France and India signed an agreement that will allow Areva SA to build two nuclear reactors for $9.3 billion to help meet soaring energy demands in Asia’s second-fastest growing major economy.
French President Nicolas Sarkozy told reporters at a joint press conference with Indian Prime Minister Manmohan Singh in New Delhi that there was “no limit” to the countries’ nuclear cooperation, and that today’s pact, the first between the two nations, would eventually be expanded to six reactors. “We propose a total partnership for the civil nuclear” sector, he said.
Today’s agreement is Areva’s biggest for so-called Evolutionary Pressurized Reactors since the 2007 sale of two units to China. The company lost a contract in 2009 to supply four of the reactors to the United Arab Emirates, a deal eventually won by a South Korean consortium.
Sarkozy, who is in India with a group of 50 business leaders including Dassault Aviation SA’s Charles Edelstenne and MBDA’s Antoine Bouvier, also targeted defense contracts, including the refurbishment of Indian jet fighters and missile sales. Singh said he would support France’s agenda for its chairmanship of the Group of 20 nations.
“We did not come to visit a big client like we were big suppliers,” Sarkozy said today. “We came to visit a partner.”
Areva, the world’s biggest nuclear-power builder, will work with Indian companies to prepare for the construction of the two reactors from “early 2011,” Chief Executive Officer Anne Lauvergeon told reporters. She said the contract, which will also include the supply of uranium fuel, will be worth about 7 billion euros.
Areva’s civil nuclear energy project at the Jaitapur site south of Mumbai passed a key hurdle when India’s Environment Ministry gave its approval on Nov. 28. India plans to add 60,000 megawatts of nuclear power capacity in the next 14 years, a third of the current total output, to address power shortages.
“The signing of this agreement is good in that we’ve been able to get things moving for the nuclear business in India,” said A.V. Kameswara Rao, executive director at PricewaterhouseCoopers Pvt., which advises nuclear companies.
“Nuclear will be a big part of India’s energy future considering rising prices and protectionism uncertainties around oil and coal. This deal is an encouraging sign,” Rao said by phone from Hyderabad in southern India.
India won access to atomic fuels and technology in September 2008 after the 45-member Nuclear Suppliers Group lifted a three-decade ban on exports to the country on a proposal made by former President George W. Bush after the two countries signed a civilian nuclear accord.
U.S. companies have so far refrained from signing contracts for a share of $175 billion of nuclear power projects planned in India after it enacted a bill in August that makes suppliers such as General Electric Co., whose equipment generates about one-third of the world’s power, potentially liable in the event of a nuclear accident.
Russian companies won orders for as many as 16 nuclear reactors from India during Prime Minister Vladimir Putin’s visit to the country in March.
The “early works” agreement signed today precedes the final contract by six months, a French official who cannot be named according to government rules, told reporters in New Delhi late yesterday. When the cooperation phase is completed, the six Franco-Indian reactors will supply 10,000 megawatts of capacity.
France was India’s fifth-biggest trading partner in 2009. Trade between the two countries in the first nine months of this year was 5.3 billion euros ($7.1 billion), down from 7.1 billion euros in 2008, according to the French government.
While no major defense deals were signed today, MBDA and Dassault Aviation SA will complete shortly an agreement to upgrade 51 Mirage-2000 jet fighters built by Dassault for India’s Air Force 30 years ago.
The agreement, that will include new avionics and radars, will be worth 1.5 billion euros, a French presidential official told reporters after the leaders’ briefing. Thales SA will add new missiles to the refurbished jets for an estimated 700 million euros, the official added.
Sarkozy’s visit was also designed to push forward his G-20 agenda to overhaul the global monetary system and regulate commodities markets. On his first stop in Bangalore he called on India to play a greater role in the grouping and pledged to support its bid for a permanent seat at the United Nations Security Council.
“India is a strategic political partner,” Sarkozy said. “France considers that no global issue will be possible to address without India’s participation at the highest level,” he said. Sarkozy and Singh said they would make a joint proposal to increase the regulation of agricultural commodities markets.
Sarkozy’s visit follows those of British Prime Minister David Cameron and U.S. President Barack Obama as countries as India takes on a larger role on the world stage and moves to generate more power and modernize its military