Cost uncertainty dogs the Jaitapur nuclear project

Forget about the highly questionable technology for the proposed 1,650 megawatt nuclear power plant at Jaitapur in Ratnagiri district from the French power major Areva, or even the objections of the Finnish environmental watchdog body STUK for the Olkiluoto plant, which is being replicated at Jaitapur.

The fact is that nothing can prevent time overruns and, therefore, cost escalation. To date, no nuclear power project has been implemented on schedule.

The last US nuclear plant, the Watts Bar-1 reactor, took 24 years for completion, 17 years behind schedule. Even China, with the ability to implement projects before schedule, had a two-year time overrun before commercial production commenced at its latest nuclear plant in 2007. That was too an Areva reactor. Gaps in quality of implementation were detected in the welds of the steel liner of it.

About the experience of infamous cost and time lags in the Indian nuclear power industry, the less said the better. And it is well-known that although India began atomic energy planning synergistically with France, nuclear power production has a share of 3% of total electricity generation.

The Jaitapur technology - a European pressurised reactor (EPR) — is an abandoned Finnish venture, whose original cost was estimated at €5.4 billion (Rs32,000 crore).

The time horizon was extended by over two years, due to a faulty foundation with flawed welds for the reactor’s steel liner, causing a cost escalation €1.5 billion, meaning 50% of the original production cost. Moreover, STUK recorded more than 3,000 safety and quality deficiencies at the construction of the Olkiluoto plant and pointed out that Areva chose cheap and incompetent subcontractors and overlooked safety-related problems.

The EPR design is yet to be tested and a joint letter from the French, Finnish, and United Kingdom nuclear regulators identified major design deficiencies pertaining to control and safety systems of the EPR.

Here in India, any increase in interest during construction is passed on to the consumers as per electricity laws. Remember the time and cost lags of the 500mw Budge Budge Thermal Power Plant in West Bengal, set up by CESC Ltd, the flagship of the Rama Prasad Goenka group of companies. The initial cost projection was Rs1,600 crore, but a time lag of nearly a decade pushed it up to Rs2,600 crore. By contrast, the 500 MW Bakreswar thermal power plant, taken up several years after Budge Budge, was completed earlier and took less than Rs1,900 crores. Moreover, the Goenkas used to sell power at 30% more than the rate of Bakreswar.

Dr Sankar Sen, a power minister in West Bengal during the 1990s, scathingly criticised CESC for its inefficient project implementation and the resulting effect on power tariff. Dr Sen, a top power technology exponent and academic (he was a former vice-chancellor of Jadavpur University) played a key role in transforming West Bengal from a power-deficit to a power-surplus state. But Dr Sen was made to quit by the then chief minister Jyoti Basu for his pungent remarks against CESC, which were divulged by a Congress legislator, Abdul Mannan. This happened even though the minister’s concern was to prevent a rise in power tariff, which in turn pushes up the cost of production in every other sphere — a normal techno-commercial expectation.

Delhi Science Forum chief Prabir Purakayastha points out that construction-cost per MW of an Indian designed pressurised heavy water reactor is Rs8-9 core/MW against Rs20 crore in the abandoned Olkiluoto plant. Indigenous nuclear reactors would save us Rs1.1 lakh crore, taking into account the six EPR projects in the pipeline. However, Purakayastha skips the time overrun factor, one reason why investors in OECD countries are disinterested in nuclear power projects.

Much has been said about the choice of location, against which the local people have agitated with a solid rationale. A few months back, some 1,500 of them courted arrest to protest against the government ignoring their objections at the public hearing for the environmental impact assessment (EIA). The pity is that EIA for various projects have been more on commercial concerns rather than environmental. Jaitapur is no exception.

The deal between the Nuclear Power Corporation of India Limited (NPCIL) and Areva reflects a bonhomie between Indian prime minister Manmohan Singh and French president Nicolas Sarkozy at the cost of Indian people and the economy. Dr Singh actually came to the rescue of the problem-stricken French nuclear industry. Apart from the tariff structure, which is a very contentious issue, silence about the safety-related expenditure aggravates the suspicion.Transparency is, historically, a casualty in the nuclear energy arena.

The writer is a veteran journalist & commentator, specialising in left politics and environment.