Former chairman of the Atomic Energy Regulatory Body A Gopalakrishnan has warned against signing a deal with Westinghouse, the American nuclear major brought by Toshiba, which has filed for bankruptcy.
Westinghouse is expected to build six AP1000 nuclear reactors in Andhra Pradesh as part of Indo-US nuclear deal.
Gopalakrishnan, in an article in The Hindu, wrote: "India must not enter into a contract involving billions of dollars with an American company that has already declared bankruptcy".
He said the company, hamstrung by financial crunch, has a history of project delays in the US and China, causing cost to increase by 50%.
More than half of world’s nuclear power plants run on Westinghouse technology. "When Toshiba purchased the company for $5.4 billion in 2006, it expected Westinghouse to be a lucrative sideline to its consumer electronics business. But delays on the four nuclear reactors it was constructing in the US, combined with increased regulation after the Fukushima nuclear accident in 2011 that forced changes to reactor design, left the company in the red," reported Christian Science Monitor.
The US Embassy has scrambled to assure that Westinghouse continues to stand behind the delivery model that it presented in its Technical Commercial Offer to India.
But is India rushing to shake hands with ailing reactor manufactures?
Rajaraman, the Professor emeritus of Jawaharlal Nehru University and theoretical physicist by training, told Outlook: "The French Areva has already been in deep financial trouble for longer than Westinghouse. Areva is in effect already bankrupt and has already stopped issuing financial statements. It has been taken over by the government, which is trying to revive it."
Areva is expected to build two big 1650 MW reactors in India initially and six in total.
"When Prime Minister Narendra Modi went to France, Areva’s financial disaster had happened and they were struggling to complete building two reactors, one in Finland and one in France. Both are six years behind schedule and the budget had tripled," said Rajaraman.
Many observers then thought that India would back out of the deal but they came back with renewed confidence in the collaboration.
Areva offered a bit of incentive just as they had offered the Chinese. L&T and other homegrown companies may be involved in providing some of the parts. So we will have some pieces "made in India."
Another question to be considered before signing up Westinghouse is whether employees will stick on to a bankrupt company, affecting its capability to offer services in future.
"Senior and mid-level Westinghouse mangers and technical staff have aleady started looking for jobs," said Gopalakrishnan.
If the nuclear majors like Toshiba and Areva are in doldrums, what are the options before India?
"One option is South Korea. They are building four reactors in UAE. They undercut Westinghouse and Areva in the bidding ."
For India, the Russians have been only reliable option right now, which is going forward strong.
“China has been occasionally telling us 'we can build them for you', but it won’t be politically acceptable to us . In any case, they themselves are still on the learning curve with respect to new reactors, and are being a bit cocky,” said Rajaraman.
“Westinghouse’s technical capability to build a reactor is just as valid now as before. They have the expertise. But who will bankroll the project by a company that has filed for bankruptcy?"
Another concern going against Westinghouse is that the reactors they are offering us, AP1000, are not in operation anywhere in the world today. The consolation is that we are not the first one to sign up for AP1000 – China and the US have already done.
“Every new version of a reactor is not necessarily brand new. It can involve just some technical improvements based on earlier models. But that is a real problem with Areva. “AP1000 is less frightening than Areva’s EPR reactor because the latter is of a significantly different design.” They have had difficulty building their brand new EPR reactors in Finland,” said Rajaraman.