Opinion » Lead

Updated: September 26, 2013 02:03 IST

Nuclear extravagance in Washington

    Suvrat Raju
    M. V. Ramana
Comment (23)   ·   print   ·   T  T  

In rushing to purchase commercially untested reactors from the United States, New Delhi has glossed over concerns about safety and the scope of suppliers’ liability, while failing to assess profitability in the long run

Nuclear commerce is likely to feature prominently in the forthcoming discussion between Prime Minister Manmohan Singh and President Barack Obama in Washington. The U.S. government is keen to clinch some sales for its nuclear industry. The Prime Minister would like to advance the nuclear deal that has, so far, failed to yield a single contract for reactors. However, as we describe here, India’s plans to buy reactors from the U.S. are deeply problematic: they involve the expenditure of thousands of crores of Indian public money on arbitrarily selected American companies. The reactors on offer are commercially untested, and accompanied by unscientific promises about high levels of safety that are belied by the fierce determination of these companies to absolve themselves of responsibility for any accident.

Cost escalations

Public knowledge of these deals dates back to 2008 when William Burns, a senior U.S. diplomat, told the U.S. Senate that the Indian government had written a “strong Letter of Intent stating India’s intention to set aside at least two reactor sites with a minimum of 10,000 MWe generating capacity for U.S. firms.” It is customary for the government to go through a competitive bidding process, or at least a feasibility study before awarding a large contract. However, this commitment was made without even settling on broad details like the reactor-designs. In subsequent years, the two sites have been narrowed down to Mithi Virdi in Gujarat for Westinghouse, and Kovvada in Andha Pradesh for General Electric (GE).

The reactor proposed for Mithi Virdi is the AP1000 — a pressurised light water reactor. The Nuclear Power Corporation of India Limited (NPCIL) has already signed a memorandum of understanding with Westinghouse on an “early works agreement,” which is likely to be finalised during the Prime Minister’s visit.

No AP1000 has entered commercial operation anywhere in the world, although eight are being constructed — four each in China and the U.S. The AP1000 is based on the AP600 — a design that was described by the president of the U.S. Nuclear Energy Institute as one that “will compete in world and U.S. markets and maintain America’s global leadership.” In the event, not a single AP600 was ever constructed, because it could not compete economically.

It is evident that electricity from the AP1000 will also be expensive. In the Vogtle project, where two AP1000 reactors are being constructed in the U.S. state of Georgia, each reactor was initially estimated to cost approximately $7 billion.

Despite strong governmental support, including an offer of a loan guarantee for $8.3 billion, the plant has already been delayed by a year. Costs have increased, contributing to a downgrade of the associated corporations by financial rating agencies. Westinghouse, and the operator, Georgia Power, recently sued each other for nearly a billion dollars, with each blaming the other for delays and cost escalations.

In May, another U.S. utility, Duke Energy, suspended plans to construct AP1000 reactors in North Carolina. Last month, the same company cancelled two AP1000 reactors in Florida after total cost estimates had risen to “between $19 and $24 billion,” before the start of construction.

The reactor design chosen for Kovvada is GE’s Economic Simplified Boiling Water Reactor (ESBWR). This design has not even been certified in the U.S. and not a single ESBWR is under construction anywhere. A few years ago, when talk of a “nuclear renaissance” was rife, a few companies explored the possibility of the ESBWR; one estimated that each reactor would cost $8.5 billion. All those plans are essentially frozen or cancelled.

The capital costs of both these American designs, per unit of installed capacity, are roughly the same as those of the French EPRs planned for Jaitapur. In a detailed analysis for the Economic and Political Weekly, we estimated that at these prices, first-year tariffs would be around Rs.15 per unit of electricity, even after allowing for substantially lower construction costs in India.

Moreover, several indirect subsidies are built into the government’s revenue model for imported reactors. These include cheap loans at taxpayer risk and an investment pattern where the government injects equity early during the construction process, only to receive an effective rate of return on capital well below that mandated by power sector regulations.

