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print versionSpecial to ‘Financial Chronicle’ - 14 December 2010
Whenever a French president comes to India, so do arms deals. During President Nicolas Sarkozy’s recent visit, India and France discussed or signed several weapons agreements. These include a $2 billion deal to upgrade Mirage fighters and a $900 million contract to equip them with missiles. French and Indian agencies are now in advanced talks on jointly developing new fighter jets and surface-to-air missiles in deals worth $7 billion-plus.
France is pushing India to buy its military tanker planes, Eurocopter combat helicopters and Rafale fighter planes. These last are offered as part of the world’s currently largest military order—India’s purchase of 126 combat aircraft worth $11 billion.
Overshadowing all these is the Indo-French agreement on two European Power Reactors (EPRs) developed by Areva. The EPRs, each of 1,650 MW, carry a price-tag estimated at $13 billion and are to be erected at Jaitapur, in Maharashtra’s Ratnagiri district. The site was cleared by the Ministry of Environment and Forests only days before Sarkozy’s arrival.
The MoEF granted the clearance 80 days after the project promoter, Nuclear Power Corporation of India Ltd (NPCIL), submitted its Environmental Impact Assessment (EIA) report, instead of the normal six months or longer. The haste was also evident in the 35 conditions attached to the clearance, some of them pertaining to studies that should have been conducted much earlier and cooling systems that should have been designed well in advance.
The EIA ignored three crucial issues: the reactors’ effect on the region’s ecosystem and biodiversity, including 200 hectares of mangroves; the serious environmental problems posed by nuclear power, including potentially catastrophic accidents and routine radioactivity exposure through effluents and emissions; and safe disposal of radioactive waste.
According to the respected Bombay Natural History Society, “the true impact of a project of this scale will never be known†without a comprehensive biodiversity assessment. Water discharged from the plant will be 5 °C hotter than the ambient sea temperature. But “even a 0.5 °C of continual thermal stress will lead to mortality of marine species.†The EIA doesn’t even mention the generic issues of nuclear plant safety and radioactive waste.
When activists met MoEF’s Jairam Ramesh to protest against the project, he reportedly told them: “I can’t stop the project. It is going to come up because it is not just about energy but also about strategic and foreign policy. Now you can put forth your grievances.â€
The Central and Maharashtra governments had already made up their mind about clearing the project without full scrutiny. Such was their eagerness to push it that Land Acquisition Act notices were issued more than two years ago under an emergency provision—well before the site was approved, the EIA prepared, and the contract signed. The state did everything possible to discourage and outlaw peaceful protests against the EPRs, including detaining a former High Court judge, externing activists and banning citizens’ visits from nearby areas, including that of a former Chief of Naval Staff.
As if this weren’t bad enough, serious issues have been raised about the EPR’s safety and economics. The EPR has not been built and tested anywhere in the world. Nor has its design been approved even by the French nuclear regulator. It uses an unconventional fuel, a mix of uranium and plutonium oxides, whose commercial-scale performance is untested. Two EPRs are currently under construction, in France and at Olkiluoto (OL-3) in Finland.
OL-3 has become a test case for a “market-driven†nuclear project. The reactor is three years behind schedule, and more than 80 percent over budget. The delay is partly attributable to the reactor’s size and complexity, but largely to the 2,000-plus safety issues raised by Finnish, British and French regulatory authorities, in particular, about the reactor’s control mechanisms. The OL-3 fiasco has led the German firm Siemens to walk out of a joint venture with Areva and to bitter arbitration between Areva and the Finnish utility.
OL-3’s high costs will have to be largely absorbed by Areva, which itself has been in need of rescue. If OL-3 is abandoned or becomes a White Elephant, the nuclear industry in the West, which has still not recovered from the Chernobyl shock, will suffer a body blow.
It is clearly imprudent for India to import an untested extremely high-cost reactor which may fail. At current estimates, which may have to be revised upwards, the EPR’s capital costs per MW are at least three times higher than those of India’s CANDU reactors. The EPR looks like another Enron in the making, but could be worse because it involves generic problems, including dependence on imported fuel, decommissioning, and waste storage, which too have huge cost implications.
Sarkozy openly expressed his misgivings about India’s nuclear liability law and demanded that French suppliers be exempt from liability. We don’t know if NPCIL has accommodated his concerns through an agreement with Areva which rescinds NPCIL’s right of recourse. The NPCIL-Areva contract must be fully disclosed.
Jaitapur is a fit case for a high-level commission which examines its viability, safety and environmental impact before the EPR juggernaut begins rolling. Or else, it will soon be too late.
