Growing component of localisation in Indo-Russian nuclear cooperation

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The highlights for the Indian nuclear industry, during the year engulfed by the coronavirus (COVID-19) pandemic, are the attaining of criticality with India’s first indigenously built 700 MW pressurised heavy water reactor (PHWR), and the start of machine assembly in France at the multinational thermonuclear fusion reactor ITER project, in which India is a participant. Through over half a century of India’s atomic energy programme, Russia has been the most successful foreign collaborator of the South Asian nation. Indo-Russian nuclear cooperation became even more significant in the wake of the non-proliferation sanctions imposed by western nations after India’s underground testing of a nuclear device for the second time at Pokharan in 1998. Only Russia, as a founder of the 48-nation Nuclear Suppliers Group (NSG) group, continued to supply nuclear fuel to India in the aftermath of the sanctions.

After the sanctions ended, and the International Atomic Energy Agency (IAEA) adopted a policy of nuclear cooperation with India in 2008, the only project involving foreign collaboration completed successfully in the country has been the Kudankulam Nuclear Power Plant (KNPP) in Tamil Nadu, where the Russian state atomic energy corporation Rosatom is the equipment supplier and technical consultant. The first two units in KNPP have been commissioned in 2014 and 2017, respectively, while construction work is underway at the site to erect 4 more units of 1,000 MW each. Nuclear Asia spoke to some Indian experts for an overview on Indo-Russian nuclear cooperation.

First, a look at the financial aspects, that are of primary consideration in large capacity nuclear projects as these involve huge costs and long gestation periods. According to the state-run operator Nuclear Power Corporation of India Ltd’s (NPCIL) former Chairman S.K. Jain, in this respect, Russian credit terms are the “most favourable, with a rate of interest at 4 percent and repayment periods of up to 25 years.” As per the intergovernmental protocol signed for financing the Kundankulam project, Russia will be providing $3,400 million for financing upto 85 percent of the value of works. The protocol also has provision for state export credit amounting to $800 million for financing up to 85 percent of the nuclear fuel and assemblies. The credit carries interest at 4 percent per annum.

The cooperation between the two countries in the peaceful use of nuclear energy has been in existence for over two decades. A comprehensive inter-governmental agreement was signed between India and the erstwhile Soviet Union in 1988 for construction of two units of 1,000 MW each at Kudankulam. Thereafter, following talks with Russian President Vladimir Putin during the visit of Prime Minister Narendra Modi to Russia in September 2019, it was announced that at least 12 Russian-designed power units could be built in India within 20 years, six of which are proposed to be constructed at a second site other than Kudankulam.

“The Russian nuclear industry is an undisputed leader in advanced nuclear technologies, providing innovative engineering and construction solutions for nuclear reactors and the production of nuclear fuel”, says retired diplomat Ashok Sajjanhar, who has served as India’s Ambassador to Kazakhstan, Latvia and Sweden. Rosatom has the world’s only nuclear icebreaker fleet, the most powerful fast neutron reactor, the first in its kind floating nuclear power plant (FNPP) and contributes to digitalisation, as well as nuclear medicine. As a corporation that brings together over 300 enterprises, Rosatom currently has the world’s largest portfolio of foreign construction projects consisting of 36 NPPs in 12 countries, the second largest uranium reserves, and has 17 percent share of the global nuclear fuel market. According to Sajjanhar, given the history of Indo-Russian political and strategic ties, it makes eminent economic sense to also have close cooperation in the nuclear field.

According to the former NPCIL Chairman, a crucial element of this nuclear cooperation with Russia is the understanding that it would significantly increase Indian industrial manufacturing capacity in the area of sophisticated technology. Thus, a supplementary agreement signed in 2014 with Russia mentions “Localization of Manufacturing in India for the Russian-Designed Nuclear Reactor Units”, which provided for indigenous manufacturing of equipment and fuel assemblies for Russian designed nuclear plants in India. While critical components such as reactor pressure vessels, coolant pumps and steam generators, among others, are supplied by Rosatom companies, the share of Indian industry in manufacturing equipment in the turbine Island and in the rest of the NPP has always been at a high level ever since the construction of the first unit at Kudankulam, Jain said.

“From a beginning in the last century, when 100 percent of the project was supplied by the Russians on a turnkey basis, the circumstances changed in the new millenium, the USSR had split up, and with sanctions ended, India was able to sign civil nuclear cooperation deals with many countries, obtaining more favourable terms, including assurances on indigenisation of production,” Jain said. “Right from the start at Kudankulam, all the civil works for erection (of the NPP) were handled by the Indian side, while the Russians provided the technical expertise in terms of the warranties and guarantees. We have now moved further ahead on localisation, to the extent that, for instance, the entire electrical system, the water system of the plant are supplied by India”, he added.

In the early part of the current decade, the Russia offered to localise the production of major reactor components and sub-systems for building new NPPs in India. During his 2014 visit to New Delhi, President Putin described nuclear export to India as “not just trading goods or services or even technology – it is the creation of an entire industry, a new industry for India.” As a result, the two countries formally incorporated “localization of manufacturing of equipment and fuel assemblies” in the 2014 Indo-Russian strategic vision document, which paved the way for the construction of the KNPP Units 3 and 4.

While Rosatom has repeatedly expressed its commitment to progressively raise the local component in the remaining units, an NPCIL study on Kudankulam has indicated a planned increase in the construction and manufacturing workshare for Indian companies in KNPP Units 3-6. “Russians have been very open as far as technology is concerned and have not hesitated about sharing knowhow on items like pressure vessel technology, for instance. Whatever we have asked for, they have given,” Jain said.

From India’s perspective, nuclear cooperation with Russia would significantly help increase Indian manufacturing content and would be a boost for domestic industry. In this context, moreover, India has also decided to enhance its domestic industrial capabilities in Light Water Reactors (LWRs), which it lacks at present. India has fully developed its indigenous capability with Pressurised Heavy Water Reactors (PHWRs) as witnessed in achieving criticality earlier this year with the second 700 MW unit at the Kakrapar NPP. In the wake of India’s nuclear development programme, Indian industry has also successfully acquired capabilities to develop major reactor components, sub-systems, and assemblies.

There is another dimension of “localisation” in Indo-Russian cooperation in the atomic sphere – one that involves joint projects in third countries. A beginning has been made in the area of joint projects with the ongoing construction of the first NPP in neighbouring Bangladesh at Rooppur, in which Rosatom is also the equipment supplier and technical consultant. Bangladesh, in 2018, became the first initiative under an Indo-Russian agreement to undertake atomic energy projects in third countries. Following the Bangladesh example India and Russia are considering cooperation in building nuclear power facilities in other countries. Since India is still not a member of the NSG, it cannot directly participate in the construction of nuclear reactors overseas.

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