PARIS France's Areva claimed a first victory in the race to grab a share of India's lucrative nuclear market with the signing of a multi-billion dollar agreement to build up to six atomic reactors.
The agreement, signed after India consented on Monday to opening up its civilian nuclear plants to U.N. inspections, strengthens Areva's global nuclear reactor leadership over rivals such as Toshiba's Westinghouse Electric Co.
Areva, a state-controlled company, signed a memorandum of understanding with Nuclear Power Corp of India on Wednesday to build at least two Evolutionary Power Reactors (EPRs) in a deal worth more than 8 billion euros ($10.4 billion).
Areva expects to finalise the deal later this year.
"The price (for the two reactors) will be clearly above the 8 billion euros in China. The China deal was more than a year ago and the market has moved on since then," a spokeswoman said.
Areva sealed a record 8 billion euros deal with the China Guangdong Nuclear Power Corp (CGNPC) in November 2007, agreeing to sell China two new-generation reactors and provide atomic fuel for nearly two decades.
Nuclear Power Corp has an option for four more reactors, implying the Indian deal could potentially be worth some 30 billion euros in total.
S.K. Jain, chairman of Nuclear Power Corp, said the six reactors would be worth 600 billion rupees ($12.3 billion) in total, but it was not immediately clear whether this included engineering works or if it was the price for the reactors alone.
"It's probable the Indians secured a very good deal given that reactor makers compete pretty viciously with each other, but this ($12.3 billion) number seems very low. It depends on what you include in it," said analyst Alex Barnett at Jefferies International.
Strong economic growth has led to a surge in demand for power in India, which currently relies on imported oil for some 70 percent of its energy needs.
India expects to double the nuclear power's share in its electricity grid to 5-7 percent in the next two decades.
"India and China are the two fastest growing nuclear markets in the world so it is really important that Areva gets a footprint there," Barnett said.
The agreement laid the ground for the construction of at least two 1,650 megawatt EPRs at Jaitapur in India's Maharashtra state, with an option on four more.
The Indian agreement, which comes four months after Paris and New Delhi signed a bilateral agreement on the development of a peaceful use of nuclear energy, also includes life time fuel supply for the reactors Areva will build there, Areva said.
The agreement is the second commercial success in 24 hours for Areva, which announced on Tuesday a 5 billion euros uranium enrichment contract from French power giant EDF.
It also comes as good news for Areva, which is reportedly struggling to secure financing for 2.7 billion euros worth of planned investments in 2009, and has yet to find the 2 billion euros it needs to buy Siemens' 34 percent stake in their nuclear venture Areva NP.
Areva's investment certificates were 3.32 percent higher at 345.08 euros in Paris at 1716 GMT.
(Additional reporting by Krittivas Mukherjee)