Sunday, March 8, 2009

Hot fuel could freeze U.S. nuclear trade with India

India - No reactor deals without reprocessing

India US nuclear dealU.S. vendors of nuclear reactors seeking to build at least 10 GWe of civilian facilities in India to generate electricity may be frozen out of the market over the issue of reprocessing of the spent fuel from the plants.

In an exclusive report in The Hindu March 6, Siddharth Varadarajan writes that India has formally requested the start of negotiations with the U.S. over “arrangements and procedures” under which American spent nuclear fuel would be reprocessing in that country. India wants to keep the uranium to insure adequate fuel for its rapid expansion plans of atomic energy facilities.

The terms of the “123 agreement” on bilateral nuclear cooperation, Washington provide just 18 months to complete the negotiations.“ This means that unless the parties agree to an extension, the talks have to conclude with an agreement by August 2010. It is the first test of the deal negotiated by the Bush administration with the new Obama administration.

The 123 agreement gives India prior consent to reprocess spent nuclear fuel in principle. It stipulates that this right can only be exercised if and when India builds a facility dedicated to reprocessing safeguarded nuclear material under IAEA safeguards.

The second part requires an agreement with the U.S. on “arrangements and procedures under which such reprocessing will take place in this new facility.” The U.S. is also seeking the right to approve the design and operating procedures for the facility.

If India started work today, it would be at least three-to-five years before it could break ground and, in all likelihood, somewhere between 2018-2020 before the first fuel bundle could be processed by the plant. The expected capacity could be about 500 tons per year.

Not your ordinary diplomatic horse trading

Shyam Saran (source BBC)The Hindu reports that on Feb 3, Foreign Secretary Shiv Shankar Menon [right] wrote to Under Secretary for Political Affairs William Burns invoking this provision and asking the U.S. to propose dates and an agenda.

The Hindu reports the request is important for two reasons. First, because it will provide the first test of President Barack Obama’s intentions for balancing traditional American non-proliferation concerns about reprocessing with the broader foreign policy interests that make up the strategic partnership with India. Second, the prospects of American companies winning a significant share of the multi-billion dollar Indian market for nuclear energy “depends crucially on India being satisfied that it will be able to reprocess the spent fuel which accumulates from the running of U.S.-supplied reactors.”

Last January during a visit of an officially sanctioned U.S. trade group to India, Atomic Energy Commission Chairman Anil Kakodkar went out of his way to tell the delegation there would be no reactor purchases without reprocessing.

USIBC logoOfficials from the U.S. India Business Council (USIBC) later confirmed to the Washington Post this conversation took place.

"This means that some of the American nuclear fuel suppliers will not be able to make some very near-term sales of uranium to India directly. And India needs fuel desperately," Ted Jones, a USIBC spokesman, said. "But the official was clearly using this as a leverage to get the reprocessing rights."

India sees the reprocessing issue as an essential element of insuring a reliable supply of nuclear fuel for its civilian reactors. India also has ramped up its R&D efforts to design and build ‘fast reactors’ which could burn MOX fuel.

Some Russian and French reactor exports to India reportedly come bundled with reprocessing consent. If the U.S. fails to resolve the reprocessing request to India’s favor, it could have the effect of freezing U.S. vendors out a market that the U.S. opened in Fall 2008.

Other hurdles in terms of U.S. nuclear trade with India include apparent failure to resolve long standing disputes over protection of intellectual property, technology licensing, and tax and tariff rules.

Larsen in talks with three firms to build India’s reactors

Larsen & Toubro Ltd. expects to sign separate initial pacts soon with General Electric, Areva, and Russia's state nuclear firm Rosatom to build nuclear reactors in India, a senior executive with Larsen said.

MV Kotwal L T"We are engaged in dialogues to make nuclear reactors in India," M. V. Kotwal, (right) senior vice-president of heavy engineering at Larsen, told Dow Jones Newswires.

Larsen has also signed deals to build nuclear reactors with Atomic Energy of Canada Ltd. (AECL) and Westinghouse.

"I expect the orders for nuclear reactors to start coming in about 18 months time," Mr. Kotwal said.

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