Special Report-India US and Tarapur

Business India, October 25-November 7, 1993

Fuel for Controversy

The nuclear energy industry finds itself in an impossible situation strapped as it is for both fuel and funds. It has survived against great odds and could do much more in terms of energy generation if things improved.

Shivanand Kanavi

A delegation from the ministry of ex­ternal affairs, which also included the chairman of the Atomic Energy Commission returned on 7 October 1993 from Washington after the latest round of discussions with their US counterparts. The members of the team didn't have much to celebrate on their return, for negotiations between India and US continue to be dead­locked over the issue of Tarapur fuel.

Meanwhile, on 24 October 1993, the treaty between India and US for nuclear co­operation, that involved the setting up of two Boiling Water Reactors and supply of low enriched uranium (2.4 per cent U235), expires. The 30-year-old treaty has seen many ups and downs in Indo-US relations in the field of nuclear energy, which started with co-operation but are now bogged down in contentious negotiations, if not outright confrontation.

Under the agreement, after calling for global tenders General Electric, the US built two Boiling Water Reactors, each capable of producing 210 mw of electricity. The two reactors went critical in February 1969 and commercial operations began on 28 October 1969.

Following the Pokharan blast in 1974, and the passing of Nuclear Non-prolifera­tion Act by the US congress in 1978, Tara­pur faced severe problem regarding spares as the US placed an embargo. This led to the Tarapur reactors getting downgraded from 210 mw to 160 mw.

The US applied the 1978 Act retroac­tively and stopped fuel supply from 1983, ten years before the contractual obligations ended. The reactors require 40 tonnes of fuel each. Ten tonnes of it need to be changed every 18 months. The spent fuel if chemically processed, this highly radioac­tive waste will yield Plutonium 239. This isotope of plutonium can be used to make nuclear weapons or to run a nuclear reactor. Hence, the spent fuel in nuclear industry attracts more attention than the actual fuel itself.

To prevent misuse of this plutonium for a weapons programme, a strict accounting procedure has been set up by the Interna­tional Atomic Energy Agency. IAEA in­spectors periodically visit the country and meticulously record the movement of every gram of uranium and plutonium from the fuel assembly stage to storing, loading in the reactor core and storage of spent fuel. In Tarapur reactor they even have two remote controlled cameras continuously video re­cording the fuel elements.

A tripartite agreement was made be­tween India, US and IAEA that the latter will subject Tarapur reactor fuel to safe­guards. The arrangement has worked so far with no friction between IAEA and India, In fact, Hans Blix, director general of IAEA said in Bombay recently, "There have been extremely good relations between Indio and IAEA. Even as the tripartite agreement expires, India and IAEA have entered into 0 bilateral safeguards agreement in anticipation of successful conclusion of a tripartite treaty.

The problem then is with the US. It tried to persuade India to sign the NPT, which would have placed all its nuclear establish­ments, including those built indigenously and supplied with indigenous fuel, under the "safeguards". India has staunchly re­fused to sign the treaty on the grounds that it discriminates between weapon states and others.

R. Chidambaram, chairman of the Atomic Energy Commission, takes pains to explain that India is not for proliferation 01 nuclear weapons. He says, "India does not agree with NPT in its present form which only seeks to prevent horizontal proliferation while doing noth­ing about vertical proliferation." If the US did not want to com­plete the contract, then India could have exercised its right to remove safeguards from the spent fuel in Tarapur and repro­cessed it in 1983, enabling it to use the recovered plutonium whichever way it wanted.

The US averted such a con­frontation by allowing France to supply the fuel for ten years. The uranium hexafluoride gas that used to come in cylinders from France was converted into uranium dioxide powder at the Nuclear Fuel Complex, Hyderabad. Here it was converted to pellets and loaded into fuel rods made of zirconium alloy. This was a major advance in India's fuel fabrication capability from the early days when the entire fuel used to come in the form of fabri­cated fuel rods from the US.

