When the Fukushima nuclear power plant in Japan went into virtual meltdown after the tsunami of March 2011, nuclear power development across the world was arrested. But India remains bullish on nuclear power, and has a generation target of 63 GW by 2032.
Nuclear power contributes just 3.5 per cent to India’s energy needs, but the new target raises that to 9 per cent. This is in contrast to declining nuclear share across the world, as pointed out by independent energy consultants Mycle Schneider and Antony Froggatt’s World Nuclear Industry Status Report (WNISR) 2014. In 2013, the world produced nearly 12 per cent less nuclear power than in 2006, when generation peaked.
A 2014 report by the International Energy Agency (IEA) says that “uncertainties continue to cloud the future for nuclear—government policy, public confidence, financing in liberalised markets, competitiveness versus other sources of generation and the looming retirement of a large fleet of older plants”. Proposed additions have been affected by increasing costs and adverse public sentiment, especially after Fukushima.
India’s enthusiasm and aggression seems to be contained to planning; results are poor.
The Nuclear Power Corporation of India Ltd’s (NPCIL) track record on construction is not impressive. Reactors deadlines have been missed consistently. Kudankulam-1 took over 11 years while Kudankulam-2 has been under-construction for 12. The Fast Breeder Reactor at Kalpakkam has not been completed in 10 years since then Prime Minister Manmohan Singh launched the commercial phase in October 2004. In 2007, former Atomic Energy Commission (AEC) chairman Dr M.R. Srinivasan wrote in The Hindu that an India-designed 300 MW Advanced Thermal Reactor (a third stage reactor) might see commencement of construction work in 2008, another deadline that passed.
Can India expect to meet the targets? Princeton University nuclear physicist M. V. Ramana in The Power of Promise—Examining Nuclear Energy in India says, “It is very unlikely and probably impossible. The principal reasons, among many, for this conclusion are the technical implausibility of the DAE’s (Department of Atomic Energy) plans, its inability as an organisation to learn lessons from its earlier failures, and local opposition”.
This could be the reason why, despite the target of 63 GW by 2032, Prime Minister Narendra Modi downsized expectations. On May 26, 2014, he urged DAE to triple existing capacity to 17 GW by fiscal 2024.
India’s nuclear journey
After the first nuclear test in 1974 (Pokhran I), India was barred from the nuclear trade by the United States, Canada and other countries. The Nuclear Suppliers Group (NSG) was formed in response to Pokhran-I to restrict export of equipment, materials or technology.
After the first Gulf War in 1992, the NSG mandated that a country could not make export deals without agreeing to full scope International Atomic Energy Agency (IAEA) safeguards, effectively keeping India out of such deals.
There was a shift in 2005 with the Bush administration signalling a change that, in 2008, resulted in an Indo-US civilian deal which waived the earlier restrictions on nuclear trade, even though India had gone ahead with a second nuclear test (Pokhran-II) in 1998. India has also refused to sign the Nuclear Non-Proliferation Treaty which would close down the weapons programme and has not agreed to full scope safeguards.
The IAEA approved a safeguards agreement (not full scope) in August 2008, and the NSG granted an exception to its own rules on September 6, 2008, allowing India to access civilian nuclear technology and fuel from other countries “following intense lobbying by the United States, supported by France and Russia”. There is some evidence to suggest that support was forthcoming for commercial reasons.
On September 10, 2008, a letter of intent was written by India’s foreign secretary to the US under-secretary of state, promising to buy 10,000 MW of American reactors. This “strong” letter played an important role in the civil nuclear deal. Physicists M. V. Ramana and Suvrat Raju (of the Coalition for Nuclear Disarmament and Peace) wrote in a blog in The New York Times (October 15, 2013) that this commitment was made “without economic studies, or even a comparison of reactors available in the world market. Going by the current capital costs of nuclear reactors, this would have translated into $50 billion or more in reactor sales”.
Anil Kakodkar, former AEC chairman and current member, confirmed this, writing in Marathi daily Sakal on January 5, 2011: “America, Russia and France were the countries that we made mediators in these efforts to lift sanctions, and hence, for the nurturing of their business interests, we made deals for nuclear projects …We have to keep in mind the commercial interests of foreign countries and of the companies there.”
