The Indian Economy Blog

March 23, 2006

Private Nuclear Energy

Filed under: Energy,Infrastructure — Yazad Jal @ 1:37 pm

Indian Express reports:

In a bid to encourage private investment, including from abroad, in the country’s ambitious nuclear power programme, the Department of Atomic Energy is amending a law which prohibits such activities.

“We have been working on the possible amendments to the Indian Atomic Energy Act 1962 for the last five years and now we are trying to speed up the process,” Chairman of Atomic Energy Commission and Secretary of Department of Atomic Energy (DAE), Anil Kakodkar, told PTI here today.

The amendments would enable and encourage private participation in the country’s nuclear programme in the form of investment, both from India and abroad, to generate 20,000 mwe of power by 2020, he said.

A good step which would boost competition and investment in the energy sector overall. Both Ratan Tata and Anil Ambani have shown interest in private nuclear power generation.


  1. Sure they did, any one else not surprised, :-)

    Comment by Guru Gulab Khatri — March 23, 2006 @ 10:59 pm

  2. Sure they did, any one else not surprised, :-)

    forgot to quote both tata and ambani have shown interest.

    Comment by Guru Gulab Khatri — March 23, 2006 @ 11:01 pm

  3. India’s current installed generation capacity is 120,000 MW. BY 2012, the country would need 100,000 MW more to meet the power demand.

    Generation capacity is currently growing only by 3% p.a.

    Given this, India needs this nuclear deal as much as America.

    Also, the Transmission and Distribution losses (T&D) is a whopping 35% of total generation.

    The nation needs to plug this diahorrea as urgently.

    BTW, a friendly pointer – Mega Watts is denoted as MW, i.e., in upper case. Lower case, mw, means milli watts.

    (Source: The stats are from a recent communique from the Ministry of Power)

    Comment by Shrini — March 24, 2006 @ 11:18 pm

  4. Generation capacity may be only growing 3% a year, but this is not due to lack of nuclear technology. We have vast reserves of coal. True, utilizing coal will result in environmental woes but it is more realistic that a sizable portion of our future energy needs can be met by this. Lets not pretend that once nuclear technology becomes available that our generation capacity will sky rocket up.

    Comment by Patel — March 25, 2006 @ 6:34 am

  5. Patel

    That’s true. Not to talk about the vast amount of water resources in the North-East. The region can easily add a few thousand MWs of in hydro power. This alone will not be suffficient, however. Hence, the additions through nuclear power.

    But again, unless the 35% loss occuring in T&D area is plugged, no amount of new initiatives will result in demand-supply match.

    Comment by Shrini — March 25, 2006 @ 2:27 pm

  6. well i have few points to add:
    1.When we talk about nuclear energy MWe is the convention so there is nothing wrong in article.
    2.All this loss of 35% thing is crap.No electrical engineer in country will agree to this fact in private.This loss thing is simple cover up to eneficciency of geneartion companies as well as massive underrecovery of bills.Just separate the transmission ,distribution and generation then you can see the difference.
    3. When many players are there and we move from paucity of power to real competition among various power generators then customer will have option just like telecom.At present there is a single distribution company and it chooses from which generation company it should buy power so customer doesn’t have that musch leverage. But when ideal situation arrives a customer would be able to choose from which company he should buy power on a real time basis.Now this scenorio involves lot of issues in transmission and distribution but sadly no where in India including IITs this kind of reserach is being done.
    4.All that potential of NE India looks good on paper but hydel plants require massive investment and given law and order conitions in NE no FDI has moved in those areas.All small power projects are being financed by GOI which obviously suffers from fund crunch and corruption.Sometimes I simply don’t understand people of NAgaland and mizzoram.Okay u don’t want to be with Indai but u r highly educated and hopefully understands importance of tourism and economic developmetn .Why block these activites??
    5.In heart of India no big hydel power is possible as things stand today.First of al lthere is big scarcity of water.Secondly govt doesn’t have political will to act on plants like Baghliar and thirdly all these Medha PAtkar people who will do anything for few thousand dollars and international prizes.They have singleghandedly doomed Bhils of MP and Mahrashtere to perrennial poverty.
    6.Thanks to militant coal trade unionism no private equity will come in coal mining .So keep on using old techniques of mining which are highly western countries they are reopening abandoned mines with the help of new technology but in India there is no institute producing quality minnig engineers.And whatever little is produced therre are big bucks of softwre to wean them away from core where the so called fear of Bangalore bug comes into picture.

    Comment by Anshul — March 25, 2006 @ 9:34 pm

  7. Anshul

    1) MWe or MW is right. I was talking about the ‘case’ to use here. Lower case mw is wrong is my point.

    2) When you say T&D losses are just ‘crap’ and ‘cover-up’ what do you mean exactly? That T&D losses don’t occur at all? Imagine power being generated in a corner and transmitted to the grid several thousand miles away. There is dissipation on the way due to inefficient transmission lines. Add pilferage to it. It won’t be ‘crap’anymore if you do your arithmatic right.

    3) I don’t see what point you are trying to make. Customer choice is a separate issue. It is nice to have but the context here is demand-supply mismatch. And if you think T&D losses can be minimized by having multiple distribution companies, I don’t see the logic. I have pointed how T&D losses occur in my previous point.

