India Taps into Buyers' Market to Fuel its 40,000-Megwatt Nuclear Power Program

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Researched by Industrial Info Resources (Sugar Land, Texas)--Even as markets worldwide are reeling under the recessionary effect of the global financial crisis, India is well poised to tap into the buyers' market to procure reactor equipment and fuel as it embarks on its ambitious nuclear energy program. India is planning to add 40,000 megawatts (MW) of nuclear power generation capacity by 2020.

The 17 nuclear plants in the country are starved of fuel and are operating at 54% of their installed capacity. State-owned Nuclear Power Corporation of India Limited (NPCIL) (Mumbai) recently announced plans to source up to 2,000 tons of uranium fuel by the end of 2008. The firm is also planning to invest over $1 billion to acquire stakes in uranium mines overseas. It is in talks with Kazakhstan, Niger and Uzbekistan to forge long-term uranium fuel supply contracts with these nations and is also exploring joint mining opportunities with Mongolia.

Kazakhstan is home to over 15% of the world's uranium reserves and is the third-largest uranium miner, after Canada and Australia. Uranium production in the country is expected to be 9,000 tons in 2008, and this will be raised to 12,826 tons in 2009. Uzbekistan contains 93,000 tons of uranium reserves, accounting for 3% of the global reserves of the mineral.

Spot prices of uranium fell by more than 37% from this year's high of $75 per pound. According to a report by J.P. Morgan, part of JPMorgan & Chase Company (NYSE:JPM) (New York, New York), spot prices of uranium this year are likely to hover around $65.98 per pound, as opposed to an earlier forecast of $69.62 per pound. J.P. Morgan has also slashed its 2009 forecast of uranium spot prices by 14% to $64.75 per pound and its 2010 forecast by 4.7% to $71.50 per pound. The firm did not alter its long-term price forecast of $65 per pound.

India is planning to spend nearly $14 billion for the purchase of nuclear reactor equipment. NPCIL is already in the process of finalizing supply contracts and agreements with international equipment suppliers including Areva S.A. (EPA:CEI) (Paris, France), Atomstroyexport (Moscow, Russia), General Electric Company (NYSE:GE) (Fairfield, Connecticut), Toshiba Corporation (TYO:6502) (Tokyo, Japan) and Westinghouse Electric Company LLC (Monroeville, Pennsylvania), among others. The Indian government is likely to amend the Atomic Energy Act of 1962 to facilitate participation by private players in the nuclear sector. It is also drawing up a liability framework to facilitate participation of private players from the U.S. in India's nuclear sector.

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