GE fearful of losing Indian contracts if US fails to back pact

GE fearful of losing Indian contracts if US fails to back pact
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First Published: Wed, Aug 27 2008. 12 35 AM IST
Updated: Wed, Aug 27 2008. 12 35 AM IST
Washington / Boston: The world’s biggest maker of energy-generation equipment, General Electric Co. (GE), says it may lose contracts in India to French, Russian and Japanese rivals if the US Congress doesn’t ratify a US-India nuclear deal soon after the agreement wins approval from a coalition of supplier nations.
“It will be very important for the US Congress to act quickly to approve the agreement” once India has cleared the 45-nation Nuclear Suppliers Group, Karan Bhatia, GE’s Washington-based vice-president for international law and policy, said. If Congress fails, “US companies could be at a significant competitive disadvantage.”
Congress, starting its next session on 8 September, may not endorse the US-India nuclear cooperation agreement before it adjourns on 26 September because the proposal before the supplier group to lift a global atomic trade ban on India doesn’t conform to US law, Howard Berman, chairman of the house foreign relations committee, wrote in an 5 August letter to secretary of state Condoleezza Rice. The supplier group meeting in Vienna on 22 August ended without a consensus and the next gathering is set for 4 September.
GE’s nuclear unit is a joint venture that is 40% owned by Japan’s Hitachi Ltd. It’s competing for a share of about $10 billion (Rs44,100 crore) of orders to supply reactors to India against Westinghouse Electric Co., which is owned by Tokyo-based Toshiba Corp., and with France’s Areva SA and Russia’s Rosatom Corp.
India plans to meet its rising energy demands through atomic power, breaking out of 34 years of nuclear trade restrictions following its first weapons test in 1974.
In his letter, Berman said the supplier group’s approval must specify that if India explodes a nuclear weapon or violates agreements to safeguard atomic fuel, all contracts to supply equipment for power plants will be terminated. India opposes such conditions. He also said “it would be better to review these complex matters” in the next session after January because there wasn’t enough time left this year.
Once the group lifts the trade ban, Congress must ratify the agreement to ensure US companies are in compliance with the 2006 Hyde Act that paved the way for India to begin discussions with the International Atomic Energy Agency and other nations.
“Our participation in India depends on US government approval, because we are a US-based company,” Vaughn Gilbert, a spokesman for Monroeville, Pennsylvania-based Westinghouse, said.
If congressional approval is pushed to next year, “we’ll have to start all over again because we’ll have a new administration,” William Cohen, former US defence secretary, now chief executive officer of Cohen Group, said in an interview. “It will be a great irony” if US companies lose out to foreign competitors because “we championed this effort.”
GE also is calling for India to pass a nuclear liability law that protects investors from legal responsibilities in case of accidents.
“Liability limitations remain very important for companies operating in this area,” Bhatia said. “We and other companies have communicated this to the US and Indian governments and are confident that India recognizes the need to address this issue.”
GE doesn’t break out the revenue for its nuclear operations, a part of the Atlanta-based GE Energy, the world’s biggest provider of gas-fired turbines. GE Energy provided $21.8 billion of the parent company’s $172.7 billion in sales last year.
Shares in GE lost 80 cents, or 2.75%, to $28.32 on the New York Stock Exchange on Monday. The company’s stock has declined 15.63% in the past six months.
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First Published: Wed, Aug 27 2008. 12 35 AM IST