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Thursday, July 31, 2014
Andrei Ivanov and Judith Perera
- India is expected to sign a final contract before the end of the year for the construction of a Russian- designed nuclear power plant comprising two of its VVER-1000 pressurised water reactors.
Final details being discussed by Indian officials with Russia’s Atomic Energy and Foreign Economic Relations ministries concern financial arrangements for the plant which will be sited at Kudamkulam in Southern India.
“These problems should all be resolved in four to six weeks,” Deputy Minister of Atomic Energy Engineering Yevgeni Reshetnikov told IPS Monday. Current discussions centre on the provision of a loan by Russia, similar to the one Moscow provided to Armenia for recommissioning its nuclear plant at Metsamor last year.
Reshetnikov explains that Russia and India signed a protocol of intent to build a nuclear power station seven years ago, but financial difficulties led to the project being shelved. Russian experts assessed India’s debt to Russia at that time at 10 billion dollars.
Assuming the deal is signed soon, construction will begin after two years of feasibility and design studies. The Russian Atomic Energy Ministry (MinAtom) sees the contract as a long-term investment giving it a foothold in Asia in general and India in particular.
The Indian market for nuclear power technologies is potentially large. The government has stated its intention to build 22 nuclear stations in the next 20 years worth a total of 25-30 billion dollars. At present India operates seven nuclear power generating facilities which satisfy only 2.5 percent of the country’s electricity needs.
MinAtom’s main rival for the Indian nuclear market is Canada — Canadian companies have already built two CANDU reactors fuelled by natural uranium and heavy water in India. Russian VVER-1000s are light water reactors which use slightly enriched uranium.
The average price of a new design VVER-1000 unit in the international market is around 700 million dollars. Delhi would have to pay 1.4 billion dollars for the two units, plus the cost of design, construction and erection making the total price around 1.7 billion dollars.
A straight Russian loan to India seems unlikely because of Moscow’s present financial difficulties. India’s currency reserves are limited: to date, the largest investment into nuclear power production has been the allocation of one billion dollars in 1990 for the construction of 10 reactors with a total capacity of 4,000 MW.
However, the nuclear deal will be viewed in the wider context of Russian-Indian relations which are developing rapidly, and the loan could involve elements of offset and barter deals.
For example, India is already involved in the construction of Russia’s largest plant for the production of semiconductor silicon at one of MinAtom’s major facilities at Zheleznogorsk (formerly the ‘secret city’ of Krasnoyarsk-26) in Siberia.
It will belong to the Mining and Chemical Combine which once used to produce plutonium for Russia’s nuclear weapons. The combine’s general director, Valery Lebedev, says that about 15 million dollars have already been invested in the first phase of the plant and India is taking an active part in its construction as one way of repaying its debt to Russia.
“Moreover, India is also interested in buying the silicon,” he says. “At the end of December it is in India that the presentation of the design of the new plant will be made, the building cost of which amounts to 150 million dollars.”
Both sides are pressing to increase trade and economic cooperation.
Russia has urged India to consider the possibility of organising a new trade route for the export of Indian goods to the Commonwealth of Independent States and Europe. This could involve a new railway route from the Iranian port of Bandar Abbas through Azerbaijan and Armenia to central Russia .
This would make it possible to greatly increase Indian exports while reducing delivery time and will be much cheaper than transportation by sea.
The president of the Confederation of Indian Industry, Shekhar Datta, recently told Indian media that India should accept Russia’s proposal that it reinvest part of its debt in the creation of joint enterprises on the basis of Russian technologies and Indian production. The silicon project is a first step in this direction.
India is also expected to step up it purchase of Russian military equipment including Su-30MK multipurpose fighter planes and the Admiral Gorshkov aircraft carrier as part of a joint programme of military technological cooperation for the period till 2000.
In 1995, India’s share in Russia’s commodity trade turnover with Asian countries, a trade worth 20.3 billion dollars, was just 9.3 percent. However, bilateral trade has risen from 1.1 billion to almost two billion dollars over the last three years.
Russian deputy premier Oleg Davydov says the slow growth is because trade is based on raw materials and agricultural products when it should focus on sophisticated scientific and hi-tech items. However he says a “new stage of economic development” has now begun.
The nuclear power deal will undoubtedly cause friction with the United States, because India has not signed the nuclear non- proliferation treaty, although it has placed all its civilian nuclear facilities under the control of the International Atomic Energy Agency. But Russia is unlikely to change its policy when so much is at stake in the long term.