Repeating Enron in Jaitapur- Miscalculations of the cost of energy from Jaitapur will cost #India


English: Internationally recognized symbol. De...

 

Suvrat Raju, Hindu 

 

The tariff of Rs. 4 per unit of electricity is unrealistic unless the government subsidises the cost of the first two Areva reactors by Rs. 22,000 crore

More than a decade after Enron’s collapse, its legacy continues to haunt Maharashtra. In 2006, the Dabhol power project was restructured into the Ratnagiri power project with public subsidies that, by some estimates, amounted to Rs. 10,000 crore. The project has led a troubled existence and in March this year it announced that it may have to stop servicing its outstanding debt of Rs. 9,000 crore because of a problem with its fuel supply. In spite of this reminder of the continuing long-term costs of sweetheart deals to attract foreign investment in the power sector, a team from the Indian atomic energy establishment left for France last week to repeat the same mistakes.

Problem with design

The French company Areva, just like Enron, has been promised a contract for six European Pressurized Reactors (EPRs) by executive fiat, bypassing a competitive bidding process. The reactors will be set up in Jaitapur, which is also in Ratnagiri. No one knows the exact extent of this give-way, because no EPR has been commissioned anywhere in the world. Areva started construction on its first EPR in Finland in 2005, with a promise to complete the reactor by 2009, at a price of just over €3 billion. After eight years, the reactor is still incomplete but cost estimates have ballooned to €8.5 billion —almost thrice the original figure. Areva has various excuses, but similar delays and cost increases in the second EPR under construction in its own country point to a more fundamental problem with the EPR design.

There is little public data about the EPRs being built in China, but these prices are consistent with those proposed for EPRs in Britain and indicate that each Indian reactor may cost as much as Rs. 60,000 crore. So, the price of the two reactors that the government hopes to commence in the Twelfth Plan period will equal the total plan outlay on science and technology including the departments of Space, Science and Technology, Biotechnology, and research labs throughout the country.

What does this imply for consumers? In 2010, the then CEO of Areva, Anne Lauvergeon, told this newspaper that the tariff would be “below the Rs. 4 figure.” More recently, Areva suggested that this “tariff holds true,” except for small escalations because of the delay in operationalising the project.

Both Areva and the Nuclear Power Corporation of India (NPCIL) have doggedly refused to explain the origins of this number. In the same 2010 interview, Lauvergeon said that “I am not going to give you the details … it is not for me to give the price if the customer does not want to give it.” The government has also refused to divulge information in meetings with local activists or even in response to parliamentary questions, where it has fallen back on the story that the final price is still under negotiation.

However, it is possible to independently estimate the cost of electricity using a study on the economics of imported reactors that the government produced in preparation for the India-U.S. nuclear deal. This was later updated and published by NPCIL.

When M.V. Ramana and I applied this framework to the Jaitapur reactors, in a paper for theEconomic and Political Weekly, we concluded that the true cost of electricity is likely to be almost four times as high as what the government claims. The figure of Rs. 4 per unit comes from a combination of unrealistic assumptions and a revenue model that provides massive public subsidies to the project.

The single most important factor in determining the tariff is the capital cost of the reactor. The government claims that the Indian EPRs will be cheaper because construction forms “about 40 per cent of the total cost.” Estimates suggest that construction costs in India are about 60 per cent lower than Europe. So, under best case conditions, the government could hope for about a 25 per cent reduction in the total cost.

However, the capital cost assumed in the government’s study is not 25 per cent lower, but literally 25 per cent of the figure for European reactors! It is this assumption of an unrealistic capital cost that underpins the Rs. 4 figure.

The study also reveals how the government plans to set out an exceedingly generous revenue model for the project. For example, it assumes that the project will have access to long-term debt at an interest rate of only 6 per cent. This is inconsistent with the serious concerns about the project’s viability. Moreover, since the yield on 10-year Indian Government bonds has been consistently higher than 7 per cent, even the full backing of the government will not bring the rate down to this level in the open market. So, the government will have to arm-twist public sector banks or itself provide a long-term loan to the project at this throwaway rate.

Another subsidy is built into the government’s plan to inject equity during the first few years of construction. In the government’s revenue model, this money will sit idle for more than a decade until the reactor becomes operational. Assuming, optimistically, that the EPRs are constructed as fast as the Kudankulam reactors, this delay will bring the government’s return on equity down from the advertised rate of 14 per cent to an effective rate of only 7.7 per cent. Further delays, which are likely, will reduce this further.

When these parameters are corrected, and combined with a realistic estimate of the cost of fuel, the government’s own methodology leads to a first year tariff of Rs.15 per unit, even without including transmission and distribution costs. Obviously, this cannot be passed on to consumers, and so the state will have to subsidise the electricity. To bring the tariff down to Rs. 4 will require a subsidy of Rs. 22,000 crore each year for the first two reactors. This “Areva-subsidy” is a quarter of India’s entire food subsidy bill.