    4 and 5) Dam constuction is not the only way for hydel power. There are plenty of natural waterfalls in the Northeast. Thousands of them. It is assumed, based on viability studies, that this region has a potential for atleast 50,000 MW in hydel.

    6) Even if we improve mining capacity, it is not going to solve the issue.

    a) Indian coal has high ash content. It is due to geogrpahical reasons and the sub-average quality can’t be attributed to any ‘militant trade unionism’ etc unfortunately. It takes 1 ton of Indian coal to boil 100 liters of water.

    b) Indian coal, since it has high ash content, can be an exterme pollutant to the envionment.

    Along the context: In thermal as well as nuclear models, the bottomline is water. Coal or fissile material is just a raw material to heat water. If India has a resource crunch in water as you say, even thermal and nuclear models will be unviable.

    Comment by Shrini — March 26, 2006 @ 2:20 pm

  8. Thanks Shrini,
    1.yes T&D losses occur but not at the extent of 35%. At most 5-10%.And with the advent of DC transmission which is bein implemnted in India big time this problem will diminsh more.Moreover if for the moment we admit that indeed losses are that high then all your NE power becomes useless as consumption will havve to take place in heat of India.
    2.As things stand in India today ,nuclear power plant have problem of fuel and technology thanks to our isolation for all these yrs.Yes there is scarcity of water but of drinking water and lack of its even distributino.Still thre are areas in Ganges planes,bihar ,WB etc which have 12 month rivers.We can establish nuclear plants over thr.MAin concern is fuel in this case.
    3.All this NE power potential looks gud at paper but u have not answered my basic question law and order and funding.No FDI has been made in NE inthis sector and if u want to utilize potential u need money.
    4.R&D thing is important because sooner or later private players will dominate market when SEBs become so sick due to populist measures that they will have to be shut down.We should prepare for that future right now.This is how all superpowers behave and an aspiring superpower should try to behave.

    Comment by Anshul — March 27, 2006 @ 5:56 pm

  9. How will private players dominate the market?
    Why will be SEBs be sick due to ‘populist measures’?
    Agriculture is an example why due to populist measures it is sick already
    and no one gives a damn.
    All populist measures have been sick for decades!
    Without beating basic economic into the head of dumbass populist,
    Chandrababu Naidu included(any one remember rice at an affordable price plan)
    How the F without invading Australia can any one pull that off?

    Comment by Guru Gulab Khatri — March 28, 2006 @ 6:56 am

  10. I am against the so called populist measures. But I think they have to phased out. True there has to be political will for that.

    A bit over 1/3rd of power generated is lost in T&D and that is a public figure now. This is widely discussed in all power summits.

    “No FDI has been made in NE inthis sector and if u want to utilize potential u need money.”

    When we think of investment in infrastructure, why do we automatically think ‘FDI’. I guess we have enough local players who can put together the required capital if the viability is right.

    But you are right about the region being a bit volatile and alienated. That would scare of any capital inflow – local or FDI. However, it is like investing in Afghanistan or Iraq. I think the private players who have developed a recent appetite for power generation (read Anil Ambani and the Tatas) should increase their risk tolerance levels.

    Comment by Shrini — March 28, 2006 @ 11:38 pm

  11. Privatization in india is conglometrization….
    Is it stage one only ? or this is the way its allways going to be in india.
    I hope its the former, but when i consider the fact that a good deal of them around forever.
    They tend to have a herdish mentality and DONT innovate.
    Is FDI led investment the holy grail?
    A large population like india should be able to self sustain investments.
    All foreign investments are subject to whims of the mba buzzword crowd…
    True innovation seems to happen at the grassroot level.
    It maybe possible in the power sector too.
    We also need to fix our taxation scheme.
    The local government has to beg for taxation from central which is a screwed up system
    Needs of Lahaul, Spiti regions are different from rest of himachal yet they both have to beg to delhi for funds.
    More autonomy at the district level can itself lead to more funding for electrical generation weather fully private or a mixed public-private infrastructure.
    I’d be more hopeful of that kind of organic solution gauranteeing longterm energy needs being met than FDI led growth….
    I am not saying throw them out, but rather allow a lot more players in.
    Your local rinku-shinku gajodhars may be able to jugaad a stopgap solution faster and more economicaly than a traditional model(partly b/c of our large and poor population)
    and may also aid in the development of some true revolutionary methods too.
    The traditional models including nuclear can easily serve the growing energy needs for the urban and manufacturing sectors.
    Indian 3rd tier cities have the incentives in place for inovative models to serve small cities and rural models in a cost effective way.
    That should be aided (although i am not sure how yet)…
    Just throwing my thoughts on the matter…

    Comment by Guru Gulab Khatri — March 29, 2006 @ 2:44 am

  12. Transmission losses – 30 percent losses seems unrealistically high (though I am no expert). However, the final distribution often involves extension cables, and then extension cables on extension cables – these are a very inefficient way to carry electricity to its end point.
    Concerning non-payment and pilfering – to the generator these may look like “losses”, though somebody does get to use the electricity. If these are included in the T and D loss figures then they exaggerate the real losses.

    Comment by johnny bonk — April 25, 2006 @ 4:05 am

  13. Hey,

    Any clue where we stand now that the Indo US nuclear deal is passed, in the sense that What is prohibiting private players in India from entering the nuclear energy market or nuclear reactor supply market?

    Comment by Rahul — April 3, 2009 @ 7:51 pm

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