Concerns on high price remain

Following clearance from the Atomic Energy Commission and the Cabinet Committee on Security on Tuesday night, the Nuclear Power Corporation of India Ltd is all set to sign a ‘pre-early works agreement’ for six 1,000 MWe reactors with Westinghouse, official Indian sources said here on Wednesday.

On Washington’s insistence, the signing has been rushed to demonstrate the commitment of the Manmohan Singh government to fulfilling its end of the nuclear bargain struck with the U.S. in 2008 — that in exchange for American efforts to lift the global embargo on nuclear sales to India, the country would buy at least 10,000 MWe worth of U.S. reactors.

The agreement, to be signed before Prime Minister Singh’s meeting with U.S. President Barack Obama on Friday, marks the first concrete step towards a full-fledged commercial deal and will involve NPCIL paying approximately Rs. 100 crore to the American company in exchange for the proprietary information needed to plan the proposed nuclear park in Mithi Virdi, Gujarat, and secure clearances from the Atomic Energy Regulatory Board.

Though a lot of hard negotiations are still required to move to the next stage, Indian atomic energy officials are concerned at the “upper limit calculation” for the price of power in the proposed agreement. According to a report in The Indian Express, this stands at approximately Rs. 12 per kilowatt/hour, or more than double the price at which the Russian reactors at Kudankulam will produce electricity.

While there is some scope for NPCIL to bring the price down during commercial negotiations, Indian officials say the liability issue will be cited by Westinghouse as the reason for keeping the price high.