NPC, Areva talks stuck over cost of supply of two EPRs for Jaitapur project

Final works contract not possible in the presence of French President

It's now official. Nuclear Power Corporation (NPC) and Areva won't be able to exchange documents on final works contract for the supply of two evolutionary pressurized reactors (EPRs) for Jaitapur nuclear project in Maharashtra in the presence of visiting French President François Hollande on Friday. The negotiations between the two for the initial supply of two EPRs of 1,650 MW each for the proposed 9,900 MW project in the state have been stuck over cost and tariff. NPC official confirmed this development and told Business Standard "Talks are still on. The signing of final works contract will still need further time as both the parties will have to arrive at a consensus on crucial factors such as cost of supply of initial two EPRs and subsequently four more for Jaitapur project." Besides, tariff will have to be competitive with the coal based power projects.

However, NPC official informed that a small contract similar to early works contract can be signed with Areva on Friday. He reiterated that it would not be a final works contract.

Areva official declined to comment on the issue but said talks were underway. As reported by BS, Areva's team headed by vice president Yves Lintz is currently in Mumbai for talks with NPC since February 5. Opponents of Jaitapur project claimed that per megawatt cost works out to be Rs 38.19 crore while the total cost will be of the order of Rs 3,78,087.10 crore. This was due to stricter French regulations in the wake of Fukushima nuclear disaster.

NPC and Areva have been holding negotiations since early works contract between the two was signed in December 2010. This was possible as India and Franch struck inter governmental civil nuclear deal. NPC had estimated Jaitapur project cost at Rs 1 lakh crore and a per unit tariff of Rs 3.40 to Rs 3.50 of the Jaitapur project. Areva has indicated that French banks and financial institutions will be roped in to provide a long term loan at competitive rates. Besides, Areva had also initiated talks with Indian manufacturers to achieve production and supply of EPRs locally instead of its 100% imports from France in a bid to contain cost.

However, NPC official said the negotiations with Areva practically came to a halt after the Fukushima disaster took place in March 2011. Subsequently, French regulator asked Areva to revisit the safety and security applications and incorporate more to tackle Fukushima like accident in future. On the other hand, Atomic Energy Regulatory Board (AERB) also instituted an inquiry into safety aspects. At the same time, NPC also completed its internal exercise through the formation of six separate working groups who revisited the safety and security applications in the existing nuclear power plants and also relooked into the EPR safety arrangements.

"The incorporation of additional safety applications will have its bearing on cost and its impact on tariff. There won't be any compromise on safety and therefore NPC and Areva are still negotiating to arrive at a consensus," the official informed.  He said the Centre's intervention can be sought to subsidize the hike in cost of supply so that tariff remains competitive.