Nuclear power sector woos private firms

Mumbai: Domestic power majors BSES and Larsen & Toubro are now in talks with Nuclear Power Corporation of India Ltd (NPCIL) for a probable equity participation in its two upcoming nuclear power projects at Kaiga and in Rajasthan.

To fulfill the dream of India's Nuclear Power Programme (an ambitious plan aimed at attaining a target of 10,000 mw by 2000), NPCIL had opened itself up for joint ventures - private and/or public participation - to handle its multi-type nuclear power reactor projects, planned for the next 20 years, by way of reforming and restructuring itself. The Atomic Energy Commission and NPCIL are working together for necessary amendments of the Atomic Energy Act, 1962, to facilitate it.

As part of this, the corporation had recently announced its plan to set up Kaiga (3&4 units) power and Rajasthan (5&6 units) projects with private sector participation. Says a senior NPCIL official: BSES and L&T have completed two-round talks with us to pick up 49 per cent equity in these power stations. We are waiting for a final clearance from the Department of Atomic Energy (DAE) and the Cabinet to go ahead with our joint venture plans with private sector players.

He said the Union government has already initiated steps to amend the Atomic Energy Act to accelerate the private sector participation process, and by the end of 2002 the amendment process would be over. NPCIL, which is the nodal agency for harnessing nuclear power in the country, has developed the necessary technical and scientific infrastructure for implementing nuclear power programme.

NPCIL, which now has a capacity of 2,620 mw, was constituted in 1987 by converting the Nuclear Power Board of the DAE into a company under the Companies Act, 1956. The official says that as per the current plan, NPCIL would complete the Kaiga 3&4 (220 mw each) by the end of 2002. We are also evaluating the possibilities to borrow funds from BSES and L&T to complete the project and once the amendment process is over, the corporation can offload proportionate stakes to the respective corporate.

Along with this, NPCIL has also appointed a consortium of RR Financial Consultant and the Power Finance Corporation to scout for a private sector partner for taking a stake in the Kaiga project. The consortium will look for a private sector equity partner and will recommend changes in the Atomic Energy Act.

The mandate was given after a two-stage selection process, based on technical and financial proposal. Among the other bidders were PricewaterhouseCoopers, ICICIJM, Morgan Stanley and McKinsey.

NPCIL, however, said it has outlined a programme for an additional capacity of around 5,000 mw during the 10th Five Year Plan period (2002-2007), the estimated investment of which has been computed at Rs 28,000 crore.

During the current year, NPCIL has also chalked out a programme to restructure and upgrade its manpower to man different types of nuclear power reactors, including light water, pressurised light water, larger-sized pressurised heavy water and fast breeder reactors.

During the10th Plan period, NPCIL plans to complete four of its ongoing projects and would set up a new project. According to an internal blueprint prepared by the corporation, NPCIL would complete the construction of the Tarapur 3&4 (500mw each) and Kaiga unit 4 (220 mw) projects by adding around 1,300 mw power to the national grid during the first two years of the 10th Plan.

By the end of the Plan period, NPCIL expects to construct and commission the Kudamkulam project (2,000 mw), the Rajasthan unit 5&6 (220mw each) and the Kaiga unit 3(220). Besides this, NPCIL is also planning to set up a new power project either at Punjab or in Andhra Pradesh. But a final decision is yet to be taken on this.

Senior NPCIL officials say the corporation's capacity-addition programme requires an estimated Rs 28,000 crore and around 50 per cent of this amount will be mobilised through internal accruals and government support, while the remaining would be generated through debt. This programme has to be approved by the planning commission and a detailed report on this will be submitted to the planning commission and the Cabinet soon. During the last five years, the debt component of the corporation has been reduced considerably from a high of 1.5 per cent to 0.3 per cent. This will help us to mobilise enough funds from the market and we have plans to go for a bond issue programme within the next six months.

Circa 2000 was very fruitful for NPCIL with the commissioning of four units of 220 mw each pressurised heavy-water reactors - Kaiga 1 and 2 and Rajasthan 3 and 4 - taking the total installed capacity for nuclear power to 2,670 mw, besides operating all the 14 plants at an average 81 per cent of capacity and making over Rs 50 crore profit.

Efforts are being made by NPCIL to reduce the project gestation period to five and a half years by incorporating innovative and modular design concepts among other measures, the officials said.