Mr Prime Minister, Importing Nuclear Reactors Is Bad Economics !

Dr. E A S Sarma


Former Union Power Secretary, Govt of India

Know more about Dr. Sarma HERE.

14-40-4/1 Gokhale Road
visakhapatnam 530002

Dr. Manmohan Singh
Prime Minister

Dear Dr. Manmohan Singh,

Subject:- High cost of imported nuclear reactors at the expense of the Indian tax payer

My letter dated 17-12-2011 addressed to you
Reported statement of Secretary (DAE) on the high cost of imported nuclear power reactors

In addition to pointing out the inherent dangers of nuclear power, I had written to you earlier, vide my letter cited above, on the huge contingent liability that the imported nuclear reactors will impose on the Indian tax payer, as a result of the diluted nuclear civil liability law that your government has enacted. I enclose a copy of that letter for your ready reference. If Fukushima provides any indication, the contingent liability will be in excess of Rs. 33 crores per MW. This is over and above the high capital cost of imported nuclear power reactors being purchased on a nomination basis, without any competitive bidding and the high cost of the imported fuel that goes along with the reactors.

The proposal of your Ministry (Dept. of Atomic Energy) to set up 60,000 MW of nuclear power capacity based on imported reactors will cost the nation heavily, diverting its scarce resources from more pressing development and welfare programmes. I feel distressed that the government should display a total sense of indifference to the obvious pitfalls in the nuclear power development plan mooted by DAE!

In this connection, I enclose here a news report of a recent statement made by the outgoing Secretary (DAE) on the huge capital cost differential between indigenously made reactors and the imported ones.

According DAE’s own admission, the capital cost of an indigenously manufactured power reactor is around $1,700 per KW (Rs.8.5 Crores per MW), compared to $3,000 per KW (Rs.15 Crores per MW) in the case of imported reactors. The cost estimate of Areva’s reactors being set up in Finland has already touched Rs. 24 Crores per MW.

Even going by the lower cost figure cited by DAE for imported reactors, the capital cost differential between indigenous and imported reactors would work out to Rs.6.5 Crores per MW! Since DAE has programmed to set up 60,000 MW of nuclear capacity by ordering for imported reactors, the total capital cost implication of this will be around Rs.3,90,000 Crores!! This will be the additional cost that the Indian tax payer will be paying as a result of the non-transparent purchases being made by DAE to help the foreign MNCs to sustain their respective businesses which have otherwise become stagnated due to the freeze imposed by the western nations on setting up new nuclear power projects in their own countries. In other words, India will be charging its own people heavily and expose them to the dangers of an unsafe technology, to help the western MNCs to prosper and the western nations to provide employment to their own citizens!

Placing orders on the foreign reactor suppliers without going through the competitive bidding route amounts to a serious impropriety on the part of DAE. The cost of this impropriety far exceeds the loss on account of 2G spectrum scam, the captive coal block scam, the S-Band spectrum scam and the mining scams! Certainly, as a concerned citizen, I would demand an independent enquiry into the cost burden that your Ministry has imposed on the public exchequer not only by placing orders on foreign nuclear reactor suppliers but also insulating them from accident liabilities by enacting a law and rules that have shifted the liability burden from the suppliers to the Indian tax payer.

I have not quantified here the additional costs that India will incur on imported nuclear fuels, apart from the fact that DAE will also be jeopardising India’s energy security by committing the country to long-term dependence on foreign reactors and fuel.

I feel particularly distressed that your government should repeatedly mock at the meagre food subsidies being given to the poorest of the poor in the country, in the name of “good economics’ and, at the same time, without batting an eye lid, dole out billions of rupees of subsidies to the foreign reactor-supplier MNCs both openly and clandestinely. It is all the more disturbing that your government should refuse to look at several cost effective, environmentally benign alternatives to nuclear power, just to help the foreign MNCs.

I am marking a copy of this letter to C&AG for auditing the reactor deals that DAE has already signed and proposing to sign so that C&AG may apprise the Parliament of the far reaching implications of what DAE is doing.

Meanwhile, I would request you, as the Minister in charge of DAE, to freeze all new nuclear power projects based on imported reactors, pending an independent enquiry.


Yours sincerely,

Former Secretary to GOI






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