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Home News Power Sector News Lesson from Enron - Private participation will be limited in nuclear power generation

Lesson from Enron - Private participation will be limited in nuclear power generation

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Enron debacle haunts like ghostAlthough Central Government is strongly advocating for private sector participation in nuclear power generation, the equity of private sector will be limited to avoid a case like Enron's Dabhol power project where the plant gets stuck due to bankruptcy of the promoters and power purchase pacts get mired in controversy over very high power tariffs. In the nuclear arena, once reactors were set up there can be no going back on the project or power production. Another concern is who will bear the responsibility -- and cost of rehabilitation — in case of collateral damage from any accident.

Changes in the existing law being planned envisage all private participation through only joint venture with state- owned Nuclear Power Corporation and limit their investment to 26% equity in such ventures.
Atomic Energy Commission (AEC) chairman Anil Kakodkar said only experienced private companies will be allowed in nuclear power generation.”Private players with experience in nuclear power generation alone can get into this segment and that too as a 26 percent stake holder in joint ventures with Nuclear Power Corporation of India (NPCIL),” Kakodkar told reporters.

“We don’t want another Enron episode. Once a nuclear reactor goes on stream, it has to be attended. We can’t afford the private party going away locking the plant gates,” he said, referring to US energy giant Enron that walked out of the Dhabol project in Maharashtra before completion.

“If light water reactors (LWR) are set up in convoy mode, standardisation will be of great economic value. The higher the reactor capacity, the lower will be the per megawatt cost. Standardisation will also depend on the vendor’s product portfolio,” he added.

According to Atomic Energy Commission chairman Anil Kakodkar, nuclear power plants could come only through joint ventures and private sector would not be allowed to set up units on their own. NPC is at present the sole operator in this area. Since it is state-owned, all liability in case of damage from an accident is indirectly taken by the government. Unlike other industrial units a mishap in nuclear power plant can cause widespread damage which can affect generations of population. That's why the liability is considered huge and it is felt that no private entity alone would be able to bear the burden.

These changes could cap the liability in case of any disaster and specify the damages that may have to be paid. Majors such as the Tatas, Anil Ambani's Reliance Energy and state-owned NTPC have evinced interest in nuclear power generation. Entities sucha s L&T and Bhel are already in talks for setting up joint ventures to manufacture equipment for N-plants.

NPC now has an installed capacity of about 3,380 mw but is hamstrung for fuel. Interestingly, the joint venture proposes a manufacturing capacity that can also cater to demand for such special steel and forgings from thermal power plants. This too is significant as the power sector is in the process of inducting the supercritical technology of installing 660-800 mw capacity turbines and boilers.

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