There are other serious questions about the project. For example, Areva’s reluctance to accept even a small amount of liability is in sharp contrast to its unscientific claims that it has precisely computed the probability of a serious accident in an EPR, and found it to be once in 1.6 million years.

But the economics of this project are so appalling that it is possible to separate these issues and even the broader question of the role of nuclear energy in India. Even the nuclear establishment accepts, as WikiLeaks revealed, that the “NPCIL [has] paid a ‘high’ price”. The justification for the project cannot be Maharashtra’s electricity shortage either since at this price it is possible to find several alternative solutions to that problem.

Jairam Ramesh admitted that for the government, the “venture is significant not just from an energy generation but also from a strategic point of view.” Anil Kakodkar, former chairperson of the Indian Atomic Energy Commission, explained that India had to “nurture” French “business interests” because France helped India when it wanted access to international nuclear markets.

Back-room deal

This is an admission of an unsavoury back-room deal. However, a moment’s reflection also brings out the circularity of this argument. France supported India’s efforts because it wanted to sell reactors to India. Why should the country return this self-centred help by paying through its nose?

There is a simple but significant political aspect to this entire issue. It is clear that this deal and the concomitant negotiations to purchase reactors from American companies are being driven by pressure from the Prime Minister’s Office. The reason that negotiations with Areva have taken on an urgent note is because the government’s prospects in the next elections are uncertain. If the next dispensation does not have the same ideological commitment to imported nuclear reactors, these deals may flounder.

Our system concentrates enormous financial powers in the hands of the executive. However, just because the government has the power does not mean that it has the right to rush into a deal that could bleed the country for years to come.

— SUVRAT RAJU

http://www.thehindu.com/opinion/lead/repeating-enron-in-jaitapur/article4834435.ece

 

 

 

Areva seeks help of French govt on cost sharing for Jaitapur project in Maharashtra


Sanjay Jog  |  Mumbai  June 16, 2013 , BS

NPC insists that per unit tariff be equivalent to new coal based project during phase I commissioning

In a major breakthrough, Areva, which proposes to initially supply two evolutionary pressurized reactors (EPRs) of 1,650 MW each for Jaitapur nuclear project in Maharashtra, has sought the intervention of treasury officials of France government and banks to find a way out to address the issue of cost sharing. While the Department of Atomic Energy (DAE) and Nuclear Power Corporation, which is a project developer, are emphasizing the need for higher level of indigenization or localization, the French reactor supplier Areva does not want to reduce its share on supply of reactors and components by admitting to increased burden.
Areva spelt out its move to refer cost sharing issue with treasury officials of the French government and lenders during its recent meeting held in France on June 5 & 6 with a high level Indian team consisted of Dr CBS Venkataraman, additional secretary, Department of Atomic Energy (DAE), Preman Dinaraj, director (finance), Nuclear Power Corporation and Sandeep Singhroy, Jaitapur project director. This is also important when DAE and NPC want the Centre’s intervention to provide a special package to share increased cost burden.
When contacted Areva officials declined to make any comment.
However, NPC official, who did not want to be identified, told Business Standard “Areva has indicated that capital cost per megawatt will be Rs 24-25 crore in the changed circumstances while we are insisting on Rs 12-14 crore. We are aware that Areva will not accept any compromise on its copyrights. However, we expect Areva to cooperate by accepting higher level of localization in order to reduce the capital cost. During the signing of inter governmental agreement between India and France in December 2010, NPC had projected the per unit tariff of Jaitapur project at the time of commissioning in 2017-18 will be equivalent to the per unit tariff of newly commissioned coal based power project in the country. This was estimated in the range of Rs 4 to 7 per unit depending on the nature of the boiler, turbine and generator used in new coal based power project in the country.”
NPC official admitted that the situation has changed as the cost escalation is quite imminent in view of the incorporation of additional safety applications necessitated after the safety review held globally following the Fukushima nuclear accident took place in Japan in March 2011.
NPC hoped that Areva’s move to seek the opinion of treasury officials of the company and lenders may give a necessary push for ongoing negotiations. It is also significant when Areva and NPC are unable to sign the commercial agreement for the Jaitapur project and resolve contentious issues with regard to India’s Civil Liability for Nuclear Damages Bill, credit arrangements for the construction and the final cost of the Jaitapur project. The official informed that Areva has indicated that the commissioning of first phase can be possible in 2021 if all these issues are settled at the earliest.
Meanwhile, Jaitapur project opponents including Konkan Bachao Samiti have estimated a per unit megawatt cost of Rs 38 crore and the per unit tariff of Rs 14. According to them, the total project cost works out to be a whopping Rs 3,76,200 crore. However, NPC officials have said that the project cost will be finalized only after its talks with Areva are concluded.

