Fate of Areva deal for nuclear reactors hangs in balance

By: | Published: January 23, 2016 12:52 AM

Areva, which had inked the agreement in April last year, has since then had major financial loss and has now been taken over by a French utility company EDF

The fate of  the agreements inked between French nuclear company Areva and Larsen & Tubro and between Areva and NPCIL will be discussed when leaders of India and France meet for official talks in New Delhi on Monday.

It was during Prime minister Narendra Modi’s visit to Paris last April, Areva which had inked these agreements has since then had major financial meltdown and has now been taken over by a French utility company EDF. Due to this situation, the question that has now arisen is what is the future of the nuclear reactors that were to be built at Jaitpur, Maharashtra and will they be built by EDF?

“EDF will be in the lead now, that is creating a change in the way nuclear negotiations will be conducted,” said French ambassador to India Francois Richier.

The French nuclear giant Areva since May 2015, announced huge losses amounting to 4.8 billion euros (well above its capital base) and in June the French government, which owns 87% of the company, announced that Areva would be broken up, with its nuclear power arm, Areva NP, (including engineering, construction and design) being sold to another French energy giant, EDF. The French state has an 84.5% stake in EDF.

Both Areva and NPCIL  have been negotiating unit price of power generated from the proposed Maharashtra power plant for years. A source at NPCIL said the French firm was asking for a simply too high price.  The French company which uses Japanese components, has a deal to build six reactors in India, although restructuring within that company was likely to delay construction until 2017.

A source at Areva said that French President Francois Hollande visit may help move things forward.  “The company was encouraged by India’s establishment of a nuclear insurance pool to address suppliers concerns stemming from the 2010 liability laws but was waiting to see the details.”

As part of Prime Minister Modi’s push to ramp up nuclear energy capacity in India, Areva which has been discussing with Indian companies to  build six reactors in western India,  are now stuck over the price, and  EDF recent takeover of Areva’s reactor business has slowed progress.

Areva and NPCIL took the first concrete steps towards making the Jaitapur nuclear power plants a reality with both companies signing an early works agreement. This was the first formal pact between the two sides for Areva to begin work on the planned six EPR (evolutionary power reactor) power plants.

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