Liability law

Despite the government’s willingness to bear these high costs, contracts have been held up by a dispute over a relatively minor clause in India’s nuclear liability law. In his 2008 Senate testimony, Burns pointed out that “India also has committed to adhere to the Convention on Supplementary Compensation (CSC),” which indemnifies the manufacturers of nuclear plants in the event of an accident. As Burns’ deputy, Robert Blake explained, this “would provide a very important legal protection and open the way for billions of dollars in American reactor exports.”

The U.S. engineered the CSC with a discriminatory “grandfather clause” that allows it to maintain its own distinct liability law. Since only four countries have ratified this outlying U.S. creation, the CSC has not even entered into force. Nevertheless, in 2010, the Indian government acquiesced to American demands and drafted a liability bill, almost entirely based on an annex to this convention.

The final law prevents victims from filing lawsuits against the manufacturer, and also caps the liability of the NPCIL at Rs.1,500 crore. In Fukushima — where the accident continues to cause devastation after two years — the costs of a clean-up are estimated to be several hundred times larger. As such, the law is heavily biased in favour of the industry. Nevertheless, the Americans are unhappy since, at the insistence of Parliament, the Indian law does not indemnify their companies outright but allows the NPCIL to recover the money paid out in compensation from the manufacturer.

From another perspective, this indicates a fundamental structural problem with the law: it takes away the rights of victims to directly petition the courts to punish the supplier for negligence. In Bhopal, the government first insisted on representing all the victims, and then let Union Carbide off the hook. A report in this newspaper (September 19) indicates that the government plans to repeat this strategy, by promising the Americans that the NPCIL will not exercise its “right of recourse.”

This is part of a persuasive case made in a Supreme Court petition — filed by the prominent lawyer Prashant Bhushan — that the current law impinges on the constitutional rights of Indian citizens. Ironically, if the Court takes cognisance of the recent actions of the government, which show how the law can be subverted, then this may result in U.S. companies having to face higher levels of liability.

This reluctance to accept liability is in sharp contrast with the claims of safety surrounding the reactors. Westinghouse asserts that its reactors are likely to suffer severe accidents less than once in four million years. If this were true then, given the cap on liability, it would cost only Rs.2 lakh to insure the reactor for its entire lifetime — an absurdly low number. The problem is that Westinghouse bases its claims on a method called “probabilistic safety assessment” that cannot be justified scientifically. By using a standard mathematical technique called “Bayesian analysis” to extrapolate from the observed pattern of nuclear accidents, it is easy to show that the Westinghouse figure is almost certainly wrong.

Local misgivings

Apart from these legal and technical issues, there are significant local misgivings about the reactors. A strong protest movement has come up in Mithi Virdi, where a “tractor rally” was held in anticipation of the Prime Minister’s U.S. visit. In March, thousands of people walked out of the public hearing on the environmental impact assessment. Numerous civil society groups, ranging from students to fishermen, have registered their opposition to the reactor in Kovvada.

While reassuring nuclear manufacturers on the liability law, the Prime Minister explained that “the proof of the pudding is in the eating … I hope their profits will tell the true story. If they make a lot of money, they will forget some of the concerns they have expressed.” One can only hope that in Washington, he will also spare a thought for the concerns of Indian citizens and local residents.

(The authors are physicists associated with the Coalition for Nuclear Disarmament and Peace. Ramana is the author of The Power of Promise: Examining Nuclear Energy in India, Penguin, 2012. The views expressed are personal.)

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Is it not clear, that these companies are using Indians as guinea pigs to experiment their reactors on. If there is an explosion, which they cannot guarantee against either, its up to the Indian public to fend for themselves. That the PM has agreed to the demands of these scrupulous companies is a clear sign that the government is least interested in the safety and security of Indians. I am sure some other scam will come up sooner or later with respect to this issue.

from:  Nitya
Posted on: Sep 26, 2013 at 21:08 IST

This article didn't speaks about united states denial of transfer of
enr(enrichment and reprocessing )technology to india. This enr
technology is very much needed by india to reach its ambitious 2020
target of 20000 Mev. Though india has 1/3 rd of thorium(fertile)
deposits, it can be converted to U233(fissile) only by reprocess
technology.In civil nuclear deal agreement , us wants india but
regarding india US is not the only manufacturer. japan(mitsubishi) ,
france(raaefal) are ready to supply nuclear machines to india. so
india must think wise in this matter

from:  k.vikraman
Posted on: Sep 26, 2013 at 20:44 IST

People of India will do well to remember that, for a nuclear reactor we have NO REASON and NO LOGIC to believe such advertisements. It is not like the advertisement of a washing machine which can be tested for its veracity by putting to use.

