Areva’s local partners to provide 40-50% of material, services

Areva’s local partners to provide 40-50% of material, services

Mumbai: Indian partners in the 9,900 mega watt (MW) nuclear power park Areva SA is developing in Jaitapur, Maharashtra, will contribute material and services to the extent of 40-50% of the costs for the first two reactors, a top executive of the French firm said.

Arthur de Montalembert, chairman and managing director of Areva India Pvt. Ltd, said that the company expects contribution from its Indian vendors to increase as the project progresses, to be able to keep tariffs competitive.

Loading video...

Areva, the world’s largest builder of nuclear plants, is contracted to develop six reactors of 1,650MW each in Ratnagiri district on India’s west coast for state-run Nuclear Power Corp. of India Ltd (NPCIL). The first two reactors are expected to be operational by 2018.

“Construction of power plant, balance of plant will be taken care of by Indian contractors and Areva will be providing the nuclear island (nuclear reactor vessel and steam generator)," Montalembert said in an interview in Mumbai on Friday. “As we go ahead with the project we will be looking to source castings and forgings for reactor vessels and steam turbines from Indian companies."

Areva and NPCIL want greater contribution from local vendors to contain the overall cost of the project. The per-MW cost of the project is a bone of contention between the two firms. While Areva has quoted a price of 17-18 crore per MW, NPCIL wants this restricted to 10 crore.

“We had told Areva if cost of the project exceeds beyond 10 crore per MW then we will not be able to offer competitive tariffs for our power," an NPCIL official said on condition of anonymity. “We expect power tariffs from conventional sources such as coal, gas and hydro at around 7-8 per unit in 2018, and our tariffs should be in the same range if the project has to be economically viable."

NPCIL suggested to Areva that the only way to keep costs down was to opt for more indigenization, the official said.

Areva has already signed a memorandum of understanding with Bharat Forge Ltd for heavy forgings.

Montalembert declined to comment on the commercial negotiations with NPCIL. “As a matter of policy, we don’t comment on commercial negotiations with our clients, so I will not be able to give any timeline also for conclusion of commercial negotiations," he said.

A second NPCIL official said the company’s mandate to Areva is clear that the project cost should not exceed 10 crore per MW. “We hope to conclude negotiations by the end of (the) calendar year," the official said.

On the supplier’s liability clause in India’s civil liability for nuclear damage law, Montalembert said Areva, like other vendors, is waiting for the rules of implementation of the law to be framed to ascertain its impact. “At this stage it is difficult to comment on the impact of (the) clause on the cost," he said.

The supplier’s liability clause allows the operator of a nuclear plant to seek damages from vendors if a nuclear incident occurs due to the supply of equipment with defects or sub-standard services.

On guarantees of fuel supply and the right to re-process spent fuel, Bertrand Barre, scientific adviser to Areva’s chief executive Luc Oursel, said, “France’s ambassador to India Jerome Bonnafont has already said that the Indo-French civil nuclear agreement aims at expanding existing cooperation in the field of nuclear reactors, nuclear fuel, nuclear fuel cycle and nuclear waste management etc., and Areva will be bound by bilateral agreements between (the) two countries."

Barre dismissed as propaganda by the anti-nuclear lobby, reports that its evolutionary pressurized reactors (EPRs) that are to be commissioned in Jaitapur are untested. These reactors will be commissioned in Finland, France and China before India, he said.

Barre said EPRs, which are third-generation reactors, are an improvement on second-generation reactors that have been in use globally for over two decades. EPRs include safety features to restrict threats such as a core melt-down within the reactor, he said. While the phenomena is rare, it can’t be ruled out completely, he said.