5 February 2009 – France’s Areva claimed a first victory in the race to grab a share of India’s lucrative nuclear market with the signing of a multi-billion dollar agreement to build up to six atomic reactors.
According to Reuters, Areva signed a memorandum of understanding with Nuclear Power Corp of India on Wednesday to build at least two Evolutionary Power Reactors (EPRs) in a deal worth more than €8bn euros ($10.4bn).
Areva expects to finalise the deal later this year.
“The price (for the two reactors) will be clearly above the €8bn in China. The China deal was more than a year ago and the market has moved on since then,” a spokeswoman said.
Areva sealed a record €8bn deal with the China Guangdong Nuclear Power Corp (CGNPC) in November 2007, agreeing to sell China two new-generation reactors and provide atomic fuel for nearly two decades.
Nuclear Power Corp has an option for four more reactors, implying the Indian deal could potentially be worth some €30bn in total.
S.K. Jain, chairman of Nuclear Power Corp, said the six reactors would be worth 600bn rupees ($12.3bn) in total, but it was not immediately clear whether this included engineering works or if it was the price for the reactors alone.
“It’s probable the Indians secured a very good deal given that reactor makers compete pretty viciously with each other, but this ($12.3bn) number seems very low. It depends on what you include in it,” said analyst Alex Barnett at Jefferies International.
Strong economic growth has led to a surge in demand for power in India, which currently relies on imported oil for some 70 per cent of its energy needs.
India expects to double the nuclear power’s share in its electricity grid to 5-7 per cent in the next two decades.
“India and China are the two fastest growing nuclear markets in the world so it is really important that Areva gets a footprint there,” Barnett said.
The agreement laid the ground for the construction of at least two 1650 MW EPRs at Jaitapur in India’s Maharashtra state, with an option on four more.
The Indian agreement, which comes four months after Paris and New Delhi signed a bilateral agreement on the development of a peaceful use of nuclear energy, also includes life time fuel supply for the reactors Areva will build there, Areva said.