As the same authors once put it pithily once earlier, if the Westinghouse claim about ONCE IN 4 MILLION years is correct, then there is no reason to seek a liability cap. That bares the reality that Westinghouse is making false advertisements.

from:  Janarddan
Posted on: Sep 26, 2013 at 13:16 IST

Instead of playing to the tune of USA's nuclear corporations, our
National Government can take a leaf out of Narendra Modi's book, by
funding indigenous Solar Power Plants. Even they need huge investment,
but once incorporated, they are sufficient. Research in improving the
efficiency aswell has gone a long way. I really hope Indian Government
stops its adventurism.

from:  Dinesh
Posted on: Sep 26, 2013 at 12:18 IST

A timely article. Nuclear energy may be an option but neither 'clean' nor effective also from
the cost angles as detailed. Apparent o'cleanness' claimed is more than offset by its radio
active effluent that is harmful and long lasting and in the event of a failure or accident the
consequences are unthinkably devastating. When nuclear option for energy itself is
questionable, we are quibbling over liability clauses when the liability is something that is not
quantifiable and beyond any compensation.The argument that risks are the mother of
success and growth, is certainly valid, but recklessness is not prudent. Research on the
issues related to safety, i.e disposal of harmful effluents and technology to neutralize the
deadly radio activity effectively should precede any large scale commissioning of an
unproven hazardous nuclear technology unless it is for destruction as in making bombs.
Statistics employed selectively is untrustworthy. World should wake up to rule out nuclear

from:  M.R.Sampath
Posted on: Sep 26, 2013 at 12:02 IST

As author himself pointed out that pressurised light water reactor s are being built in the usa as well as china, so safety aspects of this reactor should not be given undue consideration. We should sincerly consider our future energy needs and resources available to fulfil them.same time we must not forget the harms caused to environment by coal fired plants. We need to invest in nuclear energy not only to fulfil citizens' energy requirement but also to make our economy competitive. If we will ask for more liability from manufacturers then surely it is going to increase the cost of electricity unit because they are here to do business , not to pay premium cost from their pockets.

from:  Abhishek
Posted on: Sep 26, 2013 at 12:01 IST

The writers should also contrast the US law on liability that company like BP faces for Gulf oil spill.
These laws ensure that Indians become 2nd class global citizens with less rights.
The govt plans to give advance money to US companies, this is blatant corruption at the highest level. The advance money can itself buy India a few 100 MW of wind power.

from:  Abhinav
Posted on: Sep 26, 2013 at 12:01 IST

We all know Bhopal is world's largest Industrial tragedy. Is it because of Congress's extravagance to USA at that time? Well this nuclear extravagance of congress to USA now will bring Bhopal on what scale, we have to think now.

from:  Martin Kurian
Posted on: Sep 26, 2013 at 11:42 IST

Import of nuclear power plants, posited on two propagandised averments
namely inadequate Natural Uranium reserves, and NEED to have 60,000
MWe or so of nuclear generation capacity, is against our Nation's
interests to become self-reliant in technology and (heavy) industrial
manufacture. Answering questions in the Parliament, successive
Governments have indicated that India has adequate U mineral resources
to sustain our well-chalked-out 3-stage plans in which LWRs (except
Tarapur 1&2) had no place. If at all, according to some of the
Answers, the "shortage" of fuel is supposed to be only temporary due
to "mismatch" (euphemism for "mismanagement"?) between production and
consumption. Cognoscenti may be able estimate and place in public
domain, how much Nat U has so far been consumed in PHWRs, how much is
the estimated reserves at Tummalapalle and everywhere else in our
country, and how long it will last before which Pu and Th Breeders
become a major source of Nuclear Electricity.

from:  Udhishtir
Posted on: Sep 26, 2013 at 11:27 IST

Today, when solar electricity, environment friendly renewable source
of electricity is nearly reaching grid parity for commercial and
industrial sectors, and given India's vast potential for solar, it is
tragic that our Congress government is acting as the servant of
American nuclear companies.

