 "Confident that Modi government will address nuclear liability issues: Tarik Choho")
The 9,900-megawatt (Mw) Jaitapur nuclear power project in Maharashtra is way behind schedule as Nuclear Power Corporation of India (NPCIL) and French multinational Areva have yet to close the works contract. In his first interview after the Narendra Modi-led government assumed office, Tarik Choho, Areva’s chief commercial executive officer, speaks to Sanjay Jog on key issues. Excerpts:
What is the status of the negotiations between Areva and NPCIL to close the final contract for the Jaitapur nuclear power project in Maharashtra?
In December 2010, Areva and NPCIL signed a General Framework Agreement for construction of the first two EPR (evolutionary pressurised reactors) reactors and the supply of fuel. The commercial negotiations with NPCIL are in progress for the first two EPRs. Areva is now looking forward to launching the early works and to reaching an agreement with NPCIL on the technical and commercial terms of the contract.
It is important to underline that Areva’s EPR design is based on an evolutionary approach using feedback gained from more than 80 pressurised water reactors already built worldwide, even before Fukushima. After the Fukushima incident, safety checks were conducted throughout the world, including by European safety authorities on Areva’s technologies. They confirmed that Areva’s EPR design met all the revised standards, especially to handle a combination of hazards, including core melt situations.
What is Areva's estimate for the project cost and per-unit tariff on which the agreement will be arrived with NPCIL?
The cost per kilowatt hour produced by the EPR reactor is highly competitive as we have to take into account all the technical aspects of the reactor, as well as its operational and economical performances. Indeed, the EPR reactor provides a high power output of 1,600 Mw per unit, optimising notably site and land use. It benefits from innovative features, which ensure the high availability of the reactor (up to 92 per cent) and significant savings on operation and maintenance costs (up to 20 per cent) and fuel costs (up to 15 per cent) compared to other new-generation designs.
We are confident that once the technical parameters are agreed to with NPCIL, we will be able to demonstrate the competitiveness of our technology to meet the targets set by the Department of Atomic Energy. As Areva’s scope only accounts for around 40 per cent of the entire project, there are certain elements impacting the overall tariff that are beyond our control.
Talks were also delayed due to India's civil nuclear liability regime and its stringent provisions regarding compensation for an accident. Is there any breakthrough?
It appears that some clauses of Indian civil nuclear liability law and its implementation are open to various interpretations. We are calling for clarification and we expect that once the provisions are clarified, a legal framework acceptable to suppliers like Areva will be defined. If Areva engages in nuclear business in a certain country, we naturally abide by the applicable laws and regulations, which is true of India as well.
What assistance do you expect from the Modi government, which will provide a much-needed relief on project cost and tariff and resolve issues relating to liability?
We are confident this government will address the liability issue as they are really committed to development of the nuclear industry in the country. The law not only impacts foreign companies and investors but also the local industry which is highly involved in nuclear projects. Indian nuclear suppliers have indeed pointed out that the act is a major obstacle for them and they have also requested for more clarity, as well as a revision of the law.
Governments play a key role by supporting the right conditions. In the UK, for example, the government has pursued electricity market reforms and, as part of this, implemented the ‘Contracts for Difference’. These are mechanisms to encourage utilities and private investors to invest in new, low-carbon electricity generating capacity, such as nuclear energy.
When do you expect project development to begin? What is the revised year for the commissioning of the first phase?
Construction time and commissioning dates are country-specific as they depend on a number of factors such as the availability of resources, the level of localisation, the reactor site to be built, and the approval process of the domestic safety authority, among others. That said, discussions with NPCIL are progressing well, and we expect to be in a position to reach an agreement on the technical aspects of the project in 2015.
What is the status of the negotiations between Areva and NPCIL to close the final contract for the Jaitapur nuclear power project in Maharashtra?
In December 2010, Areva and NPCIL signed a General Framework Agreement for construction of the first two EPR (evolutionary pressurised reactors) reactors and the supply of fuel. The commercial negotiations with NPCIL are in progress for the first two EPRs. Areva is now looking forward to launching the early works and to reaching an agreement with NPCIL on the technical and commercial terms of the contract.
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Negotiations were not moving due to differences over project cost and per-unit tariff. The rise was inevitable due to incorporation of additional safety measures after the Fukushima accident. What is your take?
It is important to underline that Areva’s EPR design is based on an evolutionary approach using feedback gained from more than 80 pressurised water reactors already built worldwide, even before Fukushima. After the Fukushima incident, safety checks were conducted throughout the world, including by European safety authorities on Areva’s technologies. They confirmed that Areva’s EPR design met all the revised standards, especially to handle a combination of hazards, including core melt situations.
What is Areva's estimate for the project cost and per-unit tariff on which the agreement will be arrived with NPCIL?
The cost per kilowatt hour produced by the EPR reactor is highly competitive as we have to take into account all the technical aspects of the reactor, as well as its operational and economical performances. Indeed, the EPR reactor provides a high power output of 1,600 Mw per unit, optimising notably site and land use. It benefits from innovative features, which ensure the high availability of the reactor (up to 92 per cent) and significant savings on operation and maintenance costs (up to 20 per cent) and fuel costs (up to 15 per cent) compared to other new-generation designs.
We are confident that once the technical parameters are agreed to with NPCIL, we will be able to demonstrate the competitiveness of our technology to meet the targets set by the Department of Atomic Energy. As Areva’s scope only accounts for around 40 per cent of the entire project, there are certain elements impacting the overall tariff that are beyond our control.
Talks were also delayed due to India's civil nuclear liability regime and its stringent provisions regarding compensation for an accident. Is there any breakthrough?
It appears that some clauses of Indian civil nuclear liability law and its implementation are open to various interpretations. We are calling for clarification and we expect that once the provisions are clarified, a legal framework acceptable to suppliers like Areva will be defined. If Areva engages in nuclear business in a certain country, we naturally abide by the applicable laws and regulations, which is true of India as well.
What assistance do you expect from the Modi government, which will provide a much-needed relief on project cost and tariff and resolve issues relating to liability?
We are confident this government will address the liability issue as they are really committed to development of the nuclear industry in the country. The law not only impacts foreign companies and investors but also the local industry which is highly involved in nuclear projects. Indian nuclear suppliers have indeed pointed out that the act is a major obstacle for them and they have also requested for more clarity, as well as a revision of the law.
Governments play a key role by supporting the right conditions. In the UK, for example, the government has pursued electricity market reforms and, as part of this, implemented the ‘Contracts for Difference’. These are mechanisms to encourage utilities and private investors to invest in new, low-carbon electricity generating capacity, such as nuclear energy.
When do you expect project development to begin? What is the revised year for the commissioning of the first phase?
Construction time and commissioning dates are country-specific as they depend on a number of factors such as the availability of resources, the level of localisation, the reactor site to be built, and the approval process of the domestic safety authority, among others. That said, discussions with NPCIL are progressing well, and we expect to be in a position to reach an agreement on the technical aspects of the project in 2015.