Tag Archives: NPCIL

The Final Chapter of the Kudankulam Saga

02 Fri Jun 2017

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On June 01, India and Russia concluded an agreement that would begin work on the fifth and sixth reactors at Kudankulam. The deal was finalised during Prime Minister Narendra Modi’s visit to St Petersburg for the 18th annual bilateral summit between the two nations and ironed out the technicalities to a 1988 Memorandum of Understanding signed by Mikhail Gorbachev and Rajiv Gandhi for the development of nuclear energy in southern Tamil Nadu. Completion of this project would make Kudankulam India’s largest nuclear park, responsible for 40 percent of India’s total nuclear energy capacity.

Although the original MoU envisioned a total of eight reactors at the Indian site, a subsequent negotiation in 2008 reduced that number to six. No size of the reactor had been mentioned in the agreement but was mutually understood to be the 1,000 MW VVER-1000. In 2014, Russia offered its latest Gen 3+ VVER-1200 for future Kudankulam installations but this suggestion was nixed by India as there were no working models of the design; the first VVER-1200 reactor became commercial just three months ago at Novovoronezh.

The deal for the last two reactors at Kudankulam comes at an interesting time in international nuclear politics. Rosatom has been strongly pushing nuclear exports over the past five years and secured agreements in several countries such as Hungary, Bolivia, Argentina, Indonesia, Turkey, Egypt, Nigeria, Algeria, Bulgaria, Finland, and others. As the only company in the nuclear sector that is capable of offering the full spectrum of services from mining to reprocessing, Rosatom has a powerful advantage over its competitors in new markets. However, nuclear sales come with financing agreements and it has been questioned if the Russian state-owned company can indeed afford to float such lines of credit. In fact, Rosatom had offered to partner with India in fulfilling its agreements for probably similar concerns. This deal confirms valuable additional business for the Russian nuclear giant when it needs it most, especially considering the short period of 10 years for the $4.2 billion loan Russia has extended India for Units V and VI.

The finalisation of Kudankulam V and VI also comes on the heels of India’s decision to proceed with 10 indigenous 700 MW reactors if foreign suppliers cannot be relied upon to assist with India’s nuclear aspirations. If Delhi does succeed in streamlining the indigenous route, a valuable customer with enormous needs would be lost to the international market. Despite its frustrating vacillations, India still remains one of the hopes of a nuclear renaissance.

It is also hoped in some quarters that indigenous nuclear development will give India additional leverage to force its way into the Nuclear Suppliers Group. The emergence of a parallel market in which Delhi can set its own rules while broadly following international non-proliferation and safety protocols is a threat to the Western-led international nuclear regime. Although this is no more than a fantasy, it is hoped that taking even small steps towards such reliance will soften the stand of the nuclear cabal. Given the new mantra of Make-in-India and Modi’s emphasis on developing Indian industry, it is not inconceivable that a few benefits are also seen in domestic Indian nuclear industry.

There is no clear information yet as to what the cost of Kudankulam V and VI will be. The first two units were built for ₹17,270 crores but the price for the third and fourth units skyrocketed to ₹39,747 crores. The agreement for the fifth and sixth units commits Russia to a loan of approximately ₹27,000 crores to cover the construction costs of the reactors but reports make no mention of what the total cost is likely to be. If the agreement on Kudankulam III and IV – in which India secured a $3.4 billion loan towards construction costs – is any indicator, the last two VVER units at the site are likely to cost around ₹51,000 crores.

As usual, India’s Nuclear Power Corporation (NPCIL) will construct the plant with guidance from Russia’s Atomstroyexport. No information has been released on the timeframe for Kudankulam V and VI to begin commercial operation, or for that matter, the earlier two units.

The agreement for the fifth and sixth units follows quickly on the heals of the agreement for Kudankulam III and IV. The infusion of two more foreign reactors will not salvage India’s moribund nuclear energy programme but it comes at a time when more and more people are asking questions about India’s relations with Russia. While Delhi is perceived to have drifted towards the United States, Moscow flirts with Islamabad to India’s chagrin. Despite all the diplomatic packing peanuts, defence (technology) agreements have formed the bedrock of India-Russia relations ever since Stalin and the new Kudankulam will give flagging relations a shot in the arm. As long as cooperationin the strategic realm remains strong, both Moscow and Delhi will be able to weather any storms since their relations are not based on a sense of community or shared international vision.

