Why is Modi Govt in a hurry to push the Jaitapur project before elections?: another French deal with changed goalposts

Kumar Sundaram

As the new year began, India’s Union Minister for External Affairs Ms. Sushma Swaraj has made a statement in the parliament asserting that the government is fast-tracking the long-pending Jaitapur Nuclear Power Project. We will proceed after seeing the model plant. We have decided about the dates.” – Ms. Swaraj has been quoted as saying.

Much like the Rafale jet deal which began during the UPA government, but had its goalposts furtively altered under the Modi regime, the agreement for the Jaitapur nuclear deal is being expedited in an astonishingly spurious fashion even as India is just a few months away from the next union elections. And the consequences in the case of this deal will be far worse than the Rafale scam – not only will it have implications financially, as nuclear construction involves staggering amounts, but also in terms of the safety of tens of thousands of Indian citizens living near the proposed site.

According to the media reports, attributed to unnamed sources, the French nuclear giant EDF has submitted a “techno-commercial offer” for the proposed nuclear power park in Jaitapur on India’s western coast. This comes close on the heels of the talks between India’s Minister for External Affairs and the French Foreign Minister during the latter’s visit to New Delhi last month. The techno-commercial offer, if accepted by India, will in effect mean the clearing away of the last remaining hurdle before the start of the reactor construction.

Precisely because the agreement for the Jaitapur nuclear project has been in the pipeline for so long, and because debates around the nuclear industry, energy policy, and nuclear safety, have changed drastically since 2008 when the agreement was formalized initially, the situation warrants a thorough review, taking into account the interests and safety of India’s citizens and the fragile ecology of the Konkan region.

Specifically, with respect to the techno-commercial offer, there are some key concerns that must be flagged. The Modi government should exercise utmost transparency and accountability in going ahead with the signing of the techno-commercial agreement. The price for the 6 EPR reactors being imported from France must be made public so that a Rafale-like situation can be avoided. The stakes are much higher this time as a single reactor is expected to cost up to 10.9 billion euros per unit, considering the cost of the Flamantville reactor in France which the reported techno-commercial offer has taken as a “reference plant” for the Jaitapur project. The initial estimate for the EPR-design reactors being built in France was 3.3 billion euros when the project was announced in 2005. The Flamantville project has since seen massive delays in addition to cost overruns – while it was supposed to have become operational in 2012 as per the original plans, the latest announcements from EDF indicate that the plant cannot be commissioned until the end of 2019. Given these costs, the average tariff from the Jaitapur nuclear plant will be to the tune of Rs. 15 per unit of electricity. In contrast, the solar tariff dipped to a historic low of Rs. 2.44 per unit in 2018.

In the present scenario, 10.9 billion euros each, for six such reactors will mean a total of 65.4 billion euros, which is eight times the cost of the Rafale deal, for which Modi government is facing perhaps its biggest credibility crisis, particularly its proclaimed ‘zero tolerance’ for corruption. The actual figures, of course, are likely to be much higher as the construction time for nuclear reactors is exceptionally high and EPRs can take up to 15 years to be constructed. The nuclear power sector is perhaps the only industry which has shown a negative learning curve – reactor constructions take much longer now than the typical gestation period at the dawn of the nuclear age.

The reason for such massive delays often pertains to safety, which is a serious concern. The most recent revision of Flamantville’s cost-estimation took place earlier this year as the French nuclear regulator ASN found more safety flaws in the design. France has experienced exceptional safety problems with the particular EPR design reactors which had been in the offing since the early 90s. It is the abject failure of the EPR reactor, the French nuclear industry’s poster-boy of a ‘new nuclear age’, which has brought not just the French, but the entire European nuclear industry to its knees

Ironically, the French nuclear safety regulator had raised crucial safety questions pertaining to the Reactor Pressure Vessel (RPV) of the Flamantville EPR just a day before Modi’s visit to Paris in 2015, when the Prime Minister had also signed the agreement for the Rafale jets. However, the Indian Prime Minister, in abject denial of these crucial safety issues, renewed the Jaitapur nuclear agreement.

