The nuclear deal stands to benefit Indian power companies, says A M Naik, chairman, Larsen & Toubro. ''The opportunity to the Indian industry is the order of magnitude of about Rs2.5 lakh-crore to Rs3 lakh-crore" and  L&T is targeting roughly 25 pr cent to  30 per cent of it per year, he says. CNBC-TV18 shares domain-b its exclusive interview with Naik.

What is the opportunity for nuclear power in this country for L&T and the timeline since starting today? How long will it take for the first power plant to come up?
There will be immediate relief for current projects, which are running at less than 50-per cent capacity for not having got nuclear fuel. There will be about 2,500-3,000 megawatts (MW) extra power generation once the fuel is supplied. So we benefit for some plants right away and in the next six months to a year for the others.

Talking about the major nuclear programme that is being rumoured around as 40,000 MW, 10,000 MW is supposed to come from the heavy water-based nuclear power plants and 30,000 MW is supposed to come from other technologies.

The real issue is three-fold, other than improving the utilisation of the existing power plant. One is that proper technology agreements have to be signed and that takes a long time because each one will try to protect its position.

Then you need to locate at least three sides. There has been a lot of visits of all the three nuclear technology suppliers. These are, in this case, Westinghouse, General
Electric, which is a boiling-water reactor and Areva (France). We need clarification on the role of Nuclear Power Corporation (NPC).

Will they be involved in the overall programme management or will they act only as an owner in future? Though there will be a lot of activities in restructuring Nuclear Power Corporation.

The cost of setting up nuclear power plants are aid to be twice that of a conventional coal plant as the fixed costs are high, and therefore for the first few years this power going to be much more expensive? Who is going to be interested in buying this power?
My information is a little different from what you have said because when heavy-water was produced by us from our own heavy-water plant, the NPC (Nuclear Power Corporation) had very competitive rates for supplying electricity.

Obviously the capital cost was much lower that time. But so as the capital cost of the thermal power and coal power has considerably increased from being Rs3 crore per MW to Rs6 crore per megawatt now with the current financing cost. The economics has considerably improved or worsened in both cases. So the relative gap is narrower than just merely what the capital cost suggests. My personal feeling is that nuclear power cost will be 1.7 times that of current thermal power cost.

When cheap coal-based power is available in the grid, most state electricity boards are inclined to buy that first. Do you really believe that addition of nuclear power to our grid will be successful when it comes to the consumption of power at viable cost?
First of all, coal is available only in the eastern part of India and very little in Karnataka i.e. Beradi. There's little nickel lignite in Kutch with Gujarat, nobody else has got it.

Therefore the cluster of power plants is coming up at the coal pithead level and nuclear will come up mostly in the west and the south where there is no fuel linkage available at the moment except for transporting it for 1,500 or 1,200 kilometres.

What is the kind of opportunity that L&T has identified in this entire space in terms of the thousands of crores of business that you can do when this sector finally opens up?
Let us look at 33,000 MW to be added, which they say will be added by 2020, or let's even stretch it to 2025. I am taking 17 years because two years anyway will go away in start-up. The nuclear power of 33,000 MW will roughly cost Rs350,000- Rs400,000 crore assuming that 25 per cent import may take place of different components and technology.

The opportunity to the Indian industry is the order of magnitude of between Rs2.5 lakh crore and Rs3 lakh crore. When you divide that by 12-15 years, we are basically talking about Rs15,000-Rs20,000 crore per year.

Of that, L&T is targeting roughly 25 per cent to 30 per cent per year... let us say, Rs3,000 crore roughly per year or more more.