 

#India -Village falls within Jaitapur nuclear reactor’s 2-km danger zone #WTFnews


Nitin Ghanekar reports in  Hindustan times, June 10, 2013

Since we are so close to the plant, we fear that we might be displaced.
SACHIN WAGH DHARE, a Dhanivare resident

JAITAPUR/MUMBAI: Residents of Dhanivare village are a worried lot. Given the proximity of their hamlet to the proposed Jaitapur nuclear power plant site (JNPP), the village falls in a range of 0 to 2 km distance from the plant, which makes it a part of the plant’s exclusion zone.

A nuclear plant is supposed to have an exclusion zone of 1.6 km around the nuclear reactors, making this area uninhabitable. That the JNPP site can be accessed from Dhanivare village on foot within five minutes makes the hamlet’s proximity to the site clear. But the Nuclear Power Corporation of India Limited (NPCIL) seems to have forgotten this tiny hamlet when claiming that that no house would be displaced while creating the exclusion zone.

When HT contacted additional chief engineer of JNPP SG Galgali, and asked him about the fate of Dhanivare, he said, “The nuclear reactors at JNPP would be located along the shore in a northsouth direction near the Rajapur bay lighthouse. They would be located in such a way that no village falls in the 1.6kms exclusion zone.”

However, a report from the Department of Atomic Energy (DAE) states otherwise. Recently, under the Right to Information Act, Mumbai residents Premanand Tivarkar and Dr Bhikaji Waghdhare obtained a site selection committee report dated September 2002. The report detailing the population in villages around the Jaitapur site says, “Dhanivade, a hamlet of Madban, falls within the 1.6 km exclusion zone and has an estimated population of 135.”

Galgali said, “The report might have stated that the hamlet is in the exclusion zone, but the positioning of the plant will not displace its residents.”

Residents of Dhanivare said that the NPCIL’s attempts to encroach on their mango orchards might be their way of pressurising them to relocate. “We never received any notices from NPCIL regarding land acquisition or any exclusion zone. As we are so close to the plant, we fear we might be displaced,” said Sachin Waghdhare, a resident of Dhanivare.

N-plant encroaching on our orchards’

Boundary wall built by NPCIL for Jaitapur power plant passes through mango groves that are a source of livelihood for an entire village

JAITAPUR/MUMBAI: Even as French nuclear giant Areva, officials from Department of Atomic Energy (DAE) and Nuclear Power Corporation of India Limited (NPCIL) met to work out a financial package that would fund two 1,650 megawatt reactors at Jaitapur, residents of Dhanivare village near the plant site have alleged that there is a quiet attempt by NPCIL to encroach on village land not marked for acquisition.

Dhanivare is a hamlet of less than 200 people located within a 2-kilometre distance from the proposed Jaitapur nuclear power plant (JNPP). The residents of the village, many of who own mango orchards, have alleged that NPCIL and their sub-contractors have been trespassing on their land — marked as ‘survey no. 119’ — and are trying to encroach on it to build an unfinished boundary wall outside the plant site. This has allegedly been going on for over two years.

Survey no. 119 was not a part of the land acquired by the Ratnagiri district administration for JNPP. It did not feature in the list of notified lands to be acquired for JNPP, published by the Konkan administrative division in the Ratnagiri edition of Tarun Bharat newspaper on January 10, 2007. Current district collector Rajeev Jadhav also attested to this. The land in question is home to around 500 mango trees that serve as a source of livelihood for Dhanivare residents.

Recent developments in the area are contrary to NPCIL’s claims that villagers’ livelihood would not be snatched away due to the project.

Though the issue dates back over two years, a fortnight ago, residents said that NPCIL officials arrived at the land in question with a bulldozer and civil supplies in an effort to continue work on the incomplete wall. “There was a wedding in the hamlet so many of us were away. When we returned to our orchards, we saw that a few people had entered our property and were trying to carry out civil work. We protested and drove them away,” said Sachin Waghdhare, a resident of Dhanivare who owns close to 150 mango trees and earns between Rs50,000 and Rs1,00,000 from it annually. Even before this, villagers found paint markings running across orchards, starting from the unfinished wall, right up to the pathway to orchards. “The paint markings indicated that they (NPCIL) want to encroach into our villages. If this happens, all of us would lose our livelihoods,” he added.

Bhikaji Waghdhare, the sarpanch of Madban gram panchayat, of which Dhanivare is a part, sent a letter on May 31 informing the district collector about the markings and tree felling. When HT contacted Ratnagiri collector Rajeev Jadhav, he said, “I have not yet seen such a letter, but if NPCIL is encroaching on land not meant to be acquired for JNPP, we will follow the rule of law to take action.”