Even earlier this year, EDF admitted that the welding problems in the Flamantville EPR were much worse than initially thought. Finland abandoned its second EPR design reactor the same year owing to escalating cost and safety issues, upon which the French and Finnish companies continued to fight court cases until this March when Areva had to pay $554 million to the Finnish utility, TVO. The start-up of the first unit, which Finland could not step back from, was postponed yet again in November 2018. This nuclear project in Finland’s Olkiluoto was supposed to start producing electricity in 2009 – it has thus, seen a decade-long delay and a staggering cost overrun – from the 3.3 Billion Euros quoted initially to 8.5 Billion Euros – the last announced cost by the company in 2012. It is rather curious and odd that the French side has offered Flamantville as the reference plant for Jaitapur and not the Olkiluoto plant in Finland or the Taishan EPR which has been very recently launched in China.

This might have to do with the several problems with where the Jaitapur project stands today. Originally signed between Areva and India’s Nuclear Power Corporation (NPCIL), a number of other corporations have entered the Jaitapur project. These include Mitsubishi Corporation of Japan and the US-based General Electric (GE) with whom agreements were signed in June 2018. Interestingly, citing liability burden, GE pulled out of the massive Kovvada nuclear project which it was supposed to build independently in Andhra Pradesh. Besides the new international entrants, several domestic entities have entered the Jaitapur project, including Larsen&Toubro, many of whom have no experience in nuclear constructions. In fact, Modi labeled the Jaitapur project as his “Make in India” initiative and announced a 60-70% localization of the project.

This, however, is fraught with problems and risks as this has allowed the French corporation to minimize its role and liability, especially after facing setbacks in the market, as it can salvage the project only by passing the onus onto other entities. It was in the French nuclear industry’s restructuring, owing to its inability to export turn-key reactors and bear nuclear liability, that Prime Minister Modi saw an opportunity to make virtue out of a necessity, and he made the Jaitapur nuclear deal, which others were abandoning, a matter of nationalist pride and accomplishment. The move is also aimed at minimizing the cost to bring the final tariff of electricity to Rs. 7 per unit. This would evidently involve cost-cutting that will imply choices pertaining to safety.

Under the current circumstances, not only does the shadow of secrecy loom large over the financial transactions and partnerships in Jaitapur, but also the role of each corporation in the supply and/or manufacture of components and what their liability will be in case of an accident. It is astounding that without any clarity on these crucial matters, the government has moved ahead and acquired the total required land by brutalizing local communities opposing the project. Environmental clearance for the Jaitapur project was also obtained by the previous government in equal haste in 2010, with 35 outlandish post-facto provisions which had to be reviewed after 5 years. The Modi government extended the controversial green clearance despite the BJP’s reservations on it when the party was in opposition. Apart from concerns of environmental impact and the Indian nuclear sector’s glaring inexperience with the EPR technologies, the recent finding of an earthquake faultline right beneath the proposed project site in Jaitapur should also be reason to initiate a comprehensive safety review of the proposed nuclear project. Roger Bilham, the American geologist who made this revelation has been debarred from entering India. Ironically, the Department of Atomic Energy (DAE)’s own confidential report of 2002 had flagged the matter of the lineament in the Ratnagiri plateau, which not surprisingly, was overlooked.

The offer of a techno-commercial agreement from France should be an occasion for having an open and transparent debate on the Jaitapur nuclear project which the citizens of India have never had the opportunity to engage in. The Modi government must not exercise haste and secrecy in this matter, especially when it is almost already in a lame-duck phase – BJP has been rejected in the recent state-level polls and the country is headed for general elections in the next six months.


Kumar Sundaram is the Editor of DiaNuke.org. A version of this article was published in The Citizen.


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