India Test-Starts Kudankulam Nuclear Reactor Amid Protests

Nuclear Power Corp. of India Ltd., the nation’s sole atomic energy producer, test-started part of a $2.84 billion reactor today after a delay of six years amid protests from local residents.

The first unit of the Kudankulam plant in the southern state of Tamil Nadu was operated for two hours at a capacity of 175 megawatts, station director Hari Narayan Sahu said by phone. The unit should run at half its capacity by Oct. 26 and reach its maximum output of 1,000 megawatts in six weeks, while the second unit should start in a year, he said.

Public rallies against Kudankulam, the first two units of which are not covered by any liability law, increased after the meltdown of Japan’s Fukushima nuclear plant March 2011, the worst civil atomic accident since Chernobyl in 1986. Concerns over the extent of liability equipment suppliers will have to bear in case of an accident is stalling India’s deals with Areva SA (AREVA), General Electric Co. and Westinghouse Electric Co., impeding Prime Minister Manmohan Singh’s goal to boost the nation’s nuclear generation capacity 13 times by 2032.

“Nuclear energy is an option India can’t ignore,” said Debasish Mishra, head of energy practice at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “If we are able to spread out the capital cost over a long period, we can get extremely competitive power tariffs from nuclear plants.”

The cost of generating power from the first unit will be 2.6 rupees to 2.7 rupees, Sahu said.

Singh, Putin

Singh met Russian President Vladimir Putin yesterday to discuss cooperation between the two countries on energy and strategic matters. An accord for buying two more reactors for Kudankulam from Russia has been delayed because of Russia’s concern about India’s liability law.

The law sets a 15 billion rupee ($243 million) cap on payouts by Nuclear Power Corp., with the government responsible for damages beyond that. After paying compensation, Nuclear Power Corp. can seek money from suppliers for defective equipment or materials.

The combined cost of the two existing units of 1,000 megawatts each has risen to 175 billion rupees, Sahu said, from about 132 billion rupees. The Kudankulam reactor is the result of a bilateral agreement between India and Russia signed before the Civil Liability for Nuclear Damages Act became a law in 2010 to make atomic plant suppliers and builders liable in the event of nuclear accidents.

To contact the reporters on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net; Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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