Westinghouse team’s visit revives hopes for Kovvada plant

Relook at deal to build reactors for Andhra plant likely

January 31, 2018 10:29 pm | Updated February 01, 2018 02:42 pm IST - NEW DELHI

A file picture of Kovvada village in A.P. where the Centre proposes to establish a nuclear power plant.

A file picture of Kovvada village in A.P. where the Centre proposes to establish a nuclear power plant.

Officials of Westinghouse Electric, that went through bankruptcy proceedings last year, and was bought from Toshiba by a Canadian consortium last month, will visit India next week to discuss a reworked deal for nuclear reactors for the proposed nuclear plant in Andhra Pradesh’s Kovvada.

It is understood that the team of executives and engineers will travel to Mumbai to meet with officials of the Nuclear Power Corporation of India Ltd (NPCIL), which is the Indian operator, and with government officials including those from the Ministry of External Affairs (MEA) in Delhi.

The agreement that was expected to be signed by “July 2017” according to a deadline set in the Indo-U.S. joint statement of June 2016, had been further delayed after both Westinghouse Electric as well as Toshiba ran into major financial trouble.

This led to Westinghouse filing for “Chapter 11” bankruptcy in the U.S. On January 4 this year, the company was bought for $4.6 billion — considerably lower than the $5.6 billion paid by Toshiba for Westinghouse in 2006, and indicates the extent of the company’s financial losses that could pose more hurdles for the India deal down the road.

Assurance in LS

A day before the announcement of the deal, Minister for Atomic Energy and Space Jitendra Singh had told Parliament that there was “no change in the plan to set up nuclear power reactors at Kovvada in cooperation with Westinghouse. Discussions are in progress between NPCIL and WEC to arrive at a viable project proposal.”

In December 2017, the Andhra Pradesh government said it had completed the land acquisition for the Kovvada “nuclear park” where the reactors are expected to be built.

Only reactors

However, sources well-versed with the negotiations told The Hindu that the deal, which will now be negotiated by the new team at Westinghouse, would be significantly different from the “turnkey project” that was being negotiated last year, as Westinghouse has announced it will no longer carry out the construction of the power project, but will only provide reactors and components.

“While this could be a boon for the government’s Make in India push, this may also delay the project as NPCIL looks for Indian partners who will carry out the construction,” they said.

The reworked deal would also have more flexibility when it comes to sourcing cheaper components from Japan and South Korea, both of which India has civil nuclear agreements with, but the multiple contracts now required will complicate the NPCIL’s task, the sources added.

Another complication could come from the financing of the Westinghouse agreement, which India expects America’s Exim bank (Export-Import Bank of the United States) to undertake. The Trump administrations nominee for Chairman of Exim bank was rejected last month by the U.S. Senate’s Banking committee, adding to the timeline woes of NPCIL.

The Westinghouse deal, which first saw a Memorandum of Understanding signed in 2009, had originally run into trouble over the issue of supplier liability and of tracking nuclear parts. It was expected to go through after U.S. President Obama and Prime Minister Narendra Modi declared a “breakthrough” agreement in January 2015, where the governments claimed to have ironed out the issues to their satisfaction.

However, the proof of the agreement would only come after the first “techno-commercial” agreement is signed between American and Indian companies.

Another agreement with American company GE-Hitachi ran aground in 2016 after GE officials said they weren’t satisfied on the issue of liability in case of a nuclear accident.

“Until we actually see the agreement on paper we can’t say the nuclear deal is done,” said an official dealing with the issue, while referring to the symbolism and political significance the Westinghouse deal now holds for India-U.S. relations.

NPCIL officials declined to respond to specific questions on the contours of next week’s discussions.

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