KUMAR SUNDARAM | 7 JANUARY, 2019
Jaitapur Nuclear Project: NDA Govt in Last Ditch Push for Another Dreadful French Deal
The consequences of the Jaitapur deal will be far worse than the Rafale scam
Much like the Rafale jet deal which was initiated by the United Progressive Alliance government, but had its goalposts furtively altered under the Modi regime, the agreement for the Jaitapur nuclear deal is being expedited in an astonishingly dubious fashion with India just months away from the next general elections.
The consequences of the Jaitapur deal will be far worse than the Rafale scam - it will have implications financially, as nuclear construction involves staggering amounts, but also in terms of the safety of tens of thousands of Indian citizens living near the proposed site.
According to the latest media reports, attributed to unnamed sources, the French nuclear giant EDF has submitted a “techno-commercial offer” for the proposed nuclear power park in Jaitapur on the Maharashtra coast. This comes close on the heels of the talks between the Indian and French foreign ministers during the latter’s visit to New Delhi a fortnight ago.
India’s acceptance of this techno-commercial offer will be in effect the clearing away of the last remaining hurdle before reactor construction can begin.
Precisely because the agreement for the Jaitapur nuclear project has been in the pipeline for so long, and because debates around the nuclear industry, energy policy, and nuclear safety, have changed drastically since 2008 when the agreement was first formalised, the situation warrants a thorough review, taking into account the interests and safety of Indian citizens and the fragile ecology of the Konkan region.
Specifically with respect to the techno-commercial offer, there are some key concerns that must be flagged. The National Democratic Alliance government should exercise utmost transparency and accountability in signing the techno-commercial agreement.
The price for the six EPR reactors being imported from France must be made public, so a Rafale-like situation can be avoided. The stakes are much higher this time, as a single reactor is expected to cost up to 10.9 billion euros per unit - approximately Rs 86,500 crore - going by the cost of the Flamantville reactor in France which the reported techno-commercial offer takes as a “reference plant” for the Jaitapur project.
The initial estimate for the EPR-design reactors being built in France was 3.3 billion euros when the project was announced in 2005. The Flamantville project has since seen massive delays in addition to cost overruns. While it was supposed to have become operational in 2012 as per the original plans, the latest announcements from EDF indicate that the plant cannot be commissioned until the end of 2019.
Given these costs, the average tariff from the Jaitapur nuclear plant will be to the tune of Rs 15 per unit of electricity. In contrast, the solar tariff dipped to a historic low of Rs 2.44 per unit in 2018.
In the present scenario, 10.9 billion euros each, for six such reactors will mean a total of 65.4 billion euros, which is eight times the cost of the Rafale deal, for which Modi government is facing perhaps its biggest credibility crisis, given its proclaimed ‘zero tolerance’ for corruption.
The actual figures, of course, are likely to be much higher as the construction time for nuclear reactors is exceptionally high and EPRs can take up to 15 years to be constructed.
The nuclear power sector is perhaps the only industry which has shown a negative learning curve - reactor constructions take much longer now than the typical gestation period at the dawn of the nuclear age.
The reason for such massive delays often pertains to safety, which is a serious concern. The most recent revision of Flamantville’s cost-estimation took place earlier this year as the French nuclear regulator ASN found more safety flaws in the design.
France has experienced exceptional safety problems with the particular EPR design reactors which have been in the offing since the early 90s. It is the abject failure of the EPR reactor, the French nuclear industry’s poster-boy of a ‘new nuclear age’, which has brought not just the French, but the entire European nuclear industry to its knees.
Incidentally, the French nuclear safety regulator raised crucial safety questions pertaining to the Reactor Pressure Vessel of the Flamantville EPR reactor just a day before PM Modi’s infamous visit to Paris in 2015, when the prime minister also signed a new agreement for the Rafale jets.
However, the prime minister of India, seeming to brush aside these crucial safety issues, renewed the Jaitapur nuclear agreement.
Earlier last year, EDF admitted that the welding problems in the Flamantville EPR were much worse than initially thought. Finland abandoned its second EPR design reactor the same year owing to escalating cost and safety issues, upon which the French and Finnish companies continued to fight court cases until this March - when Areva had to pay $554 million to the Finnish utility, TVO.
The start-up of the first unit, which Finland could not step back from, was postponed yet again last month.
This nuclear project in Finland’s Olkiluoto was supposed to start producing electricity in 2009 - it has thus seen a decade-long delay and a staggering cost overrun, from the 3.3 billion euros quoted initially to 8.5 billion euros, which was the last announced cost by the company in 2012.
It is rather curious that the French side has offered Flamantville as the reference plant for Jaitapur, and not the Olkiluoto plant in Finland or the Taishan EPR which was very recently launched in China.
This might have to do with the several problems inherent to the Jaitapur project as it stands today.
Originally signed between Areva and India’s Nuclear Power Corporation (NPCIL), a number of other corporations have entered the Jaitapur project. These include Mitsubishi Corporation of Japan and the US-based General Electric (GE) with whom agreements were signed in June 2018.
Interestingly, citing liability burden, GE pulled out of the massive Kovvada nuclear project which it was supposed to build independently in Andhra Pradesh.
Besides the new international entrants, several domestic entities have entered the Jaitapur project - including Larsen&Toubro - many of whom have no experience in nuclear construction. In fact, PM Modi labelled the Jaitapur project as a “Make in India” initiative and announced a 60-70% localisation of the project.
This is, however, fraught with problems and risks as it has allowed the French corporation to minimise its role and liability - especially after facing setbacks in the market, it can salvage the project only by passing the onus onto other entities.
It was in the French nuclear industry’s restructuring, owing to its inability to export turn-key reactors and bear nuclear liability, that the Indian government saw an opportunity to make virtue out of a necessity, and PM Modi made the Jaitapur nuclear deal, which others were abandoning, a matter of nationalist pride and accomplishment.
The move is also aimed at minimising the cost to bring the final tariff of electricity to Rs 7 per unit. Evidently this would involve cost-cutting that will imply choices pertaining to safety.
Under the current circumstances, secrecy looms large over not just the financial transactions and partnerships in Jaitapur, but also the role of each corporation in the supply and/ or manufacture of components, and what each corporation’s liability will be in case of an accident.
It is astounding that without any clarity on these crucial matters, the government has moved ahead and acquired the total required land - by brutalising local communities who are opposing the project.
Environmental clearance for the Jaitapur project was obtained by the previous government in equal haste in 2010, with 35 outlandish post-facto provisions which had to be reviewed after 5 years.
The NDA government then extended the controversial green clearance despite the BJP’s own reservations on it when the party was in opposition.
Apart from concerns of environmental destruction and the Indian nuclear sector’s glaring inexperience with EPR technologies, the recent discovery of an earthquake faultline right beneath the proposed project site in Jaitapur should also be reason to initiate a comprehensive safety review of the proposed nuclear project.
Roger Bilham, the American geologist who made this revelation has been debarred from entering India. Ironically, the Department of Atomic Energy’s own confidential report of 2002 had flagged the matter of the lineament in the Ratnagiri plateau, which not surprisingly, was overlooked.
The offer of a techno-commercial agreement from France should be an occasion for having an open and transparent debate on the Jaitapur nuclear project which the citizens of India have never had the opportunity to engage in.
The NDA government must not exercise haste and secrecy in this matter, especially when it is already in a lame-duck phase, with the BJP having been rejected in the recent state-level polls, and the country headed for general elections in the next few months.
Kumar Sundaram is director of DiaNuke.org, an independent think-tank on nuclear issues.