Villagers claim the issue dates back to December 2010, when the NPCIL started construction of a wall that was to pass through the mango orchards. Back then, villagers had protested against NPCIL’s activities and had even sent a complaint to the then collector of Ratnagiri and to the Sakhari Nate police station, alerting them about this issue. Through sustained protests they managed to stop the construction. Later, in 2011, Mumbai resident Dr Bhikaji Waghdhare, 74, a native of Madban, filed a writ petition in the Bombay high court. The court had found the petition to be substantive but asked Dr Waghdhare to pursue the case at the local district court in Ratnagiri. Owing to ill-health, Dr Waghdhare did not pursue the case. He owns 0.60 hectares of land that bears 160 mango trees, 40 toddy palm trees and one well. “I sought survey maps under right to information (RTI) act and they indicate that the area where NPCIL is trying to carry out work is survey no. 119,” said Dr Waghdhare. HT is in possession of those maps. Besides, in a reply to an RTI application filed by Mumbai resident Premanand Tiwarkar, NPCIL admitted, that survey no. 119 was not acquired for JNPP.

HT mailed a detailed questionnaire to NPCIL, sent text messages to officials and also tried to contact senior officials to seek their response, but there was no reply.

Don’t fund Jaitapur Nuclear Power Plant , locals urge European banks


Friday, Jun 7, 2013, 6:47 IST | Agency: DNA

Protesters at the proposed site for a nuclear plant at Jaitapur sent an e-mail to the three main bankers — BNP Paribas, Societe Generale and Credit Agricole in France — on Tuesday, requesting the CEOs not to fund the project.

They have intensified their cause to save the environment from effects of radioactivity.

Indian government officials are set to meet French and other European investors over the week in Paris to discuss funding opportunities for the nuclear project.

Sources said about 1,000 people gathered around the proposed nuclear site on Tuesday at Jaitapur after learning that officials were going to negotiate the financial aspect of the proposed project with with French as well as other European bankers.

“They were riled by the news that Nuclear Power Corporation of India (NPCIL) and Department of Atomic Energy officials were going to Paris to discuss financing of the project with French bankers. Slogans were raised against NPCIL, Areva and the French bankers,” a source told dna.

Amjad Borkar, an activist from the fishermen’s community, said: “The project will destroy marine life and make fishermen destitute.”

The e-mail to the bankers stated: “NPCIL and the Government of India officials are making wrong representations, concealing the ground information and distorting the facts and are trying their best to convince you to finance the mega project.”

Activists Premanand Tevedkar and Mansoor Solkar said that despite an increase in compensation, the farmers were not going to give up their land. “Protesters said they would lay down their lives but not give up their land and right to livelihood,” he added.

The e-mail was sent by the villagers, farmers and fisherfolk of Jaitapur, Madban, Sakhari Nate, Mithgavane, Niveli, Karel and all the surrounding villages situated near the site.

“We will never allow anybody to contaminate our ancestral land and sea, marine as well as land of the Konkan coast with nuclear energy. It’s our right to life and livelihood and we will not give these up at any cost,” said the e-mail to the bankers.

 

Paris – Secret meeting for Jaitapur Reactors continues despite protests in India #WTFnews


 

PARIS, June 5, 2013

Investors’ meet on for underwriting package for Jaitapur reactors even as protests continue

 Vaiju Naravane
 A crucial investors’ meeting to underwrite the financial package for two 1,650 megawatt Areva EPR reactors to be built in Jaitapur, Maharashtra, got under way here with a top four-man team from India, including officials from the Department of Atomic Energy (DAE) and the Nuclear Power Corporation of India (NPCIL). Senior executives from Areva, the French nuclear giant, several banks and government agencies are also attending the meeting.

The meeting coincides with large-scale protests in Maharashtra against plans to build the two giant nuclear reactors. Hundreds of local farmers have signed petitions saying they do not wish to have their lands requisitioned or the giant reactors to be located close to where they live. Non-governmental organisations fighting plans to build the reactors say the project is located on a seismic site.

The Indian team in Paris is made up of four officials. C.B.S. Venkataraman, Additional Secretary and Niranjan Kumar, Deputy Secretary are from the DAE, while Preman Dinaraj (Financial Director) and Sandeep Singhroy (Director Jaitapur project) are from the NPCIL.

Soaring costs a concern

There have been serious concerns in India over the soaring costs of these reactors. Initially, India is expected to finalise an agreement for the purchase of two EPRs. This is expected to go up to six such reactors. The main sticking points in the discussions so far have been the cost of energy to India per kW/hour coupled with security concerns following the Fukushima nuclear catastrophe in Japan. Areva had initially promised India that energy from the reactors would not cost more that Rs. 4 per kW/h. But since the cost of each reactor has gone up from 3.3 billion Euros to 8.5 billion Euros, it would be a miracle if Areva is able to keep the cost of energy within the original framework.

Anne Lauvergeon, former chief of Areva, had told The Hindu in an interview two years ago that the “four rupee target” would be “maintained at all cost”. But the French have been unable to manage costs within their own country. The only EPR currently under construction in France at Flamanville has had massive cost overruns and is five years behind schedule. However, the two EPRs being built at Taishan in China are said to be going ahead at a terrific pace, being built to cost and to schedule.

