India woos West for nuclear
energy By Indrajit Basu
KOLKATA - The US Congress may still be
undecided on whether to ratify the recent India-US
agreement between President George W Bush and
Prime Minister Manmohan Singh for enabling
transfer of nuclear technology and fuel to India,
but Delhi seems to be already moving ahead to
entice foreign investors to invest in the
country's ambitious nuclear-power plans.
The Indian government is working on a
policy to allow foreign direct investment (FDI) in
the country's nuclear-power sector, which if
finalized, would be a new area for FDI. As with
the much-debated retail sector, nuclear power too
is currently out of bounds for foreign investors.
In a controversial policy shift, the US
president entered into an agreement on July 18
with the Indian prime minister, which,
subject to congressional
approval, promised to change US laws so that
nuclear-armed India gets from US - and willing
other countries - help and cooperation for
developing its civilian nuclear-power program.
Beside the fact this sweeping new agreement is
considered a diplomatic coup for India, it is also
"a big step ahead" for the country's nuclear
energy plans, and could open up the country's
nuclear-power sector to foreign investments.
But there is still a big hurdle in the
way. "It is contingent on whether Mr Bush can push
it through the US Congress because even if the US
president supports it, this is an issue of
high-powered politics and there are other
countries' views that could influence it," said
Shebonti Ray Dadwal of the Institute for Defence
Studies and Analyses (IDSA), a New Delhi-based
strategic and security studies think tank. Indeed
this agreement is not going to be easy for the US
Congress to push through. Even as the agreement is
under "a hard look", a Congressional Research
Service - the public policy research arm of the
United States Congress - report published in
August said that if implemented, the agreement
will contravene the control guidelines laid down
by the Nuclear Suppliers Group (NSG). It fears
that such a move would open the floodgates to
nuclear proliferation and allow rogue counties
outside the Nuclear Proliferation Treaty (that
aims to prevent the spread of nuclear weapons and
weapons technology and achieve complete nuclear
disarmament) to build nuclear weapons with
imported civilian nuclear technology. "And then
there still is the problem of the NSG -The Nuclear
Suppliers Group," Dadwal said. "Until now just a
few of the 44-country NSG supports the thought,
whereas many others are undecided."
Nevertheless, the agreement is also
crucial for energy-starved India's nuclear-power
plan, which it has been pursuing for the past 50
years but with little success. And this is why
perhaps the country is even willing to dilute, at
least for the time being, the importance of oil
and gas in favor of nuclear technology and fuel
for energy security. For instance on September 24
in Vienna, India voted on a resolution by the
International Atomic Energy Agency (IAEA) that
requires Iran to subject its nuclear program to
the scrutiny of the UN Security Council. Although
Iran has officially announced that India's vote
does not jeopardize the mutual diplomatic
relationship, and more importantly the $21 billion
Iran-India liquefied natural gas deal, critics say
India's stance has "wrinkled" Indo-Iranian
relations and could hamper India's access to
Iran's oil and gas in future.
India of
course is refuting that its Iran volte-face was a
"sellout" to the US, which has allegedly been
requesting India to vote against Iran with the
carrot of the Bush-Singh nuclear agreement. But
according to Walter Andersen, a former State
Department official, the decision will certainly
help in pushing the Bush-Singh agreement in the US
Congress. And Ronen Sen, Indian ambassador to the
US and a former Atomic Energy Commission member,
feels that geopolitics aside: "Oil and gas are
finite resources. Nuclear energy is not.
Cutting-edge research in nuclear sciences and
non-conventional energy like fuel cell and
bio-fuels is not taking place in Iran or Saudi
Arabia." Sen added that "Every major hydrocarbon
resource is some distance from India and poses
great challenges and difficulties in bringing it
home." In other words, Sen suggests that between
oil and gas and nuclear energy, the later should
be the country's priority.
Admittedly,
given the current state of its nuclear-power
capabilities, Western help in terms of technology
and fuel has become imperative for India. Despite
attaining nuclear capabilities since the
mid-1950s, when India built its first nuclear
reactor to develop nuclear energy for peaceful
activities, the country has not been able to
achieve much in terms of nuclear-power generation.
For instance, of the total 116,000 megawatts (MW)
of installed thermal, hydro and a bit of
unconventional power generation capacity, nuclear
power accounts for only about 3,300 MW (2.8%). One
of the main reasons for the slow growth of nuclear
power is that between 1974 and 1998 India changed
tracks several times to utilize its nuclear
capabilities to develop nuclear arms and emerge as
one of the world's six nuclear powers, which
attracted world ire resulting in a ban in transfer
of technology and help. Critics say that although
India did manage to develop indigenous
nuclear-power generation capability, much of that
generation capacity is "technologically weak" and
thus, "commercially unviable".
"But more
than the technological problems, India's
indigenous nuclear-power program faces a bigger
problem of limited availability of nuclear fuel,"
IDSA's Dadwal said. "Therefore, assuming that it
passes the US Congress, the Bush-Singh agreement
would enable India the crucial access to
cutting-edge technology and fuel. In fact prior to
this agreement India's plan of generating 20,000
MW of nuclear power in 20 years looked like a
dream. But suddenly this agreement not only makes
that target achievable, India can also look
forward to be more ambitious."
According
to experts, such as the World Nuclear Association,
China and India offer the largest potential for
nuclear power globally. China currently has a
combined capacity of 6,500 MW, and like India,
China's nuclear-power generation is just a
fraction (about 2%) of its total power generation.
But China has reportedly already invited
international tenders for 4,000 MW this year that
could cost US$1.5 billion and plans to pump in
more than $50 billion investment in its
nuclear-power sector over the next 30 years.
India's prime minister has suggested that
following the Bush agreement, India could add
30,000 to 40,000 MW of nuclear capacity over the
next 20 to 30 years, and that would still be a
fraction of its projected requirements 30 years
hence.
Small wonder then that global
nuclear-power companies are already setting their
sights on India. Reports say that nuclear power
giants such as Westinghouse of the US, French
companies Areva and EdF, Russia's AtomStroyExpor
and US-based Exelon Corp and GE Energy (a part of
General Electric) have started pitching for Indian
power projects.
Moreover some of the NSG
countries, such as Germany and Canada, that were
unable to make their presence felt in India -
mainly because the US insisted that nuclear
cooperation with non-NPT countries should be
discouraged - have now started looking at India
too. The Canadian government announced last week
that it has "agreed to allow the supply of
nuclear-related, dual-use items to Indian civilian
nuclear facilities under IAEA safeguards, with
appropriate assurances consistent with the
requirements of the Nuclear Suppliers Group Dual
Use Guidelines".
Indrajit Basu
is a Kolkata-based
equity-analyst-turned-journalist with more than 12
years of experience in business/finance and
technology journalism. Besides writing for Asia
Times Online, he also writes for US-based
publications, as well as IT companies.
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