It also seems clear now that Russia will be exempted, de facto, from India’s asinine nuclear liability regime. The argument for the exemption is that laws cannot be applied retroactively – though such common sense has not always prevailed in India – and the Kudankulam agreement and the subsequent renegotiation were both concluded before the Civil Liability for Nuclear Damage Act. As analysts have pointed out, By reopening the Kudankulam deal to accommodate the CLNDA would provoke Russia into demanding renegotiation of reprocessing rights, the implementation of full scope safeguards, and showing a greater restraint in nuclear cooperation or technology transfer. Russia has already substantially raised the price of its reactors to allow for India’s convoluted workaround of its liability law.

Russia remains the only country that has committed to developing nuclear power plants in India despite the CLNDA albeit no new agreement has been concluded and the reactors presently under construction are still grandfathered into the 1988 accord. India’s early optimism in face of international concern for its liability law now seems hollow and self-deceptive. A good experience with Kudankulam is therefore important to retain India’s only foreign nuclear vendor.

This post appeared on FirstPost on June 02, 2017.

India’s Nuclear Slumber

18 Mon Jul 2016

Posted by in India, Nuclear, South Asia

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Every couple of months, an article appears in the Indian media that launches a broadside against the country’s civilian nuclear establishment. In principle, this would not be a bad thing if they were accurate and focussed critiques that revealed flaws in the the way India manages its nuclear energy sector. However, most authors seem content to smear the nuclear conclave hoping that even the appearance of any impropriety would be enough to imply wrongdoing and scandal.

To be fair, the Nuclear Power Corporation of India (NPCIL) does little to endear itself to the public. Despite its under-publicised yet generous public outreach, the organisation remains unduly secretive and often promises far more than it can deliver. The scientists at NPCIL are undoubtedly capable – their technical excellence has been recognised several times by international bodies since India began to allow international inspection of its nuclear facilities pursuant to the Indo-US nuclear deal in 2008. India has had no catastrophic nuclear failures until now and its only major accident, at Narora in 1993, was dealt with quickly and in a professional manner.

Yet this technical distinction is only matched by NPCIL’s administrative incompetence. The nuclear renaissance India was supposed to go through after the Indo-US nuclear deal has so far been a dud. Domestic critics argued that India did not require the deal, that indigenous capacity could easily provide for the country’s nuclear growth. Yet after 72 years, India has only 22 reactors in operation – about the same as what China has under construction at present. Having signed the deal, the troublesome nuclear liability law scuttled any hope that there might be rapid nuclear growth – 63,000 MW by 2032, according to the government – in the country. Although there has been impressive progress in improved efficiency and greater power generation capacity via solar and thermal sources, nuclear energy – the best option for clean and reliable energy – has embarrassingly lagged behind.

The failure of the Indian nuclear energy sector, contrary to the frequent media speculations, is not in safety but in marketing. As a public sector unit, albeit autonomous, NPCIL does not solicit business with the same aggressiveness that may be expected from a private firm. It lobbies neither the central not state governments to consider nuclear energy in lieu of other options nor does it emphasise the several benefits of nuclear power. With foreign vendors balking at India’s nuclear liability law, NPCIL has not used the opportunity to step up and offer to substitute foreign reactors with its own.

Nuclear projects in India are frequently late, but this must be seen in the context of a nation where everything is perennially late. Delays occur due to several factors – change in specifications (eg post-Fukushima), citizen protests (eg Kudankulam), shortfalls in financing (eg the dissolution of the Soviet Union), delays in sourcing, and delays in construction. All of these can be avoided with better planning and greater public outreach from the land acquisition stage onwards. Even delays in sourcing can be mitigated if there are healthy growth prospects for the nuclear industry – private vendors of sub-components will not be eager to expand production capacity in either volume or pace unless there are profit incentives. Most components for the nuclear power industry are made to order with special characteristics that make them nuclear grade.

Efficiency of construction can be increased if the present policy of building only two reactors at a time is amended to allow greater simultaneous construction. The experience from the nuclear power project at Barakah in the United Arab Emirates clearly highlights the benefits of constructing four or more reactors at once. NPCIL seems to have failed at even making a technical case to the government for these operational efficiencies to be adopted as policy.

