Even as its mega investment plan for the Posco steel plant is hanging fire, South Korea has sought permission for another big ticket item — a nuclear park. But New Delhi is moving cautiously and would like Seoul to first set up a technology demonstrator or a small civil nuclear plant, according to government sources familiar with the discussions.

The two sides will take the first tentative steps with a seminar towards the end of the next month in Mumbai, when South Korea will spell out the technology and other issues. Officials from the Korean government and industry will interact with officials from the Indian civil nuclear sector to assess their chances of entering the Indian power sector.

Seoul came into the reckoning after it beat the French company Areva in a $20-billion United Arab Emirates tender for civil nuclear plants. The first formal expression of interest for a nuclear park came during a meeting between Prime Minister Manmohan Singh and South Korean President Lee Myun Bak in March this year, although both sides signed a civil nuclear agreement last year.

Indian officials said they favoured a technology demonstrator unit because their atomic energy counterparts were unfamiliar with South Korean reactors. They were not sure if the Department of Atomic Energy would be able to accommodate another technology as it had its “hands full” in dealing with French, Russian and American reactor technologies.

Korea hopeful

Although the Korean President, who lays down office towards the end of the year, might not have the satisfaction of ensuring that his country made inroads into the Indian civil nuclear sector during his tenure, Korean diplomats were hopeful of the Posco imbroglio ending by September this year. The originally proposed investment in the Posco plant was $12 billion, which is the highest-ever single-ticket foreign investment proposal. Each civil nuclear plant is likely to cost $5 billion. India has tended to order two plants at one go but each park of French, U.S. and Russian companies is likely to have six reactors.

Land acquisition has been affected because of an agitation being led by the Posco Pratirodh Sangram Samiti (PPSS). Mr. Lee had hoped to flag off the plant's construction during his visit in 2010 but the intensity of the protests forced him to skip the Odisha leg altogether.

Following a meeting on May 2 this year between the Koreans and Odisha Chief Minister Navin Patnaik, Posco indicated its willingness to scale down its plans for the plant. The Odisha government would provide additional facilities to compensate Posco for setting up an 8-million tonne per annum (mtpa) plant instead of the original 12-mtpa one and giving up plans for a captive port and instead settle for captive berths at the Paradeep port.

Watching Orissa's move

“We have to now wait and see what the Orissa government does. We have done our best and have waited for a long time but we don't want to pressure the Indian government,” said the diplomats.

But human rights lawyer Imran Ali, who has contested criminal cases filed against villagers, said the offer was unlikely to be accepted. “The land is fertile and is the only source of livelihood for the people in the area. My assessment is that they will not give up land for the compensation package on offer,” he said.

Small plant ‘a ruse'

PPSS leader Abhay Sahu also ruled out giving up the agitation. “The offer to construct a smaller plant is a ruse. Once they do that, the adjacent land will be useless and they will then buy it up. We had a big rally on May 30 and the villagers rejected what they had heard. There is no official word on this,” he said.

While these two mega projects are still in the pipeline, India and South Korea are renegotiating the Comprehensive Economic Partnership Agreement (CEPA) signed in 2009. Since then, both countries have made better offers to other countries in some product lines and want to accommodate these in the India-Korea CEPA. Trade during calendar 2011 was $20 billion, which is nearly triple the figure five years ago.

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