October 4, 2008

N -Deal to Open Investment Tap From the Private Sector

Prabhakar Sinha & Rupali Mukherjee

NEW DELHI: The Indo-US nuclear deal will not only help the country in generating nuclear power but also give a technological edge to Indian industry in manufacturing of medicine, textiles and other high-tech sectors.

The deal has opened the ways for India to sign nuclear fuel and technology supply treaty with a number of countries. As India is a big market, a number of countries will come forward to sign such treaties to create opportunities for their companies. While, France has already signed the nuclear fuel and technology supply treaty with India, Russia, it is learnt, is also ready to sign similar treaty.

The country can expect massive investments, which go a long way in resolving India's power crisis, a major shortcoming in the drive to attain high growth. Finally, it will open the doors for foreign investments in the nuclear power generation. However, a senior analyst pointed out that to attract investments India will have to put its distribution system in order. He said as nuclear power will be costlier than the thermal power, state electricity boards might not be interested in buying power from nuclear plants.

Therefore, he said, investment will flow in, only if the central government gives sovereign guarantee to nuclear plant developers for the payment of power.

According to the Planning Commission, the deal will enable India to set up capacity of 15,960 MW by 2017 taking total capacity to around 20,000 MW. At present, India has installed nuclear capacity of 3,779 MW. But, most of the plants are operating at half of its capacity because of unavailability of raw material, uranium.

Ficci secretary general Amit Mitra said India has the potential to generate 60,000 MW of nuclear power over the next 25 years, which needs an investment of over $100 billion. According to Asscochm, a minimum of Rs 2 lakh crore investments would come in Nuclear Power Generation Sector in next 15 years.

Mitra said around 200 medium and small companies are expected to get into the act as ancillary producers with the big companies, thereby giving a new direction to efficient and cheaper power production in the country. At the same time, the government will have to amend laws to allow the private players to enter in the nuclear power sector.

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