Rs 100000cr carrot behind the waiver

R. SURYAMURTHY & JAYANTA ROY CHOWDHURY

New Delhi, Sept. 7: A sum of Rs 100,000 crore that is up for grabs in deals may have helped India bag the Nuclear Suppliers Group waiver.

New Delhi has drawn up plans under which the state-run Nuclear Power Corporation of India Ltd (NPCIL) and National Thermal Power Corporation Ltd (NTPC) are to set up a string of nuclear power plants — 15 by 2020 that will add 20,000MW to the current 3,300MW.

Global nuclear power plant manufacturers and domestic engineering giants are expected to harvest the bounty of the nuclear commerce the Indo-US deal will offer.

Areva SA and Alstom of France, General Electric of the US, Toshiba Corp’s Westinghouse Electric Co (based in the US), and Russia’s atomic energy agency Rosatom are among the global firms likely to get most of the contracts. Diplomats of these nations were in the forefront of lobbying for the deal at the International Atomic Energy Agency (IAEA) and the NSG.

The Centre might make it mandatory for nuclear reactor suppliers to get at least 30 per cent of their equipment from India, analysts said.

“The volume of business to be generated in nuclear power plant construction is huge since the cost of construction per MW of nuclear power is about Rs 7 crore and we are talking of adding 20,000MW by 2020,” said Arvind Mahajan, executive director of KPMG, a financial services firm.

Planning Commission officials said the Atomic Energy Act might be amended to allow Indian private-sector players – such as the Tatas, Anil Ambani’s Reliance Energy, GMR and Essar – to enter the sector and global players to take up small stakes in these plants.

Indian law now allows only the state-run NPCIL to set up and run nuclear power plants. Amendments lying with the cabinet permit any public sector company to enter the sector. At the time these were drafted, the Left was an ally of the government and would not have been keen on private participation. That has changed now, especially with the Samajwadi Party on board.

Still, analysts said, it may not be feasible to open the sector completely to private companies given the stringent international safeguards.

NPCIL plans to set up four power plants and has selected sites in Gujarat, Andhra Pradesh, Orissa and Bengal.

The NTPC, which is into thermal power generation, is also planning to diversify into nuclear energy and plans to add 2,000MW of nuclear energy by 2012.

Other than the NTPC, the state-owned Bharat Heavy Electriclas Ltd (Bhel) and several private players could benefit from the spillover effect of nuclear commerce. Bhel plans to spend Rs 1,500 crore over the next two years building plants to supply components for 1,600MW-capacity reactors, sources said.

Engineering firm Larsen & Toubro, construction houses Gammon and Hindustan Construction Company and power equipment company ABB are expected to benefit.

Kuljit Singh, energy analyst with Ernst and Young, however, said: “There is very little for Indian firms to benefit at this juncture since the sector is not open to private players. Most of the equipment for the power plants would be supplied by global leaders.”