Areva & EDF to Try Again with NPCIL at Jaitapur

  • word cloud negotiateThe French government is going another round in the ring with India over roles and responsibilities to build six 1650 MW EPRs at the Jaitapur site on the west coast.
  • EDF wants to have the lead for engineering and, obviously, a large piece of the procurement pie, with NPCIL being in charge of construction.
  • For its part NPCIL wants EDF to have all three roles – engineering, procurement, and construction, due to risks associated with cost overruns.

In one of the longest running “we’re gonna build it” soap operas in the global nuclear industry, the latest round of negotiations over the Jaitapur project has push back on both sides over who does what and when.

Since 2007 when the Areva deal was first announced NPCIL has been digging in its heels about not wanting to accept any responsibility for project success or failure. This stance of having EDF and Areva holding the bag, so to speak, is based on NPCIL’s well founded fear of schedule delays and cost overruns. EPRs under construction in Finland and France provide ample grounds for these concerns.

NPCIL has now added a new condition for breaking ground, and that is operational experience with a “reference plant.” By this the Indian nuclear energy development agency means it wants to know that an EPR is up and running and that issues like reliability and costs are well documented.

For its part, Areva points to the two EPRs nearing completion at Taishan in Guangdong province in China which are expected to be in revenue service by the end of 2017.  NPCIL says, in response, ‘fine we’ll wait.’  Areva also offered the Flammanville EPR as a reference plant which is expected to be complete in 2018.

But that’s not the end of it. At an estimated cost of $4,000/Kw, each EPR is expected to cost close to $7 billion.  NPCIL is asking the French government, which owns about 85% of both EDF an Areva to provide India with a line of credit to pay for all six reactors.

So, consider the size of the project.  By the numbers it comes to almost 10 Gwe of electrical power costing more than $42 billion. Assuming the reactors are built in pairs, intelligent scheduling suggests that units 1 & 2, if started in 2018, will be complete in 2023; units 3 & 4 would be complete by 2026, and units 5 & 6 would be complete by the end of the decade.

South Korea was able to figure out how to build four 1400 MW PWR type reactors for the UAE without defaulting to a serial series of starts and finishes.

But India doesn’t seem to work that way.  At Kudankulam, in Tamil Nadu, NPCIL waited until Units 1 &2, each 1000 MW Russian built VVERs, were fully commissioned before breaking ground on Units 3 &4.  Contracts are just now being drawn up between Rosatom and NPCIL for Units 5 & 6.

The longer it takes the complete all six EPRs the more the later units are going to cost. This  brings us back to NPCIL wanting EDF and Areva not only to carry all the risk, but also to provide the credit line for the costs. That’s a lot of water to carry. It comes as no surprise the EDF wants to see NPCIL be more of a partner and less of a pirate in this relationship.

In terms of piracy on the high seas, so to speak, NPCIL wants the purchases of long lead procurement items by EDF from Indian heavy manufacturing firms to be paid for in Euros.  Examples include turbines, pumps, and switch station equipment.  Why India doesn’t trust its own currency is a mystery.  Another odd item is that India wants to place a tariff on French nuclear components brought into the country by EDF.

Given the interesting negotiations taking place, it should be noted that French President Emmanuel Macron is expected to pay a state visit to India by the end of 2017. This puts some pressure on all parties to complete a general framework agreement that ties up all the loose ends before then.

Westinghouse, which though bankrupt, still has ambitions to build six 1150 MW AP1000s PWR type reactors at Andhra Pradesh on India’s east coast. The new executive team in Pittsburgh might want to look at how the deal with EDF is shaping up before they take the next flight to New Delhi to discuss that project.

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