For the government’s part, it has not applied sufficient scrutiny to the Atomic Energy Commission for its generally lackadaisical performance. Still trapped in the mentality of a colonial police state, it has not even entertained the thought of allowing private players entry into the nuclear energy sector as not just component manufacturers but as operators and utility companies. It may not be a widely known fact that nuclear power, rather than logically being consolidated with the Ministry for Power, comes under the Prime Minister’s Office. Transferring responsibility would make a lot of sense, especially since India has already separated its civilian nuclear programme from its military efforts in concordance with the Indo-US nuclear deal. The Fourth Estate has a penchant for blaming Prime Minister Narendra Modi even for the most tertiary things – for once, in this case, it is actually he who must answer.

This post appeared on FirstPost on July 19, 2016.

Nuclear Power and its Discontents

29 Tue Dec 2015

Posted by in India, Nuclear, South Asia

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With India hoping to follow China in its rapid and mammoth nuclear power expansion, it merits consideration whether such an expensive yet foundational project is feasible. There are many shortcomings of nuclear power, though none of them are what are commonly perceived: though nuclear critics constantly wail from an outdated playbook about radiation, nuclear waste, and accidents, far more realistic problems are financing, regulatory processes, industry-wide deterioration of skills, and transparency. These deficiencies of nuclear power will become a millstone around India’s neck if not addressed soon and adequately. These shortcomings are not merely the responsibility of the industry; in some areas, the government must also play an active and positive role if it genuinely wishes to develop a source of clean, abundant, reliable, and safe energy.

It is true that nuclear power plants are expensive; although nuclear power itself is quite price competitive with other sources of electricity, the economics of nuclear power plants is such that most of the cost of the project – over its entire life – are demanded upfront. The costs of thermal energy are evenly spread over the life of a plant – usually 30 years – whereas the cost of nuclear fuel is a miniscule component of nuclear energy and market price fluctuations hardly affect the cost of electricity unlike with hydrocarbons. Furthermore, nuclear plants are built to last for 60 years, twice the lifespan of thermal power and thrice the duration of solar farms; nuclear regulatory authorities worldwide are looking at the latest nuclear power plant designs and considering extending the potential life of a reactor to a minimum of 80 and a maximum of 100 years. Another factor adding to the cost of nuclear power is that estimates made consider nuclear waste – whether it is stored or reprocessed – and decommissioning. Fossil fuel has so far managed to get off without paying for the massive pollution it causes, in effect subsidising its operations.

This over-engineering raises the initial cost of nuclear power plants. Though the figures periodically released to the Lok Sabha by the Department of Atomic Energy (DAE) indicate that nuclear energy is competitive with other sources of energy over its lifetime, the high initial cost creates a financial burden few are willing to or capable of taking. Investors are usually not so sanguine on projects that have a long gestation period and the return on investment is low. In a more market-oriented world, the nuclear industry must address this issue if it is to win over any critics. One idea the industry has been playing with is making reactors smaller. The sacrifice in economy of scale is hoped to be compensated by creating modular components that can be fabricated faster and the smaller size will make them suitable not just around urban concentrations but even for use in more sparsely populated or rural areas. Some entrepreneurs are even toying with production line manufacturing on nuclear power plants. If it works, the speed of construction should increase drastically as well as the cost come down; together, these improvements will make the cost of financing more attractive to lenders and inspire greater interest in nuclear power.

The government, for its part, can also make financing of nuclear power easier. In China, for example, the China National Nuclear Corporation (CNNC) raised $2.5 billion in May 2015 through an IPO in the Shanghai stock market. Delhi’s reticence to allow any public scrutiny of the nuclear industry – financially, technologically, or administratively – only hampers the nuclear public sector undertaking from realising its full potential. Financial streams from the private sector are also forbidden and it was only a couple of weeks ago that an amendment to the Atomic Energy Act was passed to allow even other PSUs to invest – from a distance – in the nuclear sector! In 2012, there was a proposal to divest some 10 per cent from the Nuclear Power Corporation of India (NPCIL) and list it on the bourses but like many files in the Indian bureaucracy, little has been heard of it since.

A second obstacle the nuclear industry faces is the regulatory authority. In the United States, the complaint of the nuclear industry is that the process for the approval of new reactor designs is laborious, expensive, and sometimes done with criteria that reflects older knowledge than the latest developments in the industry. In India, the hurdles start sooner – in that the Atomic Energy regulatory Board (AERB) is not a body independent of the chain of command of those it regulates. Several members of the DAE have stressed on previous occasions that this administrative quibble does not in any way impinge upon the working of the regulatory authority but in a country like India where command influence and the flouting of laws is not at all uncommon, even the appearance of impropriety is reason to worry. Over decades of governmental misconduct, citizens have lost faith in government institutions and in areas like nuclear energy where the scope for damage is enormous, unflattering reports from the Comptroller and Auditor General (CAG) such as in 2012 are damning.

