India - U.S. pact likely to miss deadline

India - U.S. pact likely to miss deadline

Why in news?

The India-U.S pact for buidling six reactors in A.P. by June 2017 is now facing uncertainty.

What are the issues?

• The reason for the concern is that the Indo-U.S. nuclear arrangement hinged on two major factors.
• In the East: The completion of the India-Japan Nuclear Cooperation Agreement (NCA), as Toshiba and other suppliers for reactor parts are bound by Japanese laws and by the actual contract to be negotiated by the U.S.-based Westinghouse.
• While the NCA was signed in Tokyo in November 2016, it is yet to be ratified by the Japanese Diet (Parliament).
• Japanese officials told The Hindu that the NCA was expected to have been ratified in early March 2017, but has been derailed by a controversy over accusations on Japanese PM.
• Even after the India NCA is tabled, we can still expect to see some opposition in Parliament, as this is the first such agreement with a country that has not signed the Non-Proliferation Treaty.
• In the West: The questions are growing over the impact of a possible bankruptcy filing by Westinghouse over massive $6.3 billion losses the company incurred due to cost over-runs.
• When asked, the U.S. Embassy declined to comment on how the bankruptcy issues would affect the deal.

What is the history?

• Following former U.S. President’s visit to India in January 2015 and Indian Prime Minister’s visit to Washington in June 2016, the two sides had agreed to work toward finalising the contractual arrangements by June 2017 for six reactors to be built in Andhra Pradesh by Toshiba-owned Westinghouse and the Nuclear Power Corporation of India Ltd (NPCIL).
• When completed, this was to be the first operationalisation of the Indo-U.S. civil nuclear deal, which was announced in 2008, and proof that both sides have effectively sorted out all their issues, including over the liability that suppliers must accept in the event of an accident.

What does the issue underscore?

• Westinghouse’s near-bankruptcy is part of a larger pattern of worldwide cost overruns and delivery delays across the nuclear energy industry.
• The cost of importing reactors, relative to those based on indigenous design, is another concern.
• Land acquisition issues remain, along with the need for large water reservoirs for the reactors, which will only grow if the govt goes ahead with its plans for 55 reactors of 63,000 MW in total by 2032.
• In addition, there are concerns about a possible tsunami scenario along the Andhra coast.
• Thus, India had little control over the above mentioned delays. So, rather than seeing the delays as a setback, the government and officials should use this as an opportunity to re-examine the country’s engagement with nuclear energy for future needs.

What is the way forward?

• With rapid progress in technology in other renewable energy sources such as wind and solar power, the collapse of oil prices and the expansion in gas projects as a viable and clean alternative, that promise of nuclear power has thus dimmed.
• Unlike nuclear plants where nothing can be transmitted until the whole plant is complete and attains critical status, in renewable energy, it can be made available in smaller units.
• This is the best time for India’s energy planners and government to use the breathing space provided by the delays and take a long, hard look at the cost-benefit analysis on the nuclear power balance sheet.

Source: The Hindu