Areva may source locally for Jaitapur nuclear project3 min read . Updated: 10 Mar 2015, 12:37 AM IST
Firm hopes local sourcing will save costs for itself, as well as for Nuclear Power Corp. of India, which will operate the project
Mumbai: Areva SA of France, the world’s largest nuclear reactor maker, is likely to buy some key components for the 9,900 megawatts (MW) Jaitapur nuclear project on Maharashtra’s Konkan coast from local manufacturers, the head of its Indian subsidiary said.
The move comes at a time when Areva has just recorded a loss of €4.83 billion (around ₹ 32,845 crore today) in 2014.
“As part of our improvement plan, we are looking for sourcing in India of components for the nuclear island, which will not only help us to reduce cost for our customer (NPCIL), but also further contribute to the Make in India policy," said Erwan Hinault, country managing director of Areva India Pvt. Ltd, the fully-owned subsidiary of Areva SA.
The nuclear island includes the reactor that contains fuel and control systems, pumps for circulating the coolant, the pressurizer used to maintain pressure inside the plant and the steam generator.
It has not been smooth sailing for the Jaitapur project, though.
The nuclear project, which will be the world’s biggest in terms of power production once it is complete, has drawn the ire of environmentalists, anti-nuclear activists and the local community, especially after the Fukushima nuclear disaster in Japan. The Shiv Sena, which has a strong presence in the Konkan region, has consistently opposed the project, even though the Bharatiya Janata Party, its senior partner in the state’s ruling alliance, has pledged support for it. The Sena has threatened an agitation on 16 March to shut down the project office in Jaitapur. The state’s Congress and Nationalist Congress Party, as well as the central government, have, however, supported the project.
Areva is the technology partner and major vendor for NPCIL, which will own and operate the project with six reactors of 1,650MW each.
An analyst said Areva’s plan is a win-win situation for Areva, NPCIL and Indian companies.
Kameswara Rao, partner and leader of energy, utility and mining practice at audit and consultancy firm PwC India said, “Besides the large civil construction component, a sizeable part of nuclear power island can be localized to reduce project cost and minimize the foreign exchange component. Indian companies now have capabilities beyond the 220MW class and the supply chain for special steels can also be developed locally."
The long gestation period of a nuclear power plant of 8-10 years gives an opportunity for the reactor supplier and the operator to work with local manufacturers to pre-qualify them and develop a reliable supply chain. A greater engagement of local suppliers also gives the operator greater options to address any subsequent regulatory requirements and gives comfort of dealing with any safety situations, Rao added.
Hinault attributed the losses posted by the parent to “impairment charges, losses at completion and contingencies for discontinued renewable business". The company will be back in profit by 2018, he predicted.
As part of its turnaround strategy, Areva has decided to exit the renewable space and focus on its core nuclear business. Areva has built a 125MW solar power plant based on concentrated solar power technology in Rajasthan for Reliance Power Ltd and has an agreement to build one more 125MW solar power plant. The company has so far built 47.5MW biomass-based power plants for various firms in India and also use its technology centre in Chennai to serve the South-East Asian market. Areva Renewable Energies India Pvt. Ltd employs a little over 100 employees.
Hinault said, “As part of overall turnaround plan, company has decided to concentrate on what we do best, that is building and maintaining nuclear power plants and provide nuclear fuel services. Of course, we are committed to our clients and will complete projects on our hand, but we will not do any further business development activity without partners in the renewable space."