People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 02

January 09, 2011

Jaitapur: Repeating Enron Once Again


Prabir Purkayastha


ANY TIME an expensive power project agreement is pushed on to the country, the argument is put forward that as we are short of energy; we should welcome power from any source. This was what was done during the ruinous Enron project and what is being pushed now for the Jaitapur project. The victim in both cases are the people of Maharashtra, who earlier paid for expensive power from Enron and who will have to pay again a very high cost for power from the proposed Jaitapur plant.




People might remember that when Enron plant was being touted as a major achievement, it was supposed to produce electricity at a cost of Rs 2.40 per unit. When it finally came online, the cost was found to be Rs 5-6, virtually sinking the Maharashtra State Electricity Board (MSEB) which had signed a power purchase agreement (PPA) with Enron for 90 per cent offtake. Not unsurprisingly, the run-up to Jaitapur is very similar. The Nuclear Power Corporation of India Limited (NPCIL) is producing some figures of the cost of electricity without disclosing the cost of the plant itself: we are expected to accept on good faith that the cost of electricity from Jaitapur will be comparable to the coal-fired plants because the NPCIL is saying so. The problem that the NPCIL does not yet seem to have realised is that under the current Electricity Act, they can no longer thrust on the grid, whatever cost they may decide privately between themselves and Areva, the supplier of the reactors. These figures have to be cleared by the regulatory agencies --- either by the Central Electricity Regulatory Commission (CERC) or by the Maharashtra Central Electricity Regulatory Commission (MERC) --- and can be accepted only if the cost of electricity is competitive. But, given the figures for Areva costs, there is no way Jaitapur plant can produce electricity at costs that are comparable to other sources of producing electricity.


The Jaitapur Nuclear Energy Park for 6 units of 1650 MW of reactors, designed by Areva of France, is being hailed as the first achievement of India's nuclear deal. Obviously, the government is clearly intent on showcasing Jaitapur as the success of the nuclear deal which, otherwise, has failed to show any result. The cost of these nuclear power plants, their safety and the implications of this project for India's self-reliance in nuclear energy is, however, not being discussed. On the contrary, the actions of the government of India, NPCIL and Areva have lacked transparency on all these issues.


The CEO of Areva is on record that the price of power from Jaitapur is being kept secret at the behest of the Indian side. Anne Lauvregeon, CEO of Areva, in an interview given to The Hindu on November 25, said, “You know giving out the price depends on the customer (NPCIL, in this case). It is not for me to give the price.”




The only other Areva reactor in advanced stage of commissioning is at Olkiluoto in Finland. The 1600 MW EPR in Finland is currently costing around 5.7 billion euros (Rs 33,900 crore). India has committed to buying six of these EPRs. Even if we take a lower cost than the Finnish plant, the Jaitapur plant will cost a whopping Rs 20 crore per megawatt (MW) against Rs 8-9 crore per MW for the Indian designed pressurised heavy water reactors (PHWR) and Rs 5 crore per MW for coal-fired plants. 


Now, if we take six reactors of 1650 MW each at a cost of Rs. 20 crore per MW, the total cost of Jaitapur plant for an installed capacity of 9,900 MW will be in the region of Rs 2 lakh crore. Indigenous nuclear reactors could thus save us Rs 1.1 lakh crore and coal-fired plants would save Rs 1.5 lakh crore compared to the Areva EPR costs. Given the huge capital cost of the plant, power is likely to cost around Rs 7 to 8 per unit as against the present Rs 2.50 for coal-fired plants. Jaitapur is therefore a very expensive way of justifying India's nuclear deal.


As per the Electricity Act of 2003, all power tariffs have to be competitive and need to be sanctioned by the relevant regulatory authorities. The NPCIL should not be allowed to finalise their contract with Areva and other suppliers until they pass this test. It was due to this regulatory process in the US that the real cost of such reactors was revealed to be in the range of 7,000 dollars per kilowatt (KW) and not the bogus price of 2,000 dollars per KW being touted by the suppliers.


For those who have been observing the nuclear energy scenario for the last 40 years, there is a sense of deja vu in all this. Nuclear power started with the promise of being cheap. Throughout its history, it suffered from huge cost and time overruns. Typically, the plants took two to three times the original schedule had promised and ended up costing two or three times as well. Nuclear power became unpopular not because of safety or environmental reasons but because it failed to deliver electricity within the time and cost promised.


This time around, the nuclear industry had tomtommed that those bad days of nuclear industry were now over. They would indeed be able to meet time and cost deadlines. The reality is otherwise. Olkiluoto has now a time overrun of three years already and a cost overrun of 50 per cent. The Finnish utility and Areva is now locked in bitter commercial disputes on who will bear this extra cost. The familiar picture of the nuclear industry of huge cost and time overruns is continuing with the latest plant as well. As many trade magazines have noted, it is this which is ending the nuclear industry's much touted hype of a nuclear renaissance.




