Westinghouse teams visit revives hopes for Kovvada plant

Westinghouse teams visit revives hopes for Kovvada plant

Context

Officials of Westinghouse Electric, that went through bankruptcy proceedings last year, and was bought from Toshiba by a Canadian consortium last month, will visit India next week to discuss a reworked deal for nuclear reactors for the proposed nuclear plant in Andhra Pradesh’s Kovvada.

Relook at deal to build reactors for Andhra plant likely

It is understood that the team of executives and engineers will travel to Mumbai to meet with officials of the Nuclear Power Corporation of India Ltd (NPCIL), which is the Indian operator, and with government officials including those from the Ministry of External Affairs (MEA) in Delhi.

A bit of history

• The agreement that was expected to be signed by “July 2017” according to a deadline set in the Indo-U.S. joint statement of June 2016, had been further delayed after both Westinghouse Electric as well as Toshiba ran into major financial trouble.
• This led to Westinghouse filing for “Chapter 11” bankruptcy in the U.S. On January 4 this year, the company was bought for $4.6 billion — considerably lower than the $5.6 billion paid by Toshiba for Westinghouse in 2006, and indicates the extent of the company’s financial losses that could pose more hurdles for the India deal down the road.

Assurance in LS

• Discussions are in progress between NPCIL and WEC to arrive at a viable project proposal.
• In December 2017, the Andhra Pradesh government said it had completed the land acquisition for the Kovvada “nuclear park” where the reactors are expected to be built.

Only reactors

Westinghouse has announced it will no longer carry out the construction of the power project, but will only provide reactors and components.

A boon for Make in India

While this could be a boon for the government’s Make in India push, this may also delay the project as NPCIL looks for Indian partners who will carry out the construction.

Flexible yet complicated

• The reworked deal would also have more flexibility when it comes to sourcing cheaper components from Japan and South Korea, both of which India has civil nuclear agreements with, but the multiple contracts now required will complicate the NPCIL’s task, the sources added.

Financing woes

• Another complication could come from the financing of the Westinghouse agreement, which India expects America’s Exim bank (Export-Import Bank of the United States) to undertake.
• The Trump administrations nominee for Chairman of Exim bank was rejected last month by the U.S. Senate’s Banking committee, adding to the timeline woes of NPCIL.

History of problems with Westinghouse deal

• The Westinghouse deal, which first saw a Memorandum of Understanding signed in 2009, had originally run into trouble over the issue of supplier liability and of tracking nuclear parts.
• It was expected to go through after U.S. President Obama and Prime Minister Narendra Modi declared a “breakthrough” agreement in January 2015, where the governments claimed to have ironed out the issues to their satisfaction.
• However, the proof of the agreement would only come after the first “techno-commercial” agreement is signed between American and Indian companies.

Another agreement delayed

Another agreement with American company GE-Hitachi ran aground in 2016 after GE officials said they weren’t satisfied on the issue of liability in case of a nuclear accident.