Search the Internet          Tips  Sites: Finance, Investment

India, Russia to ink deal on Kudankulam N-project soon

Fakir Chand in Bangalore

The long wait appears to be finally over! Thirteen years after protracted delays and tough negotiations, India and Russia are all set to clinch a financial deal next month to execute the two proposed nuclear power projects of 1,000 mw each at Kudankulam in Tirunelveli district of Tamil Nadu.

The joint coordination committee of the Russian Federation and the Bombay-based Nuclear Power Corporation of India Ltd, which met in Bangalore over the last two days, has narrowed down the differences between the two strategic partners to arrive at the project cost for funding mutually.

"The negotiations on the price of the project is nearly completed and the final decision will be taken within a month," declared NPC chairman and managing director V K Chaturvedi after the third meeting of the committee.

Allaying fears over the cost escalation owing to delays in finalizing the deal, Chaturvedi told rediff.com on Wednesday that the cost of each project was likely to be around Rs 70 billion as it was originally envisaged.

It is first time that India will be going for 1000mw nuclear power projects, using pressurised light water reactors with technical and financial collaboration with the Russian Federation, thanks to the expertise developed by NPC to design, construct, operate, and maintain all types of nuclear plants, including heavy water reactors.

"By world standards, the cost of nuclear power plants has not gone up so much to be a cause for concern. Dollar appreciation over the last decade against rupee notwithstanding, we are trying to limit the cost of $1400-$1450 per kw, which is a standard price for nuclear power, projects the world over."

The brain-child of Rajiv Gandhi-Gorbachev era dating back to the late eighties, the most-ambitious project will be the first of its kind to be built and operated jointly by the two countries with the Russian technology and enriched uranium to generate power at a cost of Rs 3.50-3.75 per unit.

"Besides technology and uranium deposits, around 54 per cent of the project cost will be funded by the Russian Federation under a soft credit at 4 per cent interest. The remaining 46 per cent of the equity will be funded by the corporation with 12 per cent of it coming from private placement of bonds, and the rest from the government as borrowings," Chaturvedi stated.

Though the repayment time will be 14 years after the two units go into operation, NPC intends to payback the credit in 5-6 years as demand for cheaper power is bound to shoot up in the coming years, leading to quick recovery of the project investment.

With the detailed project report completed, reviewed and accepted, the corporation has submitted its preliminary safety analysis report to the Indian Atomic Energy Regulatory Board.

"The report is under the scrutiny of the AERB for the issue of construction license to the company soon."

In a bid to commence the construction of the main plant from the first quarter of 2002, both the partners are likely to achieve financial closure for the project by year-end.

Land measuring about 1,200 hectares has already been acquired at Kudankulam, which can accommodate 6 units of 1000 mw each.

"All going well, the first unit is expected to be commissioned by the end 2007 and the second one by December, 2008. The corporation is entering into strategic partnerships with public and private sector undertakings such as BHEL and L&T for executing the project on turn-key basis," Chaturvedi said.

Meanwhile, Russian Federation vice-minister for power E A Reshetnikov said the Russian organizations would be responsible for the entire design, supply of fuel material, equipment and machinery, supervision, and training of the Indian personnel for commissioning, operation and maintenance till its final take over by the NPC.

"The Russian credit will cover around 85 per cent of the project work. We will be installing the pressurised water reactors at Kudankulam, which will come under the supervision of the International Atomic Energy Agency for conforming to safety measures and all standard safeguards, stipulated by it," Reshetnikov asserted.

According to NPC executive director (finance) S B Kulkarni, the power generated from Kudankulam projects will be hooked to the national grid, and the four southern states, including Karnataka will be sharing it through the southern grid.

Located 25 km north-east of Kanyakumai, Kudankulam is considered to be the safest place to set up such mega nuclear projects as the region falls in seismic zone 2, where there are no active faults in the vicinity, nor any major lakes or dams to cause induced seismic activity.

"The site has also hard rock at enough depth to provide solid foundation," said NPC chief engineer S K Jain.

Being right on the coast of Gulf of Mannar and surrounded by the Indian ocean from one side and the Bay of Bengal on the other, the site has large quantity of sea water for condenser cooling and dilution of effluents. It is also not subject to severe cyclonic storms, tidal waves and tsunami.

Money

Business News

Tell us what you think of this report