India's BHEL and NPCIL Close to Finalizing Technology Partner for Nuclear Venture

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's largest power equipment manufacturer, state-owned Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) is in the final stages of closing a deal with a European partner who will join an already existing joint venture between BHEL and Nuclear Power Corporation of India (NPCIL) (Mumbai).

The European partner, whose name has not been disclosed so far, will provide the technology to build nuclear steam turbine-generator sets for nuclear power plants. The technology tie-up will involve turbine-generator sets with ratings of 700 megawatts (MW), 1,000 MW and 1,600 MW, and an investment of about $102 million. The European partner will get an equal stake of 33.3% in the venture. According to the Chairman and Managing Director of BHEL, K. Ravi Kumar, an announcement about the deal can be expected sometime toward the end of this month.

The BHEL-NPCIL joint venture company was formed in April 2008 with the goal to undertake engineering, procurement and construction projects for nuclear power plants in both the domestic and international markets. The company has been looking for a third partner since the spring of 2008. There have been reports about discussions with Alstom SA (EPA:ALO) (Levallois-Perret, France), Siemens AG (NYSE:SI) (Munich, Germany), Skoda JS (Plzen, Czech Republic) and OJSC Turboatom (Kharkivm, Ukraine). The two existing joint venture partners would divest equal shares from the venture and offer it to the third partner. The manufacture of 1,000-MW and 1,600-MW turbine-generator sets would start in 2010.

BHEL's facility in Bhopal, Madhya Pradesh, has already begun manufacturing nuclear heat exchangers for the joint venture's projects. An agreement between the BHEL-NPCIL joint venture company and GE-Hitachi Nuclear Energy Incorporated (Wilmington, North Carolina) was signed in April 2009 for manufacturing nuclear reactors with capacities of more than 1,000 MW. The 1,350-MW Advanced Boiling Water Reactor technology is the only commercially proven Generator III reactor design on the market today. A $12 billion agreement has also been signed with Areva SA (EPA:CEI) (Paris, France) for the supply of nuclear reactors. Talks are also under way with Toshiba Corporation (TYO:6502) (Tokyo) and Westinghouse Electric Company LLC (Monroeville, Pennsylvania) for the supply of nuclear reactors. Kumar said that since the supply of uranium was limited, the BHEL-NPCIL venture would have to tie up with more than one technical collaborator.

The stand taken by the G8 nations regarding transfer of nuclear enrichment technology to nations that have not signed the Nuclear Non-Proliferation Treaty may come in the way of the "clean waiver" on nuclear supplies granted to India by the Nuclear Suppliers' Group (NSG). Since the waiver, India has signed nuclear-supply agreements with France, Russia and the U.S. The G8 nations now want all nations to sign the Non-Proliferation Treaty and implement the Comprehensive Test Ban Treaty. At the recent L'Aquila summit, the G8 decided to curb transfer of enrichment and reprocessing technology and equipment to all nations that are not signatories of the Non-Proliferation Treaty.

In response to this, India's Finance Minister, Pranab Mukherjee, said that India was not overly concerned about the stand taken by the G8 since India has a very specific safeguards agreement with the International Atomic Energy Agency (Vienna, Austria). Mukherjee said that every member country of the NSG could trade with India. Further, he did not believe that the G8 Summit was the appropriate place to discuss the terms of nuclear trade with India. India intends to take up the issue with U.S. Secretary of State Hillary Clinton during her upcoming visit to India. The Chairman of India's Atomic Energy Commission (Mumbai), Anil Kakodkar, has, however, expressed concern over the G8's decision but declined to comment further on the issue.

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