Clearly, the official India is wary of answering this vital query. There are lots of uncertainties. Goalposts are being shifted and benchmarks are left undefined. Still worse, there are signs of an invisible cartel emerging to hurt our interests. All this might be dismissed as doom saying. But look at what has happened in the past six weeks. First one month, we were led to believe that the changes in the liability bill were effected after the US ok. Thus the subsequent silence in Washington was taken as approval. The truth, however, is that suppliers have refused to sign any solid agreement with the NPCIL.

The Russians and French, with better technology and track record, were ready with blueprints. For the past three years, their governments and executing firms had shown enthusiasm to set up plants. The government had identified two sites each for the US, Russian and French firms to set up the plants. Acquisition has been in progress. But suddenly, they have all developed cold feet. Two months before the Obama visit last month, we went gaga about making the occasion a nuclear fest. Obama was to bring CEOs of nuclear firms like GE and Westinghouse to sign the final commercial agreements. Obama’s visit was the reason cited for rushing with the nuclear liability bill in Parliament.

Obama came and he proudly announced that the two nuclear plants will create more jobs in US. But the two firms refused to sign agreements on nuclear supply on the ground that the liability clause in the Indian act were too harsh. This was the first shock in Delhi. The second occasion was French president Nicholas Sarkozy’s visit this month. French firm Areva has been a pioneer in the civilian power generation, especially of high capacity plants. The total tally of business deals signed during Sarkozy’s visit was double that of Obama’s. These included upgrading of the Mirage aircraft, joint mining projects and a framework agreement on two nuclear reactors.

The two plants at Jaitapur, which itself is facing massive environment protests from the local people, will produce 10,000 MW of power as against our present capacity of just 4,000 MW. But what was not revealed was the sudden cold feet developed by the French. In the course of negotiations, Areva officials refused to even negotiate the commercial contract for the two plants. They insisted on changes in India’s nuclear liability act. This was rather surprising for the Indian side which was all the while under the impression that unlike the US firms, the French and Russians are not bound by any domestic law.

More over, Areva and Russian firms like Atomstroyexport and Rosatom are government-owned, and thus enjoy sovereign guarantee. Due to this, Russians and French were in the forefront of negotiations while the US firms were mulling. Before going into this sudden turnabout by the French, it is necessary to mention the other hurdles. First, the EPR (European pressurised reactors) technology which the French plans to introduce at Jaitapur itself is yet to be tested to the suppliers’ satisfaction. This is an aspect officials here want to avoid. The second relates to pricing and such commercial details. Pricing is a complex issue with no clear benchmark to go by. Supplier firms cite different local factors to quote the cost of projects. This is something shrouded by considerable opaqueness

This is because there is no clear open market in the nuclear business. It is guided by so many factors. This had prompted concerned citizens to suggest global bids for setting up the nuclear plants. This, they argue, will enable India get the best deal for which it has, in any case, pay through the nose. In fact, India could have used its massive market strength to set a world trend. In the case of defence purchases, we had tried such a bidding system. But of late, international ‘politics’ has forced us to drop this competitive system, and settle for government-to-government deal with the US.

India cannot wriggle out of it because offer of nuclear business has been a commitment – a lure – it had made to the US nuclear firms. The US lobby firm BGR (to which India had paid $140,000 during July-September with an additional $180,000 each quarter previously) was the bedrock of the Indian lobbying in US in favour of the nuclear deal. The third hurdle with France is Japanese obstruction. The latter supplies vital components like vessels (cylinders that contain nuclear fuel). That means India will have to sign separate agreements with Japan, a country that has declined to cooperate with India due to its own proliferation concerns. Fourth is the ‘liability’ dispute. This is rather surprising because the French and Russians had in the past glossed over this issue.

In the case of Russia, there seems to be more embarrassment in Delhi. Russia has been India’s traditional friend and the source of its missile and nuclear technology. Yet they have also now joined the ‘liability club.’ As in the case of Obama and Sarkozy, Russian president Dmitry Medvedev’s visit this month is being projected as an occasion for signing final contracts for new Russian plants. Now this also seems impossible. While Rosatom is going ahead with its two ongoing plants at Kudankulam, it finds ‘complications’ in entering into contracts for the four new plants due to the liability clause. The Russians have also warned that liability for nuclear accidents will lead to higher cost of the nuclear plants and fuel.

Opposition leaders handling the nuclear affairs make scary predictions. They talk of a three-nation cartel to milk India by hiking the rates and tightening the squeeze for amending the nuclear liability bill to give a free hand to the foreign suppliers. If their fears prove true, there are even diplomatic-level contacts among the three countries. The shift in Russian position is no more subtle. They have been feeling jilted by the way India buried the traditional defence relationship and went in for huge direct military purchases from US without open bid. Russians reportedly feel that in view of the shift in India’s approach, they too need not compromise on their business to help India. As in the case of Obama and Sarkozy, Medvedev’s visit will throw more light on this shift.
(IPA Service)