State-run NPCIL and French MNC Areva, which are slated to collaborate on a nuclear power plant in the port town, are wrangling over terms and tariff. Meanwhile, the ruling BJP’s ally, Shiv Sena, is opposed to the project. So are some NGOs

Sanjay Jog  |  Mumbai   October 10, 2015 Last Updated at 21:46 IST
Sanjay Jog

Six months after signing a pre-engineering agreement during Prime Minister Narendra Modi‘s visit to France, state-run Nuclear Power Corporation of India Limited (NPCIL) and India arm of French multinational company, Areva, are still struggling to conclude techno-commercial negotiations and strike the final work contract for the 9,900-Mw Jaitapur nuclear power project in Maharashtra.

The bone of contention is the per unit tariff of Rs 6.50 as envisaged by the Depart-ment of Atomic Energy (DAE) in November 2013. NPCIL and Areva are also playing hardball over sharing the burden of application of additional safety measures while ensuring the viability of the project. The upgrade of safety applications has been mandated by the Atomic Energy Regulatory Board following the Fukushima nuclear disaster in Japan in March 2011.

NPCIL and Areva are also discussing how a memorandum of understanding (MoU) between the latter and Larsen & Toubro (L&T) on localisation of key equipment will help reduce costs as well as the per unit tariff.

This apart, despite Modi’s recent US visit, talks between NPCIL and the US-based GE Hitachi for the supply of six reactors, of 1,594 Mw each, for the Kowada project in Andhra Pradesh are yet to gain momentum. Similarly, negotiations between NPCIL and Westinghouse for the supply of six AP1000 reactors of 1,100 Mw each, for the Mithi Virdi project in Gujarat have been a non-starter.

Meanwhile, the Shiv Sena, part of the Bharatiya Janata Party (BJP)-led government at the Centre and in Maharashtra, continues to oppose the Jaitapur project, on the grounds that an earthquake – which the party says the project could trigger – would have terrible consequences for the region. This, even after Modi’s advice to the party to stop opposing the project, which he says would “transform” the region. The Shiv Sena is fighting a lone battle: both the BJP and the Opposition Congress and National Congress Party are supporting the project.

Of course, the BJP-led government in Maharashtra will have to clarify if it is prepared to clear the Jaitapur project at the per unit tariff of Rs 6.50, even as its undertaking, MahaVitaran, has struck long-term power purchase agreements for the availability of power at Rs 3.20-3.50 per unit. The government needs to make its stand clear as it had recently decided not to resume buying power from the Dabhol power plant after it revives production on November 1, citing surplus availability. Power from Dabhol will cost Rs 4.70 per unit.

While most people affected by the project have accepted compensation, local fisherfolk and some non-governmental organisations (NGO) are still voicing their protest against it. Demonstrations and rallies have not taken place because villagers are waiting for talks between NPCIL and Areva to conclude.

Notwithstanding the fact that the two firms are yet to reach a final agreement, they have started technical studies, which will enable them to finalise the technical configuration of the Jaitapur project.

In February 2009, Areva and NPCIL signed an MoU for partnership in nuclear power generation and build up to six European pressurised reactors (EPR) of 1,650 MW each, in Jaitapur. Subsequently, a general framework agreement for the construction of the first two EPRs was signed in December 2010. Initially, Areva will supply two EPRs.

“As on date, techno-commercial negotiations are underway (between NPCIL and Areva),” said DAE spokesperson S K Malhotra. “The talks are largely revolving around how to keep the per unit tariff low for the consumer.” He declined to spell out a time frame for the conclusion of the talks and the signing of the contract.

Konkan Bachao Samiti (KBS), one of the NGOs opposed to the Jaitapur project, says the government needs to clarify the cost arbitrage indigenisation will offer and how the tariff of Rs 6.50 per unit will be achieved against an earlier estimate of Rs 9.50 per unit. This is necessary when the Centre treats the MoU between Areva and L&T for indigenisation as the most vital for the viability of the Jaitapur project.

KBS co-convenor Adwait Pednekar said the Centre could not overlook global developments on the use of EPRs. “Finland cancelled its option for a second EPR from Areva as the existing one, Olkiluoto, is sinking into an abyss of cost overruns, delays and litigations,” he said. “This apart, India’s civil nuclear deal with Japan is stuck. This becomes a hurdle in sourcing reactor pressure vessels from a Japanese company.”

According to Pednekar, the civil nuclear damage liability law passed by Parliament is another hurdle. “The promises made in the law and the insurance pool created here will not be sufficient for nuclear technology suppliers,” he said.

Some nuclear industry experts are hoping Areva and NPCIL will resolve their issues amicably. They say the Centre can explore the option of installing indigenous pressurised heavy water reactors in Jaitapur.