India was on an indiscriminate shopping spree to celebrate the removal of NSG sanctions. France was adequately repaid for its favours when the government gave in-principle approval in October 2009 for six 1,650 MW of Light Water Reactors (LWRs) at Jaitapur. The WNISR 2013 quotes a French parliamentary report: “Grateful for these diplomatic positions in its favour and conscious about the French technological excellence in this sector, India has logically chosen to make France one of its principal partners.”
Cables from the US mission in Mumbai revealed by WikiLeaks indicate that the decision to buy EPRs (a third generation pressurised reactor) from Areva NP of France had been made by early 2007, write Raju and Ramana in Economic & Political Weekly (June 29, 2013). They mention another cable revealed by WikiLeaks in 2009, which indicates that India was indeed looking after the commercial interests of a French company.
Worth noting is the fact that the decision to buy six EPRs from Areva was made without bid or tender. An earlier French bid to sell LWRs for Kudankulam had been lost to Russian reactors.
Tenders are the standard procedure for a government project or procurement. Even DAE follows it for procurements over ₹20,000. It is therefore worth noting that the decision to buy six EPRs from Areva was made without bid or tender.
The events leading to the Jaitapur plant
The decision to buy Areva’s EPR for Jaitapur followed in-principle approval from the Indian government, which was based on clearance from the cabinet committee on security. The DAE had no role. It issued a letter confirming the approval. NPCIL, the project proponent, has been carrying out the techno-commercial negotiations on behalf of India with Areva. NPCIL and Areva signed an agreement (not a commercial contract yet) in December 2010 for the construction of two EPRs (first set of a total of six reactors) at Jaitapur and fuel supply for 25 years during then president Nicolas Sarkozy’s visit to India.
Disagreements over the Nuclear Liability Act (sorted out during US President Obama’s recent visit) and price are said to be key issues holding up the contract. Neither NPCIL nor Areva have a public deadline to sign the contract. The plant was expected to be commissioned by 2017 but the earliest date now is 2023 if the contract is signed in the current year.
The discussion on costs is still on. In response to an email, Areva was vague on cost, only saying that “(t)he cost per kilowatt hour produced by the EPR reactor is highly competitive”. On the cost of power from JNPP, it said “Areva’s scope only accounts for around 40 per cent of the project. Only NPCIL can calculate the cost of the electricity generated at JNPP.”
NPCIL did not entertain phone calls requesting interviews and did not answer emails with questions, including on cost, about the project.
In May 2013, Mint quoted a senior Areva functionary, Arthur de Montalembert, as saying: “It all depends on when the plant will start … The price is not something that is fixed. Right now, there is no way the EPR can start in 2017. I would say the tariff holds true but you have to take into account the actual time when tariff is applied.”
The situation resulting from massive cost overruns due to construction delays of EPRs in Finland (Olkiluoto-3) and France (Flamanville-3) provide a hint of the French point of view. Areva and its Finnish customer TVO have sued and counter-sued each other to recover some of the overruns while project costs have ballooned to almost three times the initial estimates in both cases.
In a remarkable coincidence (if it can be called that), conditional clearance for Jaitapur from the Ministry of Environment and Forests was obtained just six days ahead of Nicolas Sarkozy’s visit. Coastal Regulation Zone (CRZ) clearance came just a day before his arrival and three days before the agreement with Areva was signed. Then environment minister Jairam Ramesh admitted that JNPP “needed to be considered differently” as it represented certain strategic investments that would give the India-France relationship a new direction.
The downside of EPRs
The EPR (originally European Pressurised Reactor, or Evolutionary Power Reactor) project, which has received many extraordinary exemptions in India, faces serious questions on design and safety systems in other countries. Indian activists have called EPR technology experimental as there is no EPR in operation yet.
The EPRs under construction at Olkiluoto and Flamanville are almost three times over budget and at least nine years and four years late, respectively. The Chinese plants at Taishan are about a year late. Besides delays and cost overruns, the feedback on technology is not encouraging. On November 4, 2009, regulatory authorities in the UK, France and Finland issued a joint letter pointing out problems with some of EPR’s safety systems, asking for “improvements to the initial EPR design”.
