Nuclear Power Sector Stirs in India as Liability Fears Ease

  • Walchandnagar plans to revive talks on joint venture facility
  • Nuclear Power Corp. seeking approval to issue bulk orders

Optimism is building in India’s nuclear power industry as concerns ease that equipment suppliers would face crippling compensation costs in the event of an accident.

Companies such as Larsen & Toubro Ltd., Bharat Heavy Electricals Ltd. and Mumbai-based Walchandnagar Industries Ltd. are preparing for a pick up in orders, after Prime Minister Narendra Modi’s government took steps to blunt the impact of a 2010 act governing liability for nuclear power mishaps. 

“The lull seen in this sector is almost over,” Walchandnagar Industries’ Chief Executive Officer G.K. Pillai said in an interview. “We’d be open to making dedicated investments toward enhancing manufacturing capacity in nuclear equipment.”

The company plans to revive talks with Russia’s Atomenergomash OJSC to build a joint-venture factory in India’s western state of Gujarat that could supply nuclear power equipment for both Indian and export markets, Pillai said. For optimists, such developments, as well as progress on Westinghouse Electric Co.’s plan for six reactors in India, underscore ebbing liability fears.

Pillai said Walchandnagar is open to discussions with Westinghouse Electric and Electricite de France SA for the factory if talks with the Russians fail.

Global Protocol

The Civil Liability for Nuclear Damage Act seeks to ensure compensation for victims of a nuclear mishap, and is a legacy of one of the world’s worst industrial disasters -- the 1984 Union Carbide chemical accident in the central Indian city of Bhopal that killed more than 10,000 people.

To address concerns about the implications of the act, India ratified the Convention on Supplementary Compensation for Nuclear Damage -- a global protocol on nuclear liability -- in February. The nation has also issued an addendum to clarify the interpretation of the domestic liability law, and started a nuclear insurance pool for operators and suppliers.

That’s encouraged New Delhi-based Bharat Heavy, India’s biggest supplier of power plant equipment, to sharpen the focus on its nuclear business.

“So far nuclear has seen slow growth, but now it’s set to move at a brisk pace, as most of the concerns have been addressed,” said P.P. Yadav, head of Bharat Heavy’s nuclear business. “As the sector grows, we’ll deploy more of our resources to this business.”

Bulk Orders

Walchandnagar Industries declined 0.6 percent as of 9:36 a.m. in Mumbai, while Bharat Heavy dropped 0.9 percent. Engineering and construction company Larsen & Toubro fell 0.6 percent. The S&P BSE Sensex slid 0.8 percent.

Nuclear Power Corp., the monopoly nuclear energy producer, is discussing with the government if it can float bulk orders for domestic projects, Director Rohit Banerjee said. That will give vendors long-term visibility and will help them plan for the future, he said.

Challenges remain to scaling up the sector, including keeping costs down so that nuclear-generated electricity is competitive in a market dominated by coal. 

India’s goal is nuclear power capacity of 63 gigawatts by 2032 from about 5.8 gigawatts now, part of a push to curb fossil-fuel emissions and diversify the nation’s energy mix. The plan includes using domestic pressurized heavy-water reactor technology as well as light-water reactors sourced from overseas.

The South Asian nation has approved a number of reactor projects, according to the Department of Atomic Energy.

“We built huge capacities for nuclear, but a part of that capacity has remained idle as India’s nuclear program didn’t provide sufficient load to the industry,” said Y.S. Trivedi, senior vice-president at Mumbai-based Larsen & Toubro. “Things are looking up now and a number of orders are in sight.”

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