India is developing a 900 MW Light Water Reactor (LWR) and its Fast Breeder Reactors (FBR) have been close to criticality for at least three years now and awaiting regulatory clearances; the thorium-powered 300 MW Advanced Heavy Water Reactor (AHWR), a technology demonstrator, has been ready to break ground for a few years now. The Russian 1,000 MW VVER at Kudankulam I that shut down for routine maintenance has had its restart delayed, allegedly for thorough regulatory inspections. Each time, the nuclear establishment conveniently hides behind safety inspections – no one can fault the agency for due diligence and yet no one is clear what exactly causes the never-ending delays.

Perhaps the single greatest problem that faces nuclear power is the deterioration of skills in its workforce. This includes not just the engineers in the control room at a plant but the cement mixers, welders, and the dozens of other professions involved from the groundbreaking until the commissioning. Nowhere has this been more apparent than at Olkiluoto, the site in Finland where Areva is building its latest 1,650 MW reactor, the EPR. The crew did not have a proper understanding of nuclear safety, there was poor communication, problems witnessed were not immediately addressed, many of the workers were not trained in nuclear-grade construction, and the chain of command was unclear. According to industry reports, these problems arise from a lack of experience in nuclear construction: Europe had gone through a nuclear lull for 15 years and many of its best engineers and specialists had migrated to other industries since the last reactor was built.

India’s pace of nuclear construction has been lethargic at best, constructing only 20 reactors in the 46 years since its first civilian reactor went critical in 1969. It is only with a large and regular orders that the nuclear industry in India will be able to overcome its umpteen issues and streamline its efforts to reduce construction delays and improve quality. An example of this can be seen in the United Arab Emirates, where the experience of working on multiple reactors simultaneously has enabled efficiencies between construction sites. The Indian seems to have noticed this too, with reports on imminent nuclear agreements with Rosatom and Westinghouse suggesting that six reactors will be built at once rather than the traditional India two-at-a-time. Nonetheless, efficient nuclear builds require a decent tempo and given India’s shortage of power and commitments to clean energy, this ought not be a problem. The era of taking over a decade to construct one reactor, however, must be left behind.

The root of many fears about nuclear energy comes from a lack of transparency in the establishment. Nothing shuts mouths or doors faster on a researcher in India than mentioning the word, ‘nuclear.’ Despite their claims to openness, the DAE remains remarkably opaque to outsiders. From exploration for uranium to reprocessing, the Indian establishment reveals little about its civilian programme under the guise of security. So far, this policy has done a better job at covering incompetence than actually increasing security. Some of the more informative studies of the Indian nuclear programme, as a result, come from foreign think tanks who employ scientists to monitor nuclear developments worldwide. From observations that mean little to the uninitiated, these scholars have painted a picture of the Indian nuclear programme beyond what the Indian government reveals to its own citizens.

Most of this secrecy is unnecessary and only breeds suspicion in the minds of the public. The fantastic tales of malfeasance within India’s nuclear conclave gain weight only because it is difficult to know what to believe. The CAG has upbraided NPCIL on its resistance to greater transparency yet there seems to be little done to ameliorate the situation. This is not entirely within the hands of nuclear scientists and administrators – the laws of the land could well land them in jail if they were to actually embrace a more transparent work ethic. Some have suggested that greater public awareness is required but on this, it is difficult to fault the Indian nuclear establishment – although more can always be done, there has been an impressive array of events at various levels by the various nuclear agencies to reach out to the public and explain the basics of nuclear physics and safety. However, these efforts do not extend to questions on policy, processes, or administration. Wherever the fault lies, the DAE has a Herculean task before it to rectify the perception that it may or may not know what it is doing behind closed doors.

These are the main challenges ailing nuclear energy and those old concerns from the 1950s that make for more scintillating headlines – if the nuclear industry can address these four issues, they would be in a much better position to power the country to a cleaner, cheaper, and more energy-secure future. However, as one nuclear engineer with almost three decades of experience told me, how a society handles the first set of concerns from the six decades ago is usually a good indicator of how they will approach the real challenges today.

This post appeared on FirstPost on December 31, 2015.