However, in 1992, France also signed the NPT, along with China and South Africa and several others, and brought further pressure on India to put all its installations under full scope safeguards, Since India did not agree to do so, France also did not want to continue the supply after the end of the contract in October 1993.

India has a strong legal case in going ahead with reprocessing the Tarapur fuel and extracting plutonium from it. It has built adequate facilities for the same in Tarapur. Since India has not yet developed large scale uranium enrichment facilities, it wants to run the Tarapur plant with a mix­ture of uranium and plutonium oxides called MOX fuel. Some bundles fabricated with this fuel have already been tested at the Cirus research reactor in Trom­bay. After trying out a couple of bundles in the core of the power reactor, India plans to use MOX bundles on a large scale in 1995.

The present stocks of low enriched uranium will last till then and, in fact, may be another year if managed prudently. India surprised the US team in Wash­ington recently by offering to continue the bilateral safeguards with IAEA for another two months and later conclude an annual agreement regarding the same. "Since the plutonium extracted from Tara­pur is put back into Tarapur under IAEA safeguards, there can be nothing more non­-proliferative and peaceful than this," says Chidambaram.

Atomic energy sources indicate a soft­ening of US stand on reprocessing and are hopeful of an amicable solution to the vexed issue. As a quid pro quo, Bill Clinton's administration seems to be interested in enlisting Indian support to a new proposal to agree to enforce a cut-off on the produc­tion of all weapon grade fissile materials like highly enriched uranium and plutoni­um. Chidambaram says, "We have no ob­jection in principle to this since it does not affect our peaceful nuclear energy pro­gramme and, for the first time, sounds non- discriminatory between wea­pon states and non-weapon states. However, we have yet to see the detailed proposal."

The international confer­ence to review NPT is coming up in 1995 and it is possible that with the current push be­ing given by the Clinton administration towards vol­untary moratoriums on tests and other confidence building measures, reduction of tension in West Asia, etc, there may be a wider consensus on how to achieve non-proliferation and an agenda for gradual disar­mament. If such a thing does come into being, then India might have very little moral justification for not signing the NPT in its new avatar.

Indian strategy to be energy indepen­dent and the embargoes imposed on transfer of nuclear technology to India after Pokha­ran, led to considerable development of indigenous capabilities in instrumentation and adaptation of the Canadian Pressurised Heavy Water Reactor technology.

However, from a plant engineers' point of view, Boiling Water Reactors are much easier to operate, Though Tarapur itself was state-of-the-art in BWRs in the '60s, by now six new generations of BWRs have come out and none of the original genera­tion are still working in the world except at Tarapur. The reason is that while BWR-I had a capacity of 210mw the present BWR-6 are advanced in every way be­sides producing 900 mw to 1,100 mw.

Due to the technology em­bargo India has totally missed these developments, It is the sheer ingenuity of Indian nu­clear engineers that has led to upgradation of Tarapur to BWR-3 level in various re­spects, Besides, while MOX will get rid of the problem of storing highly toxic plutoni­um, the already downgraded Tarapur reactor will be further downgraded power wise since the loading cycle for MOX is much shorter (nine months instead of the existing 18 months), thereby leading to further loss of generation.

Interestingly, the rest of the BWR-I s were shut down not because of any inherent design problems or accidents but due to the fact that operating costs for a 100 mw plant of that generation are nearly the same as that for a 1,000 mw plant. They proved uneconomical. However, in an energy-starved India, 320 mw is 320 mw.

The bane of Tarapur, as with the rest of nuclear power programme, has not been technology, but the tariff structure. As K. Nanjundeswaran, exec­utive director, corporate planning and co-ordina­tion, of the Nuclear Power Corporation, ex­claims. "If we are not given a rational tariff structure that will help us generate funds f(x plant modernisation and ex­pansion, then it be­comes meaningless to say that the govern­ment will not give us budgetary support and we have to expand based on internal re­sources."

