The Hindu Business Line : Koodankulam sets off chain reaction

Action is picking up in the Indian nuclear sector. With the opening of the new window of nuclear commerce with other countries, the first on the list of projects to come up in the country is at the Koodankulam site in Tamil Nadu. Two reactors are already being constructed with Russian assistance under an earlier inter-governmental pact, while another four units are being planned.

With Russia cashing in on its first-mover advantage and commencing preparatory work for the proposed additional units at Koodankulam, and the French and the Americans waiting in the wings, some degree of momentum in setting up of new Light Water Reactor-based capacities could be envisaged once a new government takes office at the Centre.

More important, Koodankulam Stage II could be vital, both in terms of pricing and safety benchmarks, for all the new nuclear capacities that are to come up in the country.

Schedule

According the latest information, Russia has communicated to the Indian side that it plans to wrap up the feasibility study for two of the four units proposed at the Koodankulam nuclear site by mid-2009. This means construction of the project’s new units could possibly begin this year itself.

On the issue of reactor type for new Koodankulam units, the possibility of continuing with the third generation ‘VVER-1000’ reactor being used in the two units currently under construction, or going in for the new generation ‘VVER 1200’ units, is being debated by the Department of Atomic Energy. Currently, state-owned Nuclear Power Corporation of India Ltd (NPCIL) is preparing the construction site and obtaining necessary clearances for the two new units (Units 3 and 4).

The fourth unit will be built almost simultaneously with the third one, while the construction of a proposed fifth and sixth units at the same site is likely to commence when the third and fourth units are near completion. The Russian government-owned utility Atomstroyexport, which is currently involved in building the first and second units of the Koodankulam project, will take up the work for the new reactors as well. Atomstroyexport is currently building nuclear plants in China and Iran and starting a similar project at Belene in Bulgaria.

Costing

The biggest apprehension voiced against imported nuclear reactor-based capacities planned in the country, in the wake of the Indo-US nuclear deal, has been on the pricing front. The fear, essentially, is that the project cost entailed in setting up these new, gargantuan imported reactors could push final retail electricity tariffs to levels that consumers will find difficult to pay, creating an Enron kind of a situation.

For the new ‘VVER 1000’ units being offered by the Russians, the upfront price tag being quoted is $2 billion for each reactor under discussion. Russia has, meanwhile, proposed a sweetener in the form of a 30 per cent discount.

The discounts are based on plans by the Russians to start serial production of reactors for the Indian nuclear industry, for which Atomstroyexport is tying up with local partners. A pact with Larsen & Toubro has been signed by the Russian firm. Factoring in the discount, the cost of construction for each new reactor comes to roughly Rs 7 crore per mega watt (at current exchange rates).

This, according to analysts, is within “acceptable range”, provided there are no overruns in project execution deadline and consequent price escalations. While at these levels, project costing is around 35 per cent higher than for a thermal plant of a similar size, it needs to be borne in mind that the age of a nuclear station is pegged at 60 years, double that for a typical thermal station.

The cost estimates, however, do not include decommissioning costs that have to be borne at the end of the life of a nuclear plant. In the case of first two ‘VVER-1000’ units under construction at Koodankulam, where work started way before the nuclear sector opened up, the total construction cost was estimated at $2.6 billion. At current exchange rates, it translates to around Rs 6.5 crore per MW.

The Russian Government had provided India with long-term credit, which covered almost half of the cost of these first two units. The NPCIL expects the first Koodankulam unit, when operational, to be able to sell power at less than Rs 2.50 a unit (kilowatt hour) — ostensibly a very acceptable tariff estimate.

Safety

Koodankulam’s two under-construction units are being built in accordance with an agreement signed by India and the erstwhile Soviet Union in 1988, even as actual work on the first two units started in March 2002. The initial accord stipulated the construction of two 1,000 MWe (mega watt electric) reactors.

Subsequently, in December 2008, India and Russia signed an agreement for the construction of four more reactors at the same site. According to NPCIL officials, the first Koodankulam unit may be ready by the end of 2009. The ‘VVER 1000’ units currently being installed have special devices that intercept, cool and localise core melt in case of an accident — a kind of concrete trap located under the reactor. Besides, the Russians claim the units are earthquake-, hurricane- and air-crash proof.

The two existing units, located on the Indian Ocean coast, survived the tsunami of 2004, with the waves kept away by a special ‘wave cutter’. The Russian nuclear industry already has a significant presence in India, with a total of 100 Russian companies and organisations already involved in the Koodankulam project.

For the first two units, the Russian side’s mandate was to draft documentation, supply equipment and materials, control the construction and equipping process, and train Indian operators at Russian enterprises and nuclear plants.

Cost

Koodankulam is important in the way imported Light Water Reactor-based nuclear capacities get added in the future, in probably the same way as the Tarapur project was to the nascent Indian nuclear industry. This is specifically because Koodankulam could well prove to be the benchmark for future projects being developed through foreign participation under inter-governmental pacts.

India is planning to set up a slew of nuclear power parks across the country, with the sites chosen so far being Jaitapur in Maharashtra, Pati Sonapur in Orissa, Haripur in West Bengal, Mithirvirdi in Gujarat, and Kowadi in Andhra Pradesh. Six to eight reactors, of 1,000-1,650 MW, are proposed to be installed at each nuclear park. Negotiations are on with four global suppliers — GE-Hitachi and Toshiba-Westinghouse of the US, Areva of France, besides Atomstroyexport.

The French have already been assured the Jaitapur site, where Areva NP would set up its EPR reactor units even as the American reactor manufacturers are also waiting in the wings for site allocation. With different reactor manufacturers grabbing a piece of the Indian nuclear market, the ones offering the best deals could be those who get the first-mover advantage.

Koodankulam will prove to be a crucial benchmark in terms of pricing and project implementation experience for all of the drama set to unfold in Act Two of the India nuclear saga.

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