French president Emmanuel Macron’s vIsIt to India in March saw the conclusion of an ‘Industrial Way Forward Agreement’ (IWFA) between Nuclear Power Corporation of India (NPCIL) and EDF, for the Jaitapur nuclear power project. EDF chair and CEO Jean-Bernard Lévy described this as a “decisive step”, which meant it was now possible to “envisage with confidence the rest of this essential project for India and for EDF”.
Lévy’s enthusiastic appraisal likely stemmed from the fact that the IWFA addresses Indian concerns about the industrial arrangements around the project. The IWFA has provisions for a preliminary tender by EDF to be submitted in the weeks following its signature, and a ‘binding’ EDF tender by the end of 2018. However, India’s Department of Atomic Energy (DAE), which controls NPCIL, intends to stick to its philosophy of agreeing to build foreign reactor designs only if a reference plant is operational. So a ‘final’ contract will only happen once DAE gets to study the post-commissioning progress of Taishan 1 in China and Flamanville 3 in France.
EDF submitted a new proposal for six EPR units to be sited at Jaitapur in Maharashtra to NPCIL and India’s Ministry of External Affairs in July 2016. This fresh proposal was required because Areva had been taken over by EDF. India sought clarity on the industrial arrangements in terms of workshare and timelines for the project before it could move forward. Given the significant delays and cost overruns in EPR build programmes elsewhere, NPCIL wanted France to take responsibility for engineering, procurement and construction (EPC) for the first two units. With the IWFA, France has acceded to NPCIL’s demands and EDF will undertake all engineering studies and all component procurement activities for the first two reactors. For the other four units, the responsibility for some purchasing activities and studies may be assigned to local companies.
NPCIL will be responsible for obtaining all authorisations and certifications required in India, and for constructing all six reactors and site infrastructure. EDF and its industrial partners will assist NPCIL during construction. This places India at variance with China, which sought to keep most of the EPC-related activities in its EPR build programme.
With EDF responsible for all component procurement, the first two Jaitapur reactors will almost entirely be made up of imported equipment. This will have an impact on capital costs, as local procurement may have been cheaper. But given the concerns that have cropped up about EPR forgings in Flamanville and Taishan, India thought it best to make France responsible for ensuring the quality of parts supplied for the first two units, even if it had to forego localisation. And the cost advantages of a greater domestic share of engineering and procurement might be offset by cost escalation, due to delays and the need to replace equipment during construction that would inevitably result, given that NPCIL is not familiar with the EPR design.
The ‘Make in India’ plan for the Jaitapur project will now be based on the experience from the first two units. According to EDF, the aim is to achieve 60 percent localisation with the last two EPRs.
EDF also signed two cooperation agreements with French and Indian industrial players during Macron’s visit. The first, with Assystem, Egis, Reliance and Bouygues, covers installation of an engineering platform for studies within the scope of the Jaitapur project and looks to set up a joint venture with majority EDF stakeholding that will be responsible for engineering integration. The second, with Larsen & Toubro, AFCEN and Bureau Veritas, covers the creation of a centre to train local companies on the technical standards applicable to the manufacture of equipment for Jaitapur.
DAE sees the upskilling of Indian companies in component manufacturing and construction as key to the Jaitapur build programme.
France wants NPCIL to ensure Jaitapur’s smooth progress with respect to renewing environmental clearances, corporate social issues and navigating India’s regulatory landscape. The July 2016 EDF proposal explicitly sought guarantees for ‘the same level of protection’ in relation to liability that is available at the international level, citing the Vienna Convention on Liability. Now it seems that France may be reconciled to India’s current liability regime.
Even as France tries to move the Jaitapur project to the contractual stage, DAE will want to study the post- commissioning experience of Taishan 1, which has undergone hot tests, and Flamanville 3 which has completed its cold functional tests. France is aware of this Indian requirement. France’s Alternative Energies and Atomic Energy Commission (CEA) shared with DAE the assessment of the French Nuclear Safety Authority (ASN) with respect to the EPR design’s post-Fukushima safety appraisal and assured India that there will be no additional costs to ensure the EPR’s safety in the post-Fukushima regulatory environment.
It does seem that Jaitapur may finally be becoming a reality in the not too distant future.