B.K. Bhasin, chief superintendent at Tara­pur, is proud that the once barren industrial landscape of Tarapur is now filled with over 1,500 medium and small scale industries involving an invest­ment of over Rs.2,000 crore. At the same time, he rues the fact that the Maharashtra State Electricity Board, which pays 57 paise per unit to Tarapur, then sells it outside the plant gate at Rs. 1.75 to the adjoining indus­trial units. Says Bhasin, “The whole ap­proach towards power product ion has been altruistic. It is not based on economics leave alone market economics. After all, when we started production we were forced to sell power to Gujarat and Maharashtra at the rate 01'5 paise per unit. In those days, at least there was budgetary support. But in today's atmosphere of lessening state intervention in all fields, which translates to no budget­ary support to PSUs, how can we continue the same policy?"

S.K. Chatterjee, managing director of the NPC. claims that dues from the SEBs now stand at Rs.530 crore. Thermal power companies gets World Bank loans, but not nuclear power companies. "If we have to borrow from the market at the high interest rates prevailing and then, considering the world average of 7 to 8 years for the con­struction of a nuclear power plant, there is no way I can expand. Already a number of my projects are stuck for lack of funds," says Chatterjee.

He adds, "The Tarapur story does not end with reactors 1 and 2 or MOX. The next stage of reactors 3 and 4 will be the first 500 MW Pressurised Heavy Water Reactor that will use natural uranium as fuel. The reactor design group in Bhabha Atomic Research Centre has designed the new reactor and the main elements of the reactor have already been constructed by L& T and Walchandna­gar and others. The land is being acquired next to reactors I and 2 and the infrastruc­ture built for the new reactors is already in place. At such a moment, when one can reap the benefits of earlier investments in build­ing the infrastructure from scratch, for a modern nuclear power station, the corpora­tion is strapped for funds. It is very frustrat­ing." Chatterjee, incidentally, shared the excitement in the Golden Age of nuclear energy in India in the '50s and '60s, with Bhabha and others.

"I need about 3,000 mw of generating capacity to start earning profits of the order of Rs. 250 Crore to Rs.300 crore on which I can borrow further and expand," says Chat­terjee. "I need an investment rate of about Rs. 1,000 Crore a year to complete my projects. We have already placed orders and a number of items are ready under the advanced procurement schemes. But due to lack of money now I am stuck."

Having been spawned under the highly secretive Atomic Energy Act that prohibits even the Parliament from probing the De­partment of Atomic Energy too deeply, the atmosphere so far in the DAE has been very complacent. NPC, however is bringing in the first breeze of a corporate culture. Peo­ple in the headquarters or plants and con­struction sites talk frankly without looking over their shoulders.

So what is the way out of this resource crunch? NPC is looking at many options. Strategic Con­sultants, a financial con­sultancy, is working out ways to raise funds. One possibility is to set up separate corporations in the joint sector to operate the Tarapur complex. It would be easier to raise money when there is al­ready some generating capacity and, on top of it, one will get new capacity which will be paid for at new rates. New plants like Kakrapar are paid Rs.2.13 per unit of power.

Whatever be the strategy chosen, 25 years af­ter India's nuclear adventure began, it is clear that with minimal support much more can be done. In recent years, India's nuclear scientists have not been treated like the unalloyed heroes they were in the' 50s and '60s. As Nehru perceptively remarked while inaugurating the Apsara reactor in 1957, "In Greece, there were the mysteries and the high priests, who apparently knew about these mysteries. They exercised a great amount of influence on the common people, who did not understand them. Now we have these mysteries which these high priests of science flourish before us, make us either full of wonder or fear."

The position of the high priests of nucle­ar science has been sullied worldwide af­ter Chernobyl and Three Mile Island. Therefore, it is to be expected that they would not get the same adulation as they got before. However, looking at all sides, Indian nu­clear scientists have performed creditably and could perform even better if they lose the bureaucratic outlook that has dogged them for the last 40 odd years.