“Since the reactors will be built by the NPCIL, the cost factor will definitely be lower in India, perhaps even 30 per cent lower than it is in France. There is, however, cause for worry and the talks in Paris will focus on reducing costs to a minimum without sacrificing safety or quality,” a well placed source close to the talks told this correspondent in Paris.

Members of the Konkan Bachao Samiti said that according to their calculations, the unit cost per kilowatt/ hour will be Rs. 14 per unit. The exact cost of each EPR in India has not been disclosed.

“Three important factors”

“There are three important factors in determining the price of a kilowatt/hour of nuclear electricity. The first is the cost of building the plant. The second element is the cost of borrowing the money. What rate of interest will India have to pay? The third element is the capacity at which the plant runs. If it fails to run at 100 per cent capacity, the costs inevitably go up,” Steve Thomas, a specialist on nuclear energy at Greenwich University’s School of Business told The Hindu.

None of these issues have been properly outlined to the public and no figures have been have been released either by the DAE or the NPCIL, which has angered opponents of the project. The project will supposedly have a 70:30 debt equity ratio.

Members of the Konkan Bachao Samiti said the meeting under way in Paris was kept secret to prevent demonstrations in India. However, word of the meeting leaked out. In a letter to French bankers, the Konkan Bachao Samiti said: “NPCIL and government of India officials are making wrong representations, concealing the ground information, twisting and distorting the facts and are trying their level best to delude you [investors], in order to make you agreeable and secure loan finance for this mega disaster project.”

Anti-Areva Protest: Letter to French and European Bankers from Fishermen and Farmers of Jaitapur


02 June 2013

OLYMPUS DIGITAL CAMERA

To,

The Presidents / Chief Executive Officers,

The French and European Bankers,

 

SUBJECT:- FINANCING OF PROPOSED JAITAPUR NUCLEAR POWER PROJECT.

 

Dear Sir / Madam,

 

We the people of Jaitapur, Madban, Sakhari Nate, Mithgavane, Niveli, Karel and all the surrounding villages situated near proposed JAITAPUR Nuclear Power Project, are writing to you with a deep sense of anguish and disgust about the scheduled development taking place in the city of Paris on 5 th and 6 th June between Nuclear Power Corporation of India (NPCIL) acting through Government of India, French Company AREVA and various French as well as European Bankers.

 

We, the thousands of Fishermen, Farmers as well as common inhabitants of Jaitapur and surrounding areas, are given to know that NPCIL and Government of India officials are going to negotiate with French as well as European Bankers the loan terms for financing the proposed JAITAPUR NUCLEAR POWER PROJECT.

 

We further understand that, to allay and assuage the serious concerns of Bankers as well as French Company AREVA about our staunch and fierce opposition to the proposed JAITAPUR NUCLEAR POWER PROJECT, Nuclear Power Corporation of India (NPCIL) and Government of India officials are making wrong representations, concealing the ground information, twisting and distorting the facts and are trying their level best to delude you, in order to make you agreeable and secure loan finance for this mega disaster project.

 

To put the ground realities and facts in clear perspective, we, the fishermen and farmers of Jaitapur and adjoining areas, want to make it very very clear that our die hard opposition to Proposed JAITAPUR NUCLEAR POWER PROJECT is total, fierce and will not be subdued by any means or ways possible. In fact it is gaining momentum every passing day and is extending to larger and wider areas of Coastal Maharashtra, famously known as KOKAN.

 

In view of all above, we urge upon you not to buckle to the cheap tactics of NPCIL as well as Government of India and extend any loan to this ill fated Nuclear Project, which is sure to be scrapped sooner or later and you will end up not only loosing your money but your face too.

 

We will never ever allow anybody to contaminate our ancestral land, seas, marine as well as land environment of this konkan coast with NUCLEAR ENERGY and it’s dangerous fallout of ionizing RADIOACTIVITY at any cost and to achieve this objective, we are prepared to embrace even death if the situation so warrants.

 

Hope propriety prevails in your decision making and you desist from making money over our deaths.

 

                              

Yours Truly

                  Fishermen, Farmers and inhabitants of Jaitapur and vicinity

 

 

 

Jaitapur villagers oppose investors’ meeting, hidden from Locals


PUNE, June 4, 2013

Staff Reporter, The Hindu

Konkan Bachao Samiti says this meet was hidden from the locals to avoid furore

Even as officials of the Department of Atomic Energy (DAE) and Nuclear Power Corporation of India (NPCIL) left for France for a crucial meeting between European investors and French conglomerate Areva to gather funds for the 9900-MW Jaitapur nuclear power plant, farmers and fishermen of the Jaitapur have written to the potential investors expressing their opposition to the project.