Indian tax-payers will not only have to pay for the reactors but also
continually pay for the fuel. All this for a unit of electricity that
is going to cost Rs. 15??? Solar electricity in Gujarat is now
available for Rs. 9. It is amazing how our highly educated Prime
Minister is not willing to see simple economics. Perhaps 20 years
later, The Hindu will discover a Rs. 1 million crore nuclear scam
which would justify our government's lust for nuclear.

And the environment?

from:  Akanksha
Posted on: Sep 26, 2013 at 11:27 IST

Very well written article but I feel it is biased to some extent when it comes to comparing costs involved in nuclear power against fossil fuels. ATM 76% of India's electricity comes from coal. There is a huge amount of energy consumed in mining, transporting, crushing, Processing, burning coal, transmission etc. If u take this into consideration less than 26% of coals calorific value is put into use by the end user of power. This doesn't consider the damage caused to forests, Air quality, health and land consumption. By comparing Apples with Apples Nuclear power is the cleanest and safest form of energy in the world. Number of people directly killed in coal mining accidents compared to people killed in nuclear accidents is thousand fold. The source of all forms of energy on this planet is the Sun, which itself is a huge nuclear reactor. Europe leads US in this field & India should actively pursue EPR reactors instead of AP1000.

from:  victor
Posted on: Sep 26, 2013 at 11:18 IST

USA aircraft , ships , rockets , nuclear components , etc sold to Other countries , come with EMBEDDED SPYING AND GPS chips.

from:  mort
Posted on: Sep 26, 2013 at 11:13 IST

Excellent article that has touched on very important points concerning liability,
costs and the rights of Indian citizens.

The details concerning the problems of spent fuel, uranium mining as well as the
costs and dangers of storing radioactive waste should be discussed so that the
readers will be able to assess the foolhardy attitude of our servile Government.
Future generations will be endangered if any of these reactors are set up in India.
Nuclear energy should not be expanded in India. Japan has shut down all its
reactors and it is still managing to supply the country with sufficient electricity.
India should increase its energy efficiency especially its enormous power
transmission losses and install solar panels on every household instead of giving
away billions and billion to the predatory multi-national corporations. Create the
millions of jobs in the renewable energy sector and put the country on a self-
sufficieny track.

from:  Srinivasan
Posted on: Sep 26, 2013 at 09:39 IST

While the US has enacted a legislation to protect its companies being
sued abroad for negligence and damages, it frowns on India for seeking
safeguards from the US suppliers. What an inequity is this? Added to
this it is now seeking more tight rules on immigration even as Indian
students make the US Business schools flourish. When the Indo-US
Business Council met in Washington soon after Obama took over, US
officials and business chiefs gave a list of demands to our visiting
FM where liberalisation was needed; not only this they also asked our
minister to ensure that this is done before their President visited
India. This behavior beats even the British colonial attitude. Look on
the contrary how considerate India had been. Even when the Dow
Chemicals took over Union Carbide’s (of Bhopal gas tragedy
guilty)assets but not its liabilities and US refused to put Arthur
Anderson before Indian courts, India was continuing to patronize Dow

from:  s subramanyan
Posted on: Sep 26, 2013 at 09:35 IST

This is good development indeed in national interest. India should
become a energy surplus state I repeat 'ENERGY SURPLUS STATE'within the
next three years at any cost, let it be through Nuclear/solar/wind
energies put together.Otherwise our future is doomed and our plans fail
and we can never become a developed state. People cannot tolerate power
shut downs any more. Trash-free India like USA and potable water to all
is the most immediate task which we must implement at once. Let us not
waste time in this process and let red tape perish.

