April 1, 2010 / 11:06 AM / 9 years ago

ANALYSIS - Land, liability bill keep India nuclear power in dark

MUMBAI (Reuters) - A stalled nuclear liability bill, delays in land acquisition and political squabbling are hobbling foreign investors keen for a share of India’s newly opened civilian nuclear energy market worth about $150 billion.

A nearly 200 ton nuclear reactor safety vessel is erected at the Indira Gandhi Centre for Atomic Research at Kalpakkam, about 80 km (48 miles) from Chennai in this June 24, 2008 file photo. REUTERS/Babu/Files

Since a 2008 U.S. deal ended India’s nuclear isolation of more than three decades, firms in the United States, Russia, France, Canada and Britian have scrambled for a foothold in the energy-starved country, which aims to double the share of nuclear power on its grid to more than 8 percent over two decades.

With a peak energy deficit of about 12 percent, Asia’s third-largest economy is struggling to power its near-8-percent growth, with nuclear energy being touted as a way for the world’s fourth biggest emitter to also curb fossil fuel emissions.

“For every percentage of GDP growth, you need power to grow 1.5 times, which has not been the case in India so far,” said Amol Kotwal, a deputy director at consultancy Frost & Sullivan.

“Nuclear energy will go a long way in plugging the deficit.”

Coal accounts for more than half of India’s total energy consumption, followed by oil, a bulk of which is imported.

With plans to build 24-30 new reactors in addition to the existing 19 reactors, India aims to generate 20,000 megawatts of nuclear power by 2020 and 63,000 MW by 2032, up from just 4,560 MW now.

But protests over the liability bill seeking to limit damages to private nuclear operators and suppliers in case of an accidents has put the government on the backfoot, and delayed the entry of U.S. commercial nuclear firms.

Also, French nuclear reactor maker Areva’s plan to set up the first post-deal reactor in western Maharashtra state has been delayed, with villagers refusing to give up land.

Still, advocates say it is the only way India, the world’s fourth biggest emitter, can curb fossil fuel emissions and plug its energy deficit that can seriously undermine productivity.

“The fact remains that beyond 2050, availability of coal in India is going to be a major problem. Hydrocarbon, of course, will run out much earlier,” said Anil Kakodkar, former chairman of India’s atomic energy commission, at a recent public meeting.


It is a huge business opportunity: Russia has nearly completed equipment delivery for two reactors in Tamil Nadu state, and will build up to 16 nuclear reactors in the country. Russia’s State-owned Rosatom is exploring other options, as well.

Areva will build two reactors in Maharashtra, and India has offered to tender two plants in Gujarat and Andhra Pradesh states to U.S. firms GE-Hitachi and Westinghouse Electric, a unit of Toshiba, contracts that could be worth $10 billion.

There are also commitments to collaborate with dozens of U.S. commercial nuclear suppliers on at least 10,000 MW.

But farmers and activists are protesting land acquisition and environmental impact.

Villagers in Maharashtra, where the two Areva reactors will be located on 938 hectares, have refused compensation cheques.

“This is not arid land; these are our rice fields, our mango orchards, our cashew groves,” said Praveen Gavankar, a farmer who has mobilised protesters against the proposed plant in Jaitapur, about 300 km (185 miles) south of Mumbai, on India’s west coast.

Land poses “an increasingly significant challenge” to the power sector, consultancy KPMG noted in a recent report.

A bill aimed at overhauling an archaic land acquisition law has stalled in India, where more than 60 percent of the billion-plus population still relies on land for a living.

S.K. Jain, head of the Nuclear Power Corporation of India (NPCIL), the state nuclear power generator, is sanguine: “It’s a noisy democracy and there will always be some people objecting.”


Political opposition to the Civil Liability for Nuclear Damage Bill is even louder.

Last month, the Indian government backed off from introducing the bill that is designed to protect suppliers from the risk of lawsuits in the event of an accident by placing legal liability entirely on the state-run plant operator.

Opposition parties say the bill, which will now be tabled in parliament after April 15, favours private firms as it puts a maximum liability of about $450 million on NPCIL, without placing any compensation burden on private suppliers and contractors.

Some analysts say granting foreign suppliers legal immunity upfront weakens nuclear safety and robs victims of their rights.

The issue is sensitive in a country where a gas leak in a Union Carbide factory in Bhopal city killed about 3,800 people in 1984 in one of the world’s worst industrial disasters.

Then there’s the sensitive issue of pricing. It took years to shake off the ghost of Enron’s $2.9 billion Dabhol power plant, mothballed for years over a billing dispute.

But the pressing need for energy will outweigh most concerns.

“I think it is only a matter of time before every big country which requires large-scale energy would embrace nuclear power,” said Kakodkar, the former atomic energy chief.

(Editing by Alistair Scrutton)

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