GVK, Nuclear Power Seek GE, Westinghouse Reactors After Accord

By Paul Gordon and Archana Chaudhary

Sept. 9 (Bloomberg) -- GVK Power & Infrastructure Ltd. and Nuclear Power Corp. plan to buy reactors and equipment from General Electric Co. and Westinghouse Electric Co. when a three- decade ban on India's atomic trade is lifted.

GVK is also negotiating with Alstom SA and Siemens AG, Chief Executive Officer G.V. Krishna Reddy said in an interview with Bloomberg News today. Nuclear Power plans to buy more than $14 billion of equipment next year, Chairman Shreyans Kumar Jain said in an interview last night.

Prime Minister Manmohan Singh plans to build 40,000 megawatts of nuclear capacity by 2020, equivalent to a third of current generation, to meet soaring energy needs and cut reliance on coal-fired power plants. India won the right Sept. 6 to buy atomic technology and fuel from the 45-nation Nuclear Suppliers Group and expects the U.S. Congress to clear the deal this month.

``I am sure companies have been trying to line these deals up for ages and have just been waiting and hoping for this to happen,'' Rory Medcalf, international security project director at the Sydney-based Lowy Institute for International Policy, said. ``India has declared fairly large projections of how much nuclear energy they want to use in the future, yet there is a question mark over whether they will get there.''

India needs to add to the 3 percent of electricity that comes from Russian-designed reactors. During peak hours, the country's power supply falls 14.8 percent short of demand, according to the government. Lack of infrastructure, especially power, has eroded 2 percentage points off the country's growth, according to the Asian Development Bank.

Focused Discussions

Nuclear Power also plans to buy equipment from Paris-based Areva SA and Moscow-based Rosatom Corp., Jain said in a telephone interview in Mumbai.

``The exploratory discussions with the Russians and French can now become more focused. We can start finding partners and source fuel for some of our existing plants,'' Jain said. ``We can now start serious negotiations with all four companies.''

General Electric, based in Fairfield, Connecticut, Areva, Toshiba Corp.'s Westinghouse and Rosatom may each win contracts valued at more than $3.5 billion to supply two reactors that can generate more than 1,000 megawatts apiece, Jain said. The orders will be part of a $40 billion reactor-building program, he said.

Nuclear Power plans to set up plants at four sites, he said. The nation's monopoly atomic-power generator plans to build ``nuclear parks'' housing reactors capable of generating as much as 8,000 megawatts at a single location.

Russian Agreement

India signed a civilian nuclear agreement with Russia in January last year. Russia is helping India build two 1,000- megawatt light-water reactors at the Kudankulam nuclear power station in the southern state of Tamil Nadu.

Nuclear Power plans to buy the AP1000 series of reactors from Monroeville, Pennsylvania-based Westinghouse, the `ABWR' series from General Electric, Areva's serial designs for the 1,000 megawatt plants and the Russian VVR 1,000 units, Jain said.

The Bush administration hopes U.S. companies such as General Electric can compete for the business and aims to persuade Congress to ratify the agreement with India to allow the sales. Until then, the NSG waiver means France's Areva, Russia's Rosatom and Toshiba can get a head start.

General Electric, the world's biggest maker of energy- generation equipment, said Aug. 25 that it may lose contracts in India to French, Russian and Japanese rivals if the U.S. Congress doesn't ratify the deal soon after the agreement wins approval from the suppliers group.

U.S. Secretary of State Condoleezza Rice said the U.S. has talked to India about the potential competitive disadvantage.

``I think they recognize and appreciate American leadership on this issue,'' she said Sept. 6. ``Because of that, I think we'll have ways to talk to them about not disadvantaging American companies.''

To contact the reporters on this story: Paul Gordon in Hong Kong at pgordon6@bloomberg.net; Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.