power, are not expected to contribute more than 20-30 GW in another decade.
Add to that the energy security angle—India remains an importer of key energy-related products, including coal—and the case for nuclear energy becomes even more compelling. In the 1970s, concerns about supply security were a major cause of nuclear expansion in both Japan and France (see The World Leaders). India seems to be poised on a similar cusp. Environment thinktank TERI’s Executive Director, Leena Srivastava echoes Godrej’s sentiment.
Big business opportunity
If the NSG and the US Congress vote in India’s favour, as both are expected to, many doors will open up for India and its corporate sector. International trade in nuclear materials, technologies and equipment will open up immediately.
Currently, a uranium shortage leads to Indian nuclear reactors functioning at less than 65 per cent capacity. With the deal, fuel supply will not be an issue. “India will also get access to uranium exploration and mining technology, which will allow us to explore and tap uranium deposits within the country,” says S.K. Jain, Chairman and MD, Nuclear Power Corporation of India (NPCIL), the only operator in India at present, apart from sister company Bhavini.
In the interim, it is companies like the Hyderabad-based MTAR Technologies that will prosper. The privately-held precision equipment maker is a major supplier to NPCIL. “We are geared up quite well to undertake not only current NPCIL orders but have also gone in for expansion to accommodate future technologies and new global projects,” says K. Vamshidhar Reddy, Executive Director, MTAR Technologies. Probably sensing the opportunity and promise, US private-equity giant, The Blackstone Group, last year, invested $65 million (about Rs 260 crore) for a 26 per cent stake in MTAR.
However, private ownership of atomic utilities will need amendment of the Atomic Energy Act, 1962. That, Chavan says, may depend on political compulsions. There will, however, be significant challenges going forward. Funding is likely to be one such issue.
CII’s Raghuraman says that “at present, financial institutions may not be ready to fund these capitalintensive projects”. According to a recent report by Moody’s, nuclear generating technology is very costly, potentially reaching over $7,000 per kilowatt (KW) of capacity—by some estimates almost twice as much as new, scrubbed coal-fired power plants and three times as much as new, combined cycle natural gas plants.But that’s way into the future. For now, the government’s immediate priority is to steer India’s nuclear ambitions through the two remaining finish lines and, thus, end the N-Apartheid that has contributed to keeping India energydeficient. The rest will follow, almost as a corollary.
A few concerns remain
In the 1960s, commercial nuclear energy received a big fillip in the developed world. However, a couple of high-profile accidents, such as at the Three Mile Island reactor in the US in March 1979 and the Chernobyl reactor in April 1986 in the erstwhile Soviet Union led to declining public support for nuclear energy.
Though the estimates of deaths and other illnesses from these accidents are disputed, the accidents certainly stalled any major expansion of nuclear plants globally in the following decades. A few countries like Italy even decided to phase out existing nuclear power plants.
However, in recent years, the nuclear industry has become less defensive about its safety record. The World Nuclear Association (WNA) website, for instance, points out that these are the only major accidents to have occurred in more than 12,700 cumulative reactor-years of commercial operation in 32 countries. “The risks from western nuclear power plants, in terms of the consequences of an accident or terrorist attack, are minimal compared to other commonly accepted risks. Nuclear power plants are very robust,” it asserts.
The WNA, in fact, compiled occupational accident statistics generated over the last 40 years of nuclear reactor operations in the US and UK and believes that a comparison with coal-fired power generation shows that the nuclear option is a distinctly safer way to produce electricity.
Leena Srivastava, ED, TERI, concedes that the safety record of nuclear facilities and their technical specifications have improved, but adds that “no matter what the technologists say, there is apprehension in the mind of the common man”. The solution: clear-cut policy measures and actual practices that assuage these fears.
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