| The
difficulty of examining the recent Indo-US
agreement on the peaceful use of nuclear
energy is not one of perception alone, but of
substance. It is quite apparent that the
sudden development, in fact, much more than
was in the PM’s agenda, was due to initiative
from the highest level on the US side. The
concern with growing energy demands from India
and China, and the impact this would have in
the future on the prices for petroleum
products in the US, clearly energised a
President who understands the oil business
well. To that extent, there was certainly
enlightened self-interest in the offer. That
was perhaps the reason that the initial
reaction from the opposition was that this
represented, not an extension of the earlier
policies, but new directions altogether,
involving international oversight commitments
that India had earlier not agreed to. The
delay of a week in the PM reporting the
details of the US visit to Parliament was due
to the time taken by him to convince the
opposition, both internal and external, that
whatever the origins of the largesse, it would
be a positive step for India’s energy
security.
The arithmetic of the need to secure
sources of energy for growth is fairly well
documented. In 2002, the installed power
generation capacity in the country was around
140 giga watts (one giga watt is 1,000
megawatt) inclusive of captive generation. 67%
of power generation is from coal-based
stations, 20% from oil and gas 10% from hydro
and 3% from nuclear. Over the next few
decades, growth rates of even around 8% will
demand a quadrupling of this capacity, with
shares of coal and hydrocarbon progressively
coming down. Nuclear energy will have to take
on the responsibility of being the backbone of
power supply in the future.
China has already embarked on its path
towards greater reliance on nuclear energy.
The mainland has nine nuclear power reactors
in operation and two units are under
construction. Additional reactors are planned,
to give a five-fold increase in nuclear
capacity to 40 GWe by 2020. The country aims
to become self-sufficient in reactor design
and construction, as well as uranium supply
and fuel production. Electricity demand is
growing at 15% per year. Nuclear cap-acity of
36,000 MWe is planned by 2020. Mainland China
is starting to rely heavily on imported
uranium to fuel its nuclear power programme.
In Taiwan, six nuclear power reactors
operate and two advanced reactors are to be
ready within a few years. China’s nuclear
market has expanded at a rapid rate. From 1996
to the end of 2003, not one company has
brought a single new reactor on line in the
US, nor cleared a patch of ground to begin
building, nor applied for a licence to start
construction. Since January 2002, China has
brought six on line in China, plus one reactor
in Pakistan. The question is no longer: can
China’s nuclear industry maintain its current
growth rate? The question now being asked is,
can China accelerate that growth rate to meet
the even more ambitious pace of its new energy
plan?
There is also considerable maturity in the
Indian nuclear industry. No longer are there
concerns about international supervision and
adherence to international transparency norms.
The recognition of the distinction between
peaceful uses of nuclear energy and other
uses, by the US, marks a distinct shift in
opportunities to separate these two
initiatives. India stands to gain in
technology and equipment. Most im- portant,
with a deal such as this, India can also shop
around — an oppo-rtunity hitherto not
available. The target of 20,000 mw of nuclear
power generation capacity suddenly app-ears to
be feasible and achievable.
Notwithstanding these positives, there are
several issues that are causes for concern.
The first is the Atomic Energy Act of 1962,
that reserves the generation of power from
nuclear energy entirely to government and
government-owned entities. Thus, the receiver
of the technology, would, in all likelihood,
be an Indian public sector entity. While the
sourcing would have to be from private
entities in the US, such as Westinghouse. This
interface of foreign private and Indian public
sector has always suffered from implementation
problems. It appears to make sense to revisit
the Act to consider private-public
partnerships that will allow technology
transfer, absorption and plant operation to be
efficient.
The concern is that the atomic energy
establishment in India has always been an
insular entity, lacking transparency, and its
record of project completion has been very
poor. The question is whether government will
be able to recognise the limitations of its
existing structures and allow the larger
strategy to dictate the emergence of new and
relevant structures.
Second, and equally important, is the
concern that in matters of defence and
strategy, the US has been less than reliable
in the past. Our strategists have always been
concerned about sourcing equipment from the
US, for fear of supplies drying up on some
change in US policy. There will need to be
clear and transparent backing of the US
government to enable Indian industry to
consider the sources as reliable and
dependable in the long term.
The third is the issue of fuel. It is a
pity that environmental activists have held up
for over a decade the exploitation of
resources. It is amazing that the sovereign
state, with all the muscle at its command, has
not been able to resolve and settle issues
regarding the opening of the new mines. Due to
this, there is likely to be considerable
dependency for fuel in the years to come. It
is important to address this issue firmly and
secure control over our own natural resources.
There is a great opportunity that has
opened up—it is to be hoped that it will be
seized and acted upon.
The writer is a former finance secretary
and economic advisor to the PM |