According to sources, a team of senior officers of both the DAE and the NPCIL will attend a meeting in France on June 5 and 6.

According to members of the Konkan Bachao Samiti, this meeting was kept hidden from the local population, to avoid furore and further protests.

“Deluding investors”

The letter by the Konkan Bachao Samiti states, “NPCIL and government of India officials are making wrong representations, concealing the ground information, twisting and distorting the facts and are trying their level best to delude you [investors] , in order to make you agreeable and secure loan finance for this mega disaster project.”

Rajendra Phaterpekar of the Samiti stated that the exact cost of the project was still not made public, adding to the government’s non-transparent attitude.

According to earlier projections, the cost of the project was to be Rs. 1,20,000 crore, which is alleged to have increased three-fold over the last two years, he said.

“We, the fishermen and farmers of Jaitapur and adjoining areas, want to make it very very clear that our diehard opposition to the proposed nuclear power project is total, fierce and will not be subdued by any means or ways possible,” the letter says.

Added to this, the villagers of Jaitapur will stage a protest on July 4 to register their opposition, yet again.

 

Jaitapur nuclear power plant :A very expensive proposition


 

A very expensive proposition
MV Ramana and Suvrat Raju
February 12, 2013, HT
During his visit to India this week, French President Francois Hollande is likely to urge the government to conclude a questionable deal to purchase six nuclear European Pressurised Reactors (EPRs) from the French company Areva for Jaitapur (Maharashtra). Though marketed as “the most advanced”

reactor, the EPR is commercially immature; not a single reactor has been commissioned anywhere in the world. Moreover at the construction sites at Olkiluoto (Finland) and Flamanville (France) costs and time have escalated dramatically from the initial projected figures, suggesting that each reactor will cost about Rs. 60,000 crore. So six could cost in excess of Rs. 3.5 lakh crore.To put this figure in perspective, each of the two reactors that Areva is hoping to sell in the next five years is larger than Maharashtra’s annual plan for 2012 (Rs 45,000 crore). Shockingly, the government agreed to purchase the reactors from Areva without a nominal competitive bidding process. The procurement rules in any branch of the government, including the Department of Atomic Energy (DAE), mandate public tenders for any purchase aboveRs. 10 lakh.

Cables revealed by Wikileaks suggest that this peremptory decision was made in 2007. The government’s rationale was laid out by former DAE secretary Anil Kakodkar. In an article in 2011, Kakodkar wrote: “We also have to keep in mind the commercial interests of foreign countries and of the companies there… America, Russia and France were the countries we made mediators in these efforts to lift sanctions, and hence, for the nurturing of their business interests, we made deals with them for nuclear projects.” Indian officials are aware that this attitude is costly. In another cable, the general manager of the Nuclear Power Corporation (NPCIL) admitted that India had “paid a ‘high’ price for French reactors from Areva”.

Unsurprisingly, the government has been reticent about discussing the modalities of the contract it is negotiating with Areva. It has failed to support its assertions that “the cost per unit of electricity from the Jaitapur plant will be competitive to the other power plants” with any substantive data on costs. When asked, it demurred, even in Parliament, with the excuse that “the detailed project proposals … are under finalisation.”

To check the veracity of the government’s claims, we recently used the best available public data on fuel prices and capital costs, assumed a substantial markdown to account for lower costs of labour in India and estimated the expected tariff from the EPR reactors. This calculation involves some rather detailed accounting, but the basic procedure for setting the electricity tariff from nuclear plants was laid out by NPCIL in 2008.

By adapting this procedure to the EPR  -  and using the most recent guidelines of the Central Electricity Regulatory Commission  – we estimated that if NPCIL were to follow the regulations faithfully, the first-year tariff from the EPR would be about R14 per unit. This assumes that reactor construction starts next year and is completed on the same pattern as the Kudankulam I and II reactors, which, given the untested nature of the EPRs, is generous. The calculated tariff is a far cry from current or expected future tariffs from other base-load power projects.

Since it cannot pass on such a high tariff on to consumers, the government may absorb the loss and sell electricity at a lower price. However, every rupee of under-recovery will cost the exchequer about Rs. 1,000 crore per year. Just to halve the tariff from the first two reactors down to Rs. 7, the government may need to spend Rs. 14,000 crore per year.

This is in addition to indirect subsidies in the existing revenue model. For example, NPCIL plans to put in its equity early, and then let it lie idle with no return for the period of construction that may easily extend beyond a decade. The government may increase these handouts in various ways – for example, by putting pressure on public sector banks to provide cheap credit for the project. The issue here is not Maharashtra’s need for electricity. Rather it is why the government has chosen this particular company, and its overpriced technology, to meet this need.
MV Ramana and Suvrat Raju 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
The views expressed by the authors are personal

 

Jaitapur a critical issue: It’s all about money, honey!


English: Internationally recognized symbol. De...

