Nuclear Accident Forces China Policy Review as India Sees Safety Backlash

Japan’s worst nuclear accident in at least 33 years has compelled China and India to review plans for atomic energy that were set to provide a boon for suppliers including Areva SA (CEI) and General Electric Co. (GE)

The potential meltdown at a nuclear plant struck by Japan’s record temblor may be “a big dampener” on India’s program, Shreyans Kumar Jain, chairman of the Nuclear Power Corp. of India, said in Mumbai. The accident may become a factor in the drafting of China’s energy plans, Xie Zhenhua, vice chairman of the National Development and Reform Commission, said in Beijing.

India plans to spend $175 billion by 2030 on nuclear generation while China is adding 27 reactors in five years as the two most-populous nations seek cleaner energy sources to propel economic growth. Japan’s accident, a month shy of the 25th anniversary of the Chernobyl disaster, may reignite debate about the safety of atomic energy, Nuclear Power’s Jain said.

“The Japan accident has created a very, very tough situation for India, actual implementation of nuclear power projects will now certainly take a backseat,” said Debasish Mishra, Mumbai-based senior director at Deloitte Touche Tohmatsu. “It will be very difficult to sell the idea of nuclear power to people for any political party after the Japan disaster.”

Avoid Meltdown

Tokyo Electric Power Co., Asia’s largest utility, is seeking to avoid a meltdown of at least two reactors at the nuclear power station by flooding them with water and boric acid to eliminate the potential for a catastrophic release of radiation into the atmosphere. The station lost power to keep the reactor core cool after the March 11 earthquake, triggering an explosion the following day that destroyed walls surrounding one of the reactors bought in 1971 from General Electric.

General Electric, which is talks to sell reactors to India, won’t change its plans for the country after the Japan accident, Chief Executive Officer Jeffrey Immelt said in New Delhi today. Immelt expects the Fairfield, Connecticut-based company’s Indian operations to grow 30 percent this year.

‘Big Dampener’

State-owned Nuclear Power has sought details about the accident from the World Association of Nuclear Operators, the International Atomic Energy Agency and its own official stationed in Tokyo, Nuclear Power’s Jain said.

“This event may be a big dampener for our program,” Jain, chairman of India’s state-run monopoly producer, said in a telephone interview yesterday. “We and the Department of Atomic Energy will definitely revisit the entire thing, including our new reactor plans, after we receive more information from Japan.”

Areva’s reactors are expected to be the first overseas units to be built in India after it rejoined the international nuclear trade after almost four decades. Prime Minister Manmohan Singh’s government won access to atomic fuels and technology in September 2008 from the 45-member Nuclear Suppliers Group on a proposal made by former President George W. Bush after India and the U.S. signed a civilian nuclear accord in 2005.

France and India signed an agreement on Dec. 6 that will allow Paris-based Areva to build two nuclear reactors for $9.3 billion to help meet soaring energy demands in Asia’s second- fastest growing major economy. Nuclear Power has acquired 938 hectares of land for the project, an area that’s almost three times the size of Central Park in New York.

Patricia Marie, spokeswoman for Areva, declined to comment.

China Plans

In China, the government won’t change its plans to develop nuclear power, Zhang Lijun, vice minister of environmental protection, said a day after the 8.9-magnitude temblor struck off the eastern coast of Japan. Local media said the death toll from the quake and ensuing tsunami may exceed 10,000.

China has pledged to cut carbon emissions by switching to clean energy such as nuclear and wind power. It wants at least 15 percent of its energy mix to come from non-fossil fuels by 2020 and is building more atomic plants to help meet that goal.

The nation’s energy planners say they aim to have 40 reactors by 2015 and, by 2030, enough additional reactors to generate more power than all 104 reactors in the U.S., the leader in nuclear energy. China National Nuclear Corp., the country’s largest reactor builder, and rival China Guangdong Nuclear Power Group Co. are looking to foreign companies such as Toshiba’s Westinghouse Electric Co. and Areva for reactor technology and components, as well as help with construction.

The nation’s nuclear power capacity may reach 40 gigawatts by 2015 and exceed 70 gigawatts by 2020, Han Wenke, head of energy research at the NDRC, said last June. China had 10.82 gigawatts of nuclear power capacity as of the end of 2010, the state-owned China Electricity Council said in February.

No Longer Sacrifice

“The accident in Japan may trigger increased public concerns over building atomic plants,” said Dave Dai, a Hong Kong-based analyst at Daiwa Securities Capital Markets Co. “China will become more cautious while developing nuclear-power plants but is unlikely to alter its long-term nuclear development plans.”

The Chinese economy, which more than doubled in the past five years, surpassed Japan’s in 2010 to become the world’s second biggest. It is also the world’s largest energy consumer and leading polluter.

Most of the 155 reactors planned worldwide are in Asia, according to the World Nuclear Association. There are 442 reactors worldwide that supply about 15 percent of electricity and a further 65 are under construction, the association said on its website.

More Scrutiny

Global expansion of nuclear power may draw more scrutiny and skepticism as the world watches Japan struggle to prevent the meltdown, said Peter Bradford, a former member of the U.S. Nuclear Regulatory Commission.

“In general, our business is going very well, but the situation in Japan is troubling,” said Vaughn Gilbert, a spokesman for Toshiba Corp. (6502)’s Westinghouse nuclear unit.

China has also been the site of some of the world’s most devastating earthquakes. A 7.5-magnitude temblor in northeastern China’s Tangshan killed 250,000 people in 1976, according to the U.S. Geological Survey. At least 87,000 people died in 2008 in a 7.9-magnitude quake in the southwestern province of Sichuan. A 5.8-magnitude temblor in southern China’s Yunnan province last week killed at least 25 people.

Indian reactors at Kakrapar in western Gujarat state and Kudankulam in the southern state of Tamil Nadu survived an earthquake in 2001 and a tsunami in 2004, without any safety scares, Nuclear Power’s Jain said.

“But that doesn’t mean we can be happy,” Jain said. “Our new launches will have to keep in mind public sentiment and naturally this process won’t happen overnight.”

To contact the Bloomberg staff on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net; Wang Ying in Beijing at ywang30@bloomberg.net

--With assistance from Subramaniam Sharma and Kartikay Mehrotra in New Delhi and Bloomberg News in Shanghai. Editors: Stephen Foxwell, Margo Towie

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net

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