Nuclear liability law stalls reactor contract

Although nuclear power technology major Areva S.A. and Nuclear Power Corporation of India Limited NPCIL have signed general nuclear agreements and specific agreements concerned with the construction of the nuclear power plant in Jaitapur, Maharashtra, during the French President's visit to India, continuing concerns about nuclear liability have hindered the signing of the contract for the first two reactors of the plant.

Areva and NPCIL signed a general framework agreement for the building of the European Pressurized Reactors EPRs and an agreement for "early works" at the nuclear power plant, but what has been described as a "lack of clarity" about liability concerns among French nuclear companies stopped the contract signing for the first two reactors.

A joint statement issued by the French President Nikolas Sarkozy and India's Prime Minister Manmohan Singh indicated that negotiations have reached an advanced stage. "Following India's enactment of a civil nuclear liability legislation, both countries stand ready to further exchange views on this issue, so as to ensure the appropriate framework for the sound development of their cooperation," he said.

The proposed Jaitapur power plant will have six EPR-type reactors, which will combine to generate about 10,000 MW of electricity, and is estimated to cost about $25 billion. A bilateral agreement between France and India signed in September 2008 led to the signing of a memorandum of understanding between Areva and NPCIL in February 2009 for the Jaitapur plant.

Further agreements were signed between India and France during the French President's visit that covered intellectual property rights and the confidentiality of information concerned with the development of peaceful uses of nuclear energy.

In another France-India agreement, the Hindustan Construction Company Limited HCC, which has constructed more than 50 of India's existing installed nuclear power capacity, has signed a cooperation agreement with VINCI Construction Grands Projets VCGP, the civil engineering arm of VINCI S.A.

The agreement covers potential collaborations on power, water, transport and other infrastructure projects, within India and in other countries. As VCGP is already involved with Areva in the development of the EPR program, the agreement also will specifically target participation in the Jaitapur nuclear project.

The Indian government and NPCIL plan to increase the installed nuclear generating capacity from the current 4,120 MW to 63,000 MW by 2032. About 40,000 MW of this extra capacity is planned to be delivered through technical collaboration with other countries, and the cooperation agreement between HCC and VCGP is seen as a positioning move to take a major role in the new plant build program.