 

IndiPublished: Friday, Feb 15, 2013, 8:00 IST
Place: New Delhi | Agency: DNA

India and France on Thursday reviewed the progress on the controversial Jaitapur nuclear project, which is being constructed by French nuclear giant Areva and India’s public sector nuclear company Nuclear Power Corporation of India Limited (NPCIL), even as issues related to cost of this this multi-billion dollar deal remains pending.

“Today, President Hollande and I exchanged views on a number of bilateral, regional and multilateral issues of common interest. We reviewed progress on the Jaitapur nuclear power project and reiterated our commitment to its early implementation as soon as the commercial and technical negotiations, which have made good progress, are completed,” prime minister Manmohan Singh said.

India had signed agreements for the 9,900 MW nuclear power project in 2010 but owing to different factors such as protests from locals, difficulty in land acquisition, liability in case of accident and cost of the project, it has not moved ahead a great deal. Environmentalists have also critically opposed its construction voicing concern about seismic activity in the area specially after the Fukushima incident in Japan.

However, the Indian government has reiterated its commitment to go ahead with the project several times but has also admitted that there are issues pertaining to the cost of the project and technology.

In a joint statement released here on Thursday, French president Francois Hollande and Manmohan Singh expressed satisfaction regarding the project. “In the field of energy, the leaders expressed satisfaction in regard to the ongoing collaborative projects in R&D on the peaceful uses of nuclear energy and agreed to further strengthen bilateral civil nuclear scientific cooperation,” the joint statement said.

“Recalling the Memorandum of Understanding signed on 4 February, 2009 between NPCIL and Areva for setting up of 6 x 1650 MWe EPR units at Jaitapur, the leaders reviewed the status in regard to the first two EPR units and noted that NPCIL and AREVA were engaged actively in techno-commercial discussions. They expressed hope for the expeditious conclusion of the negotiations. It was emphasized that the nuclear power plant at Jaitapur would incorporate the highest safety standards,” the joint statement noted.

Meanwhile, sources in the central government told DNA: “There has been satisfactory progress on talks regarding the nuclear project. As far as safety issues are concerned, Areva is bringing the latest technology. And even before the reactor at India would be built they would have built nuclear reactor using same latest technologies at several other places. So by the time it would be built in India all those things the company would learn while building those could be incorporated in Jaitapur plant.”

 

 

 

The Reality at Jaitapur Nuclear Power Plant , Mr. Hollande #mustshare


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Anuj Wankhede and Cressida Morley

French President Francois Hollande is making his first visit out of Europe since he was elected. And he has chosen India as a preferred destination for his visit starting tomorrow – 14th February.

On his radar is to sell Areva’s failed EPR (European Pressurized Reactor) nuclear reactors to India. Even as his own country has neither been able to implement the EPR reactors in France or Finland and nor has the US regulator certified it, the Indian government is eager to set up these reactors in a huge area in coastal Maharashtra – at Jaitapur – a highly bio-diverse region that needs preservation.

The carrot which the French president is dangling is the supply of fighter jets to India on “favorable” terms. The Indian government for want of more and more weapons (and probably with an eye on making some money out of the deal?) is turning a blind eye to the enormous damage this project will cause. Anuj Wankhede and Cressida Morley write about the Jaitapur protestors, who despite all efforts of the French and Indian governments, remain determined that this project will never see the light of day.

The beauty of the Ratnagiri coastline and surrounding area has to be seen to be believed. Any government official from DAE to NPCIL would be crazy to think of destroying or even putting at risk this kind of natural biodiversity. It is already established that Maharashtra state itself does not require any more electricity than is already being produced and the Chief Minister himself is on record as saying that the state will be free of any load shedding by the year end.

So for whom is the Jaitapur Nuclear Power Plant (JNPP) being built?

Certainly not for the local people, the fishers, farmers and ordinary people whose livelihoods will be destroyed and their lives threatened. The government tells us that nuclear power is needed for ‘development,’ but the people who will be directly affected by JNPP have a very different ideas of what development is and whom it should benefit.

The fishing village of Sakhri-nate, is just a few kilometers by road from the proposed JNPP site – only 3 kilometers as the crow flies. You can see the site clearly just across the sea.

OLYMPUS DIGITAL CAMERASlogans such as ‘No nuclear’ and ‘Areva go back’ are painted on walls all around the village and the people against JNPP vehemently say they are prepared to give their lives rather than allow the plant to come up. Recent newspaper reports have shown just how desperate NPCIL is to do a deal with the fishers by raising the compensation for land acquisition to Rs. 22.5 lakh per hectare from Rs.1.5 to 4 lakh announced previously.

But the fishers are adamant…it doesn’t matter how much they are paid when their livelihoods, their community, in fact their very lives are on the line.

