Nuclear Power Corporation (NPCIL) and Areva may have finalized an agreement for the supply of nuclear reactors and fuel supply to the Jaitapur nuclear power project, but differences over costing have proved difficult to resolve and could become a deal-breaker.
Sources privy to the NPCIL-Areva negotiations told FE that the Indian nuclear power utility is insisting on taking as reference price the cost of its 700 mw pressured heavy reactor units which is much lower than the average price at which Areva has been supplying its European Pressurized Reactors (EPRs) elsewhere.
Sources said the French nuclear power major does not have much room for lowering the price given that most of engineering and design and manufacturing work will be undertaken at Areva?s facilities in Europe. Civil construction is the only work which will be handled by local vendors and that is where there is scope for lowering price. However, expenditure on civil construction accounts for just 25-28% of the total project cost.
Besides costing, the two sides have also to resolve differences over sourcing of key parts and components for the proposed project.
NPCIL wants bulk of sourcing from locally in order to ensure faster indigenization of the EPR technology. That would, in turn, help NPCIL ensure better availability of spare parts at a reasonable price. Areva seems to be in-principle agreeable to the idea if we are to go by what Areva chief executive officer Anne Lauvergeon said recently while on a visit to India to sign an agreement with NPCIL.
However, it may not be possible for the French company to develop local vendor base as quickly as NPCIL wants it to do given that Areva is a new player in the Indian nuclear sector, say industry experts.
Areva is expected to set up up to six units of 1,600 mw EPR units at Jaitapur in two phases and supply fuel for the project. Jaitapur is one of the five nuclear parks envisaged by NPCIL for accelerated capacity addition.