The hopes around the USD 20 billion nuclear power project in India, to be constructed by the bankrupted US nuclear firm Westinghouse, have been renewed following its acquisition by Canadian investment firm Brookfield Business Partners, a subsidiary of Brookfield Asset Management for USD 4.6 billion.
“It would be still a bit early to say when the renewed deal with the Westinghouse will be signed. But it (the finding of buyer for the US firm) is a positive development,” Indian diplomatic sources told Nuclear Asia.
The agreement was inked between Brookfield Business Partners and Toshiba Corporation earlier this month. The purchase of the leading US nuclear reactor manufacturer is Brookfield’s first foray in nuclear industry. This transaction is subjected to the bankruptcy approval for Westinghouse from a court that is expected later in 2018. Only after the court approval will the purchase be final. However, the development has shown a path for the recovery of the Westinghouse that has been reeling under a financial meltdown following a slew of debts and overruns on its American reactor projects.
Brookfield Business Partners CEO Cyrus Madon was quoted by the Atlanta Journal saying: “Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation.” As per media reports, Brookfield will be providing USD 1 billion in lieu of 50 per cent stake in the Westinghouse and will contribute USD 3 billion for its debt financing. The Toronto based firm will also take obligation of Westinghouse’s pension plan.
This brings the turn of events that started with the declaration of bankruptcy by Westinghouse in March 2017 a step near its closure. The US nuclear technology leader Westinghouse was taken over by Japanese laptop-to-chips conglomerate Toshiba in 2006 for USD 5.4 billion. Since the filing for the bankruptcy under Chapter 11 of the Bankruptcy Code, the project for six Westinghouse AP 1000 reactors in Andhra Pradesh has been hanging fire. The deal for the Andhra Pradesh nuclear power project was announced in 2016 by Indian Prime Minister Narendra Modi and former US President Barack Obama.
The project would have been the first example of the India-US collaboration in the field of civil nuclear energy following the signing of the Indo-US Civil Nuclear Deal in 2006 that ended the nuclear apartheid of New Delhi. New Delhi had also allotted a site for a 2,500 MW nuclear power station in Gujarat and identified locations for 6 units in Andhra Pradesh.
The Indian Government took up the case of the bankruptcy of Westinghouse with its US counterpart earlier in 2017. Prime Minister Modi raised the issue with US President Donald Trump during his visit to Washington and both the countries agreed to rework the deal. The deal is now said to have gone back to drawing board, as Westinghouse intend to wrap up its construction arm post the bankruptcy proceedings. The modalities of the reworked deal are still not clear but initial report suggest that Westinghouse will take up the consultation and design role, whereas construction will be done by an Indian partner.
The takeover have been closely monitored in the higher echelons of the Indian Government and the takeover has been supported by the US government. The firm has sought to allay any fears that it was abandoning the bids in India. New US Ambassador to India Kenneth I. Juster, in his inaugural policy speech, termed energy and the environment as “the third pillar of strategic cooperation” between New Delhi and Washington. Making a pitch for enhanced cooperation in the field the Ambassador said: “The United States is uniquely positioned to offer India a comprehensive energy partnership. This includes all forms of energy – coal; crude oil; natural gas; and nuclear power; as well as technology related to clean fossil fuels, smart grids, energy storage, and renewable resources.”
While the civil nuclear deal with the US ended the nuclear apartheid of India, the country is yet to secure an entry into Nuclear Suppliers’ Group (NSG) – a grouping regulating nuclear trade. “We are working with partners to secure India’s Nuclear Suppliers Group membership,” Juster added in the address on Jan 11.
Negotiations on with Westinghouse for Nuclear plant in Andhra Pradesh
Negotiations are on between the Indian Government and the Toshiba-owned Westinghouse for the construction of the six nuclear power units in Andhra Pradesh. And the final cost and schedule of the project will be clear once Westinghouse comes out of its financial quagmire.
The Westinghouse Electric Company, the US arm for Japan’s Toshiba, had filed for bankruptcy in 2017 and the proceedings are expected to reach a closure in 2018.
“Presently, discussions with Westinghouse Electric Company (WEC) are in progress to arrive at a viable project proposal for setting up six nuclear power reactors,” Minister of State (Independent Charge) of the Ministry of Development of North Eastern Region (DoNER), Minister of State for Prime Minister’s Office, Personnel, Public Grievances & Pensions, Atomic Energy and Space Dr. Jitendra Singh has told the Parliament.
The project is planned to be set up at Kovvada in Andhra Pradesh and comprises of six units of 1208 MW each. “The cost and schedule of the project will emerge upon finalisation of the project proposal and accord of its administrative approval and financial sanction by the Government,” Dr. Singh added.
The multi-billion dollar deal, which would have been the first collaboration between India and the US in atomic energy sector post the civil nuclear deal, was undergoing advanced techno-commercial negotiations when it went off the track. Westinghouse, a one-time market that was taken over by Japanese Toshiba in 2006, filed for bankruptcy in 2017. Now India and Westinghouse has pinned their hopes on the Chapter 11 of the Bankruptcy Code that allows the company to do its business and clear debt over a period of time.
The details of the deal will be thrashed out anew as Westinghouse intend to close down its construction arm following the bankruptcy proceedings. There have been reports that the firm will take up consultation and design role and the construction will be done by an Indian partner.
