Friday, January 25, 2008

India serves fig leaf to Sarkozy on state visit

A deal is not a deal unless it involves real money

Indian Prime Minister Manmohan Singh and French President Nicolas Sarkozy agreed, during a state visit this week, to discuss a civilian nuclear-cooperation agreement, which may help India to plug a power shortage using nuclear reactors.

While Sarkozy isn't going to duplicate the $12 billion deal inked with China last November, he's still the best nuclear salesman on the planet. That said what he got for his trouble was a plate full of fig leaves and little else to show for a high profile state visit. He didn't even get to bring along his new companion, a former super model, since the Indian government couldn't figure out how to work her into its diplomatic protocols.

However, the French discussions with India on nuclear issues will likely go nowhere unless India can make its case with the Nuclear Suppliers Group (NSG). That's only going to happen if India agrees to sign the Nuclear Nonproliferation Treaty. Since India has given no indication it is ready to do so, the talks are more or less diplomatic fig leaves for a fundamental problem for India's energy future.

Nevertheless, Bloomberg wire service reports France wants to generate a global consensus for India to get a waiver from the International Atomic Energy Agency (IAEA) that will allow the country to use civil nuclear energy, Sarkozy said at a news conference with Singh in New Delhi. The leaders did not give a time frame. What they are trying for is to use a separate arrangement involving IAEA inspections of India's civilian nuclear power plants as a substitute for signing the treaty.

India knows it needs civilian nuclear technology from the U.S., France, Russia and other nations to meet its target of adding 40,000 MW of nuclear power by 2020. India is hoping the IAEA agreement will open the door to agreements to move forward. That's a lot of megawatts, and generating it will require a lot of nuclear fuel. India needs some kind arrangement to get the fuel, and it is hoping the French leader can make it happen for them.

Bloomberg reports that C. Uday Bhaskar, an independent strategy analyst in New Delhi, said "France has been a very valuable voice, supportive of India's aspirations in the nuclear domain. The possible nuclear agreement with France shows that India is opening up to the global nuclear market."

Sarkozy is determined not to come home from India empty handed. If he can't build a reactor in India, he'll build one for India in France. While India is trying to find a path forward to meet its nuclear power ambitions, the next best thing to building a reactor there is to build one in France and hope to transfer the lessons learned to India. The two nations agreed that India will take part in building an experimental nuclear reactor in France, Singh said.

More wishful thinking emerges from the diplomatic speak. France will back offers from Areva, the French nuclear plant maker, to sell reactors to India after the IAEA agrees on safety rules and the country moves on to an "operational phase,'' Sarkozy said. It doesn't take much to realize that the French leader is intent on blowing right past the barriers that stopped the U.S. negotiations dead in their tracks.

The U.S. tried to develop a deal with India for two years, and all it got for its effort was a giant headache. The U.S. deal signed in principle in 2006 has been held up by differences over whether India would get a perennial supply of nuclear fuel, be allowed to reprocess spent fuel and have the right to conduct nuclear tests. Now with key negotiator Nicholas Burns leaving government service, it is unlikely anything further will be done on that end. Of course the Indian domestic political scene also contributed to the demise of the agreement.

So India has a problem. It wants to buy nuclear reactors, but it's national pride prevents it from signing on to the Nuclear Nonproliferation Treaty. Asking for a pass on it to get nuclear fuel didn't work with Australia, a member of the NSG, which last month made it clear it would not sell uranium to India because of this issue.

Reactors are going to India one way or another

All of this back-and-forth about India's unique approach to meeting international obligations hasn't stopped it from planning to buy nuclear technologies. State-run monopoly atomic energy producer Nuclear Power Corp. of India is in talks with France's Areva and three other overseas companies, to buy reactors, Nuclear Power Chairman S.K. Jain said last August.

Nuclear Power plans to place orders worth $14 billion to buy Areva's reactors, the AP1000 series of reactors from Toshiba Corp.'s Westinghouse Electric Co., the ABWR' series from General Electric Co. and the Russian VVR 1,000 reactors made by Rosatom. That's a lot of reactors in anyone's order book.

India signed a similar civilian nuclear agreement with Russia, which is helping India build two 1,000 MWe light water reactors at the Kudankulam nuclear power station in the southern state of Tamil Nadu. It appears the only exporter of nuclear technologies who is doing business in India wasn't even part of Sarkozy's visit.

Touring the Middle East plugging for reactor sales

In case you missed it Sarkozy made a grand tour of the Middle East earlier this month setting up potential new deals in the region that may take a decade or more to reach maturity. The New York Times reported that it is part of France's plan to reassert its role in the global economy and international political realm. The part about the reactors was reported by the Times as follows.

Mr. Sarkozy has signed a cooperation deal with the United Arab Emirates, the first step in building a $9 billion nuclear reactor there, and he has offered civilian nuclear cooperation to Saudi Arabia, Algeria, Egypt, Libya, Tunisia, Jordan and Morocco. In the wake of criticism that transfers of nuclear technology anywhere could be used on bomb programs, French officials rushed to make clear that it could take 15 years before those reactors are built, and to add that in some of the countries, they probably won’t be built.

Next stop South Africa

Reuters reports the next stop for the globe trotting Mr. Sarkozy is South Africa. He will visit South Africa February 26 & 27 accompanied by Areva CEO, Anne Lauvergeon. French nuclear power Areva will lead a consortium that will bid for the construction two European pressurised reactors (EPRs) in South Africa.

The consortium will also include French building conglomerate Bouygues, French state-owned electricity group EDF, and South African construction company Aveng Ltd. The consortium will file its bid at the end of January 2008. Areva's rival in the tender will be U.S.-based Westinghouse, owned by Japanese Toshiba.

South Africa announced in 2006 a plan to increase its electricity generation capacity to 40,000 MW by 2022. The electricity shortage in the country results in frequent blackouts, which is a major source of embarrassment for the government. The blackouts reportedly are cutting off electricity in major cities up to five hours a day. Economic growth in the country is being impacted by the lack of electricity.

1 comment:

CKR said...

It's a bit more than national pride that keeps India from signing on to the NPT.

As the NPT now stands, India would have to sign on as a non nuclear weapon state. Giving up its nuclear weapons would be unacceptable to India.