Why does the nuclear industry face the same problems over and over again? Why is it the only technology where the cost per unit has gone up with time (accounting for normal inflation)? For many, it is the proof that the nuclear industry has always underestimated the complexity of the nuclear technology and never therefore really reflected on its true costs. The other view, which is what I would hold, is that the nuclear industry has tried to bring its cost per MW down by increasing the size of the units. Without this, nuclear energy is not cost effective. However, the increased size brings in additional complexity into the design, which may not be fully understood and only becomes apparent either during construction or during operation. It is not surprising that the major reasons for delay have been regulators asking for modifications to the plant design as they find the designs unsafe. The EPR is no exception to this.


Whatever the reasons might be, fact remains that the cost of nuclear plants today, whether from Areva, Westinghouse or GE, are far higher than the 2000 dollars per KW promised when the nuclear deal was sought be sold in India as a panacea for our electricity shortages. At the costs that we are now seeing, nuclear power using imported reactors will be far more expensive than either indigenous PHWRs or coal-fired plants. For the Rs 2 lakh crore of 9,900 MW nuclear power, we can put up 40,000 MW of coal-fired plants.


Apart from the cost of nuclear power, safety of this new generation of reactors is a major concern. The EPR is an unproven design and the first unit has already run into serious construction issues. Serious design deficiencies regarding control and safety systems have been pointed out in a joint letter by the French, Finnish and UK nuclear regulators. The letter stated:


“The issue is primarily around ensuring the adequacy of the safety systems (those used to maintain control of the plant if it goes outside normal conditions), and their independence from the control systems (those used to operate the plant under normal conditions).


“Independence is important because, if a safety system provides protection against the failure of a control system, then they should not fail together. The EPR design, as originally proposed by the licensees and the manufacturer, AREVA, doesn’t comply with the independence principle, as there is a very high degree of complex interconnectivity between the control and safety systems.”


The US Nuclear Regulatory Commission has also made similar observations. It is not surprising therefore that Areva is opposed to taking any liability for faulty supplies and is asking for changes in the Indian Civilian Nuclear Liability Act.


Apart from the issue of the control system, there are also other issues. Francois Roussely, a former EDF president, was commissioned by the French government to analyse the problems of the EPR after continued failure to meet time and cost targets by Areva in  Olkiluoto, Finland and Flamanville (France) where the second EPR is coming up. The Roussely report states, “The complexity of the EPR comes from design choices, notably of the power level, containment, core catcher and redundancy of systems. It is certainly a handicap for its construction, and its cost. These elements can partly explain the difficulties encountered in Finland or Flamanville.”


Not only has the EPRs encountered design problems, but also encountered numerous construction difficulties. The foundation cast had serious problems, as did some of the heavier forgings. What came out clearly during all the construction reviews that there are hardly any skills available for handling such heavy structures – forgings or concrete foundation. Again, the size of the plant has introduced new complexities in these areas, with very few companies or people having the necessary skills to handle such problems.




The question that needs to be asked is: Why does India want to go in for a completely unproven reactor design, which has been plagued with problems right from the start and where critical safety issues regarding the control system still remains unresolved? And at what cost?


The answer to this question is of course political. Jairam Ramesh let the cat out of the bag while giving Jaitapur its environmental clearance. He made it clear that Jaitapur was the “success” of the nuclear deal and those who were opposing the nuclear deal are also opposing Jaitapur. The reality is just the opposite --- the Manmohan Singh government is pushing an expensive and unproven reactor because it has otherwise nothing to show for its nuclear deal. The promised nuclear power, far from reaching Kalavati as Rahul Gandhi had promised, has yet to even start any activity connected to the nuclear deal. That is why the Jaitapur Deal --- it is to save Manmohan Singh's face so that the concession that India has given by aligning with the US on a host of issues including Iran can be justified with this so-called benefit of nuclear energy. The problem is that this indeed a very expensive face saving exercise --- worth 2 lakh crore.


India has a long track record with the indigenous PHW reactors in which it has built up sound self-reliant capability. Suddenly shifting to unproven EPRs or other such unfamiliar imported technologies will make the Indian nuclear industry dependent on foreign suppliers and undermine self-reliance.


The local people around Jaitapur are also agitated about displacement and safety, and are also facing repression. Increasingly, Jaitapur seems to be becoming an armed police camp. This is hardly the way to treat the people who have legitimate questions regarding the safety of a nuclear plant.


All these issues of safety, costs and self-reliance, as well as the concerns of the local people, must be addressed. The country cannot be committed to this dangerous path of importing unsafe and costly technology for nuclear power.