Most of those opposed to the plant in Sakhri-nate are fishers but there are people of different professions as well, showing that it is not just a direct concern for livelihood but a much wider fear that JNPP will in fact destroy their lives and community. The activists have detailed knowledge of how the JNPP will affect their lives. For fishers, this knowledge may not be scientific in the academic sense of the word, but every day they observe the sea intimately as their lives literally depend on it. The knowledge that they have gained through long experience cannot be easily dismissed.

The fishing community is concerned that the effluent water used for cooling the nuclear plant – which will be pumped back into the sea at a temperature – at least 5-7 degrees Celsius higher than the natural temperature – will have a disastrous effect on the fish population and their breeding. The Government is trying to assure the fishers that a rise in seawater temperature would not affect the fish, except possibly to make them bigger! Obviously, the fishers are not buying this at all. They claim that the fish that presently inhabit their fishing ground will not be able to live in such a changed environment. Even if these fish are able to swim away to other areas of the sea, shellfish, for example cannot escape so easily and will surely perish. Perhaps, different species of fish will come to the area due to the raised temperatures but this also represents an unknown for the fishers. In any case, they refuse to believe that the environment will simply remain the same with such enormous quantities of heated water being pumped into the sea. As one fisher put it, even a refrigerator emits heat which can affect the surrounding air temperature and living things, so how can the government claim that an entire nuclear power plant will have no impact on the environment?

Others have expressed fears of terrorism and natural disasters.

The cliffs surrounding Sakhri-nate, directly opposite the proposed site for JNPP, are spectacular to say the least. The solid rocks here weather the eternal beating of the sea waves. Yet, this rock was split wide apart by lightening and electrical storms that are common in the area. It’s easy to imagine similar lightening bolts falling just a few kilometers away, and the damage they would do to a nuclear reactor. It would be a disaster of unimaginable proportions indeed.

P1190019Especially after Fukushima, the fear of accidents is very real and no amount of government assurances has convinced the activists that JNPP will be totally safe. The level of distrust towards the government is very high and palpable. Activists claim that the government contradicts its own reports and does not disclose ‘inconvenient’ information besides they feel the government is least concerned about the locals.

Rather than the government, Sakhri-nate fishers would rather believe their fellow fishers from another part of the state – Tarapur. They have travelled to nearby Tarapur which as the site for the first nuclear reactor to be built in India and they have seen what the nuclear power plants have done to the fishing catch. The fishing community at Tarapur is practically out of business due to the low catch and the enforced security ring around the plant which forces them to take long detours into the sea and which entails huge costs on diesel – not to mention the time spent.

At Tarapur, the locals were told 40 years ago that the Tarapur NPP was a matter of national pride. The local community and fishermen in that area gladly agreed to its construction, fully believing government assurances that the fish and environment would not be affected and that they would be adequately compensated. They have since been thoroughly betrayed and have warned their fellow fishers near Jaitapur to fight against JNPP – lest the same fate befalls them. The information received by the Sakhri-nate fishers from the Tarapur fishers is based on their bitter experiences and a shared understanding of the sea and the environment, both of which are integral parts of their lives and livelihoods. Who would you rather believe—the actual experience of your peers or the theoretical science of distrusted governments?

Ideas on development: worlds apart

The rift between the local community, dead-set against the NPP and the government, equally determined to build it, is not just about differing information and mistrust. There is a more fundamental difference in worldview between these two parties. While the government’s idea of ‘development’ focuses on achieving ambitious electricity generation, attracting foreign capital and making more and more ‘goods’ for an ever-expanding market, the fishers of Sakhri-nate have different ideas.

no nuclearAs one local explained “We are already developed. We don’t need anything more; we have full employment in the village. Even disabled or illiterate people have jobs, mending fishing nets etc. We have enough electricity; all we ask is that the government allows us to pursue our livelihoods. We have enough money to live well now, as fishing is a lucrative industry, but if we loose our livelihood, we will have nothing.”

Others said that if development was needed at all in their village, it should be in the form of increased educational facilities – including vocational schools – so that their children would get better employment opportunities – if they choose to. There are also calls for growth which minimizes environmental destruction and which compliments local industries such as food processing factories for the fish and mangoes, also produced in large quantities in the Jaitapur area. The already present ice factories, which provide ice to pack the fish so they can be sent to different parts of the country, are another obvious example of this type of development.

It would seem that the government has underestimated the level and type of knowledge and information that the local community has or even tried to understand their concerns – leave alone address them. This is not to mention the high income and living standards enjoyed by the fishermen who do not want this so called lop sided “development” at such high risks.

But most of all, the official model of development is being called into question: Why should large-scale industrial projects be encouraged, in this case a foreign-funded project that carries a risk of unimaginable destruction, and why should local communities be required to sacrifice their lives and livelihoods for lighting up city malls while the locals who are being affected by the project will still have only erratic power supply – just as is the case at Tarapur?

(The views expressed in the article are the personal views of the authors and not those of any organization or institution.)