The letter stated: “The issue is primarily around ensuring the adequacy of the safety systems (those used to maintain control of the plant if it goes outside normal conditions), and their independence from the control systems (those used to operate the plant under normal conditions) … Independence is important because, if a safety system provides protection against the failure of a control system, then they should not fail together. The EPR design, as originally proposed by the licensees and the manufacturer, AREVA, doesn’t comply with the independence principle, as there is a very high degree of complex interconnectivity between the control and safety systems.”
In July 2010, the Nuclear Regulatory Commission in the US also highlighted concerns on design complexity and the issue of independence.
The financial situation of Areva—one of the world’s biggest manufacturers of nuclear reactors—is an area of concern for the countries where it is building plants. Areva filed losses for the third year in a row, $3.4 billion (₹22,000 crore approximately) in 2011, $137 million in 2012 and $683 million in 2013. Areva’s credit rating and share value have tumbled in the last few years.
EPRs developed by Areva and EDF (France’s government utility) do not seem to be doing well in the market. Many deals being discussed for EPR are either called off or outbid or shelved.
The EDF is considering ways to “improve on the EPR to lower its price and integrate post-Fukushima safety measures”, a March 2013 Reuters report (originally reported by Les Echos and Le Figaro newspapers) quotes EDF production and engineering head Herve Machenaud. In this scenario, Jaitapur might be Areva’s and EPR’s only hope of revival.
India also faces some unique problems. It needs to source some critical components from Japan, who refuses to supply them as India has not signed the Non-Proliferation Treaty. The French Atomic Energy Commission chairman Bernard Bigot says if Japan does not relent, alternative sources would be costlier.
The need for independent regulation
Areva has a problem with India’s nuclear liability law, which allows the operator to sue the supplier under certain circumstances. Former Atomic Energy Regulatory Board (AERB) boss A. Gopalakrishnan blames NPCIL’s poor safety record on the absence of an independent regulator. AERB falls under the DAE, which also governs NPCIL. Moreover, radiation measurements and exposure evaluations are done by the Health Physics Division (HPD), also under the DAE. Until 1999, HPD physicists also received a bonus proportional to the quantum of energy provided.
The Comptroller and Auditor General in an August 2012 performance audit noted that AERB was not an autonomous and empowered regulator and this “is fraught with grave risks”. Its legal status was one of a subordinate office, exercising delegated functions of the Central Government, not that of a regulator, the report said.
The report also pointed out that AERB had failed to prepare a nuclear and radiation safety policy despite having had the mandate since 1983. Also, it had not prepared 27 of 168 safety documents despite recommendations of two committees in 1987 and 1997 to do so quickly.
AERB had no power to draft rules or any powers of enforcement or levy of penalties in the context of nuclear safety oversight. The report also pointed out that there were no mechanisms to ensure/verify that radioactive waste was actually transported or disposed off safely after utilisation.
AERB has, in a number of instances, not adopted international benchmarks in key areas of nuclear oversight in respect of radiation facilities. It has also not availed itself of the opportunity of external peer review by IAEA till date, either of a specific activity or of its performance as a whole.
The absence of the detailed project report
For a reactor that was be purchased without a tender, there was no detailed project report, a standard practice for government projects, even for a kilometre-long flyover. A technical or economic feasibility study has not been carried out either.
In an RTI petition on February 22, 2006, NPCIL says the Indian government would “decide the type and capacity of plant after completing techno-commercial evaluation.” It also said many crucial details, such as the centre of the project (to decide the exclusion zone) and the operational effect of nuclear power stations on the surrounding areas, would be covered in the detailed report. In another RTI reply (Nov 5, 2008), NPCIL said the “project report for the NPP units at Jaitapur site is under preparation and finalisation.”
No such reports are in the public domain yet.
Dr Srinivasan of the AEC says all these procedures will be followed in due course. “The project is in its preliminary stage and only the site has been finalised. More and detailed studies will be done as details are finalised.”
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