from:  Vyas K Susarla
Posted on: Sep 26, 2013 at 08:57 IST

We have seen Japan is struggling with nuclear disaster even though they
have good disaster management system.nobody can judge these things,i
believe that in India we dont have a disaster management system which is
capable of addressing a nuclear disaster. but still we are giving extra
perks to the US companies is not good for our peoples interests.The
perfect example is Bhopal gas tragedy.Development and foreign investment
is necessary for our economy but priority should be given to peoples

from:  varghese
Posted on: Sep 26, 2013 at 08:21 IST

I would buy one from the US/Germany any day over the ones we are getting from Russia. these countries don't have submarines exploding or meltdowns nor do they lack of technological expertise in advanced and high tech areas. lets not overlook the technological advances of these countries.

from:  john dorchester
Posted on: Sep 26, 2013 at 07:45 IST

It is a sellout to the ailing American nuclear industry by the UPA Government.

from:  N.S. Rajaram
Posted on: Sep 26, 2013 at 06:15 IST

What is not tried and tested in the US is not good enough for India.
What is tried and tested in the US must still conform to further testing and verification in Indian conditions along with tests of suitability and lack of other viable and greener alternatives.

India is no longer a dumping ground for those who encourage brain drain from here and who only chose to incidentally provide untested goodies in return because primarily it gives them the means to profit and fund their lavish lifestyles and economies literally at the cost of the lifes of teeming silent unrepresented millions here.

from:  r n iyengar
Posted on: Sep 26, 2013 at 04:26 IST

The nuclear extravagance is not in Washington, but in New Delhi. Unless the nuclear liability law in India is standardized to the international standards for product liability, wooing the US nuclear companies like Westinghouse and GE is of no avail. GE is considered the leader in the manufacture of nuclear plants. Products are bought based on the reliability of the company, their products, whether it is nuclear plant or any product. The nuclear liability law of India put all the liability on the manufacturer rather than operator. The manufacturer is liable only for the failure of the nuclear plant during the warranty period, but not for the failure of the operator of the nuclear plant. If there is a car crash, most often the driver of the car is at fault and the car manufacturer is not liable for every car crash. The same type of liability laws are needed for purchase of nuclear plants from the US. The nuclear extravangance in New Delhi to buy US made nuclear plants is too premature.

from:  Davis K. Thanjan
Posted on: Sep 26, 2013 at 04:09 IST

The article is totally biased including the inference that somehow "Bayesian Analysis" is scientific and “probabilistic safety assessment” is not. The nuclear accidents do occur but rear and for different reasons. Has any nuclear power plant built with 100% guarantee that there will not be an accident? The authors should know that modeling the earthquake impact on nuclear power plant is very difficult to model and also human performance no matter how well they were trained. The Fukushima power plant damaged heavily but the loss of human life is very limited and insignificant compared to loss of thousands of people dying in railway and auto accidents every year. India needs power and the policy of having diversified sources of energy is prudent. The concern of US companies is legitimate when those power plants are run in a foreign country by the foreigners. As per using commercially untested designs should not be a concern because every new design is commercially untested.

from:  Rao
Posted on: Sep 26, 2013 at 02:35 IST

More developed countries where workers are more disciplined, ( no
offence to Indian workers , but an easy access to terrorist ) , things like
in japan ( fukushima ) and russia ( chernobyl ) happened. .. If people of
india or those in govt or some self assurd physicists think that nothing
will happen, things will go wrong.if the goal is to make
world nuclear free then we should not allow these types of power
generators to be built..

from:  DAVE KAUL
Posted on: Sep 26, 2013 at 02:08 IST

Should we take our government silly for bowing to pure commercial causes even in the 21st century while the industrialized world is trying to rectify its sickness of its mad industrialization pursuits with respect for environment and its citizens?

Why can't the intelligent community within the government make a headway through asserting the rights of citizens and then support foreign investments in nuclear energy very intelligently?

Fukushima accident seems very much like an act of many lapses within the power plant community coupled with the power of incomprehensable natural disasters; unlike any other disasters a nuclear disaster is irreversible for life to exist the way it got evolved in a balanced way.

Why there cant be a calculated and a measured approach to investments in this area, certainly not at the cost of human evolution in this part of the world in case of a misfortune?

from:  Nandhavel
Posted on: Sep 26, 2013 at 01:48 IST
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