Looking Back at the India US Nuclear Deal
MORE than 12 years have passed since the India US nuclear deal was signed. Pranab Mukherjee, then India's External Affairs Minister, and Condoleezza Rice, the US Secretary of State, signed the U.S.-India Civilian Nuclear Cooperation Agreement in October 2008. The deal was sold to the Indian people as a magic wand to meet India's energy needs, and end India's recurring power cuts. Those who wear made-in-America blinkers refuse to recognise that the success of the India US nuclear deal has to be tested against the benchmark of whether it met any of India's energy needs. On this count, the nuclear deal has been an utter failure.
As a consequence of the deal, and subsequent lifting of nuclear sanctions, three nuclear plant suppliers—General Electric (GE) and Westinghouse from the US and Areva, France were supposed to have supplied us with 18 nuclear plants. GE was allotted Mithi Virdi in Gujarat and Westinghouse Kovadda in Andhra Pradesh to build six light water reactors (LWR) each. Areva, France was allotted Jaitapur in Maharashtra to provide six of its European Pressurised Water (EPR) reactors. Not a single plant from among these has even reached a contract stage, let alone produce electricity. Yes, India has ended its shortage of power and its recurring power cuts. But not because of adding any energy capacity under the nuclear deal.
In these 12 years, Westinghouse became bankrupt in 2017. It has only recently come out of its Chapter 11 bankruptcy proceedings. GE sold its reactor division to Hitachi who suffered huge losses and has no appetite for building large nuclear reactors. Areva, France also went bankrupt and its projects have been taken over by EDF, the government utility that owns all the nuclear plants in France. The only nuclear power plants being built in India use either indigenous capacity or Russia's Rosatom's 1,000 MW light water reactors.
The Left parties broke with the Manmohan Singh UPA government on the India US nuclear deal, arguing that it would not provide any significant benefits in meeting India's energy needs. Instead, the deal, in the guise of providing nuclear energy, would weaken India's strategic autonomy that it had zealously maintained since independence. Since then, India has signed a series of defence agreements with the US. Recently, it has also joined the US-led Quad naval exercises in the Indo-Pacific. This is the distance that India has travelled from its non-alignment days.
During the rather acrimonious debate surrounding the India US nuclear deal, many grandiose plans for nuclear energy were floated by the government and the nuclear bosses. One such plan was to set up 63,000 MW of nuclear power capacity by 2031. The chairman and managing director of the Nuclear Power Corporation, SK Jain, had then said, "Out of the total target of 63,000 MW, about 40,000 MW will be generated through Light Water Reactors (LWR) with international cooperation."
In its exchanges with the UPA, the Left had called this out as not feasible; it also flagged its prohibitive costs. None of the 18 plants supposed to have been set up by GE, Westinghouse or Areva—now EDF—show any sign of materialising. Why? Their costs would ruin any utility which would own these plants. These plant deals are periodically dusted and brought out when a US or French dignitary visits the country.
On the promise of imported nuclear reactors, we have slowed down our indigenous nuclear energy programme. In the last 12 years, we have added only two new units of 220 MW capacity of indigenous design, and two units of 1,000 MW of Russian design. Another 21 nuclear power reactors, with an installed capacity of 15,700 MW, are now planned for completion by the year 2031. That means that of the supposed 40,000 MW of imported Light Water Reactors by 2031, only 4,000 MW from Russia will materialise. And none from the US or other western sources.
WHY DID THE INDIA US NUCLEAR DEAL FLOP SO BADLY?
The key reason is a complete miscalculation by the Indian political establishment of the supposed strength of the US nuclear industry; and the belief that Bhabha Atomic Research Centre (BARC) and the Nuclear Power Corporation were not good enough.
There is a misconception that the Three Mile Island near-meltdown of a nuclear reactor was the reason why nuclear energy lost favour in the US. The US nuclear industry lost out with the power utilities due to its inability to meet construction schedules and its huge cost overruns. With the emergence of cheap natural gas in the 80s, most utilities switched to gas for their newer plants. The promised nuclear renaissance to avoid carbon emissions to produce electricity never arrived, as renewable costs have dropped continuously, while the nuclear energy disease of cost and time overruns have continued.
An MIT group recently finished a two-year study—The Future of Nuclear Energy in a Carbon-Constrained World—on the future of nuclear energy. Their conclusions are damning: the US and Western European companies have lost the ability to build large nuclear plants. The generation of engineers and nuclear physicists who were involved in the halcyon days of nuclear energy have retired or are no longer there. There is no institutional memory left of how to construct such large plants within the companies that still bear the nameplates of their past.
The results are starkly visible in the four plants that Westinghouse is building in two locations in the US. Two Westinghouse reactors in Carolina were abandoned after spending a whopping $9 billion when it was realised that the plants would cost $25 billion when finished; or more than twice the original contracted price. It was also years behind schedule. In Georgia, the Vogtle plant being built by Westinghouse will cost more than twice the initial estimate of $11.5 billion. Planned originally to be finished by 2016 and 2017, the two units are nowhere near completion.
Areva's record in Flamanville, France is even worse. The Flamanville plant was planned to be commissioned by 2013 and cost EUR 3.3 billion. Instead, it is running 10 years late, and its costs —according to France's Court of Audit—have risen almost six times: to an astronomical EUR 19.1 billion!
The MIT report notes that this western disease of failed nuclear plants does not extend to Russia, South Korea, China and India, all of whom can build nuclear plants within budgets and according to schedules.
We are not discussing the larger question of nuclear energy as a part of our future energy mix, given the costs of renewables and the risks associated with nuclear reactors. (Remember Fukushima.) We are restricting our discussion to the India-US nuclear deal, which assumed that a share of our energy needs would be met by nuclear plants. Despite this assumption, the Left had pointed out in its exchanges with UPA that indigenous capability existed for nuclear energy; and the US and other western options like France's Areva would be prohibitively expensive.
Why then did India fall into the trap of the India-US nuclear deal? For the US, the nuclear hype had two major objectives: one was to rescue the moribund nuclear industry in the US, which was facing a bleak future. The Indian market looked attractive, particularly if India could be persuaded to buy high-cost nuclear plants from Westinghouse and GE. The second was, under the guise of giving a place at the nuclear table, to tie India to US nuclear supplies and create a lock over its future policies. This would help the US steer India to its strategic embrace, jettisoning non-alignment.
After a very rocky period post the1974 Pokhran explosion and imposition of sanctions on India, India built an independent nuclear industry. Once it was tied to western nuclear supplies, it would again be vulnerable to sanctions – as it was for its GE reactors in Tarapur and CANDU reactors from Canada. BARC and NPC had taken years to master the CANDU reactors on their own. In the process, they have helped India develop an indigenous electronics industry, complex metallurgical processes, quality control in engineering. All these have helped India immensely in its quest to master new technologies.
The India US nuclear deal was an attempt to bend its foreign policy. It would also erode its self-reliant mode of developing technology. Twelve years later, what do we see? The “deal’s” objective of capturing the Indian nuclear energy market has failed. The aim to convert India into a subordinate ally of the US seems to have succeeded.