May 18, 2017 / 10:23 AM / in 5 months

Foreign suppliers urged to step up as India backs own nuclear design

* New Delhi plans ninefold boost in nuclear capacity by 2032

* India fast-tracks own-brand reactor construction

* Continues parallel talks with foreign suppliers

* Reactor makers must be financially sound - official

* India will only buy proven reactor technology

By Douglas Busvine

NEW DELHI, May 18 (Reuters) - India’s plan to build 10 of its own nuclear reactors does not signal a pivot away from foreign suppliers, but to succeed their projects must be financially sound and based on proven technology, a top official told Reuters.

Prime Minister Narendra Modi’s cabinet on Wednesday backed a plan to build a fleet of indigenous Pressurised Heavy Water Reactors (PHWRs) capable of generating 7,000 megawatts of power - more than India’s existing installed capacity.

The announcement comes as talks with U.S., French and Russian suppliers drag but Sekhar Basu, secretary of the government’s Department of Atomic Energy, rejected suggestions that New Delhi was losing patience.

“These are all part of our programme,” Basu told Reuters in a telephone interview. He added that there was “no correlation” between Wednesday’s decision and the separate talks with foreign suppliers.

Modi has made nuclear expansion a key plank of his strategy to supply Asia’s No.3 economy, and 1.3 billion people, with enough power to drive long-term growth. About 300 million Indians still lack access to power.

But, despite a civil nuclear accord struck with the United States in 2005, a hoped-for bonanza in India has yet to materialise. Domestically-built nuclear projects have also been slow to get off the ground.

That has left a target of boosting nuclear capacity ninefold to 63,000 MW by 2032 looking increasingly ambitious.

BANKRUPTCY BLIGHT

Negotiations with Westinghouse Electric to build six of its AP1000 reactors in the southern state of Andhra Pradesh have been complicated by its bankruptcy filing in March, triggered by huge overruns at its U.S. projects.

Technical talks continue with Westinghouse, owned by Japan’s Toshiba Corp. But, said Basu, to strike a commercial deal the company must show it is financially stable; the AP1000 reactor should be proven in practice; and the power supply tariff should be viable.

He said the situation was similar with French utility EDF , which signed a preliminary pact in Jan. 2016 to build six European Pressurised Reactors (EPR) at Jaitapur, on India’s western seaboard.

Long delays to the construction of an EPR in Finland have led to legal action. In France, work on an EPR is also running years late and the estimated budget has trebled to more than 10 billion euros ($11 billion).

“They have to sort out their financial issues before anything can come on the table,” Basu said. “We will not buy a reactor unless a plant is operating in their own country.”

HOMEGROWN INDUSTRY

State-owned Nuclear Power Corporation of India Ltd (NPCIL) operates a fleet of 22 nuclear reactors with installed capacity of 6,780 MW.

Eighteen are Pressurised Heavy Water Reactors - a relatively old design that does not require enriched uranium. Six more PHWRs are under construction. India expects existing projects to add 6,700 MW in capacity by 2021-22.

Basu said it should be possible to deliver the new PHWRs at a cost of 15 million rupees ($230,000) per megawatt of installed capacity. The reactors would be built serially, with the first completed in seven years.

Indian companies, such as Larsen & Toubro, Kirloskar Brothers Limited and Godrej & Boyce have welcomed the government’s move.

“It’s a big step forward for the domestic industry. We have capabilities in-house, both in design and construction,” said S.N. Roy, head of the nuclear business at L&T, which designs and makes PHWRs.

“My perception is that the government of India decided to fast-forward the nuclear programme. We have the technology available to do it ourselves.” ($1=64.4600 Indian rupees) (Additional reporting by Tommy Wilkes; Editing by Clarence Fernandez)

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