Nuclear Power Corp. of India Ltd (NPCIL’s) ambitious target to add almost 15 gigawatts plus of capacity between 2010 and 2020 will bring in investments of $20-25 billion over the next 10 years.
This comes in the backdrop of the Indo-US nuclear deal (123 Agreement) and the India-specific waiver from the Nuclear Suppliers Group (NSG) under the aegis of the International Atomic Energy Agency (IAEA). The India-specific waiver at the NSG gives India the right to pursue nuclear ambitions and also access to nuclear fuel for the first time in 30 years.
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Project awards for initial 1.4 gigawatts of capacity (at Kakrapar, Gujarat) being set up by NPCIL have commenced with Larsen and Toubro Ltd (L&T) announcing order intake of Rs840 crore in December towards reactor components. These awards are after a gap of five-six years. In addition, NPCIL intends to commence construction/awards shortly on 1.4 gigawatts of capacity at Rawatbhata, Rajasthan.
Further, 16 gigawatts plus of capacity is being planned to be set up through international cooperation with imported fuel for which preliminary activities have been commissioned/completed in certain cases. This entails a meaningful opportunity to Indian companies, with established presence in the nuclear power segment.
NPCIL estimates cost for setting up nuclear power projects at Rs6-8 crore per MW and construction time period of five-six years. Nuclear power plants, in general, have a shelf life of about 60 years and hence the fixed costs are spread over a longer period, which enables tariffs from these plants at Rs2.5-Rs3.5 per unit (in line with thermal coal projects based on imported coal).
Further, the projects being set up through international cooperation also entail a letter of credit at concessional rates, which lowers fixed charges. For instance, the Kudankulam project being built with Russian cooperation is being funded through Russian credit of $1.6 billion at 4% interest, repayable over 15 years post commercial operations. Also, for the 3.3 gigawatts Jaitapur project, the French government is supporting a credit line for French equipment supplies.
L&T and Bharat Heavy Electricals Ltd (Bhel) will be the key beneficiaries of increased investments in nuclear power. L&T is probably the only Indian company which can execute nuclear power projects on lump sum turnkey basis. Both companies have also formed a series of joint ventures (JVs) with NPCIL to manufacture components for nuclear power plants: Bhel for steam turbine generators and L&T for special steel and ultra-heavy forgings.
We understand that the market for components involving a long manufacturing cycle, such as heavy forgings and those using special raw materials, is likely to open up first, followed by that for construction and engineering services, and lastly by that for turbine plant equipment, electrical plant, and other balance of plant equipment.
GE Hitachi hopes to feed more than half of its clientele by manufacturing the castings and forgings in India. Various media articles have quoted that “50-70% of the equipment can be made here for both India and international market and manufacturing here can save as much as 50% cost”.
There are many countries with small-sized grids where only medium-sized reactors will be suitable. Currently, in India, the small and medium reactor technology is still available. NPCIL has developed an export model for 220MW equivalent and 540MW equivalent reactors.
The key issue in aggressively targeting such companies is the shortage of uranium as buyers look forward to lifetime supply of fuel. Towards this, NPCIL has signed intergovernmental agreements with Kazakhasthan, Argentina, Namibia and Mongolia, among others.
Graphics by Yogesh Kumar/Mint