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Mainstream, VOL LIV No 8 New Delhi February 13, 2016

Perverted Logic of Powerful Corporate Interests drive the India-France Nuclear Connection

Sunday 14 February 2016

by Harsh Kapoor

The French President was in India as the chief guest at the surreal nationalist military parade of January 26, 2016. As is the practice, he was accompanied by a high-powered delegation and many multilateral deals got signed between the two countries. There are big ones that have been in the news, have been in the making for many years and may still take time to fructify. These concern the sale by France of nuclear power plants and of flying war toys to India.

India’s proposed purchase of military weaponry and nuclear power plants from France constitute the big centrepiece—attention and money involved in the overall scheme of Franco-Indian ties of the moment. These involve the sale of the Rafale-Multi Role Fighter jets, made by Dassault, said to be the most expensive in the world, and the sales of EPR (European Pressurised Reactors) nuclear reactors, made by Areva, also in the league of the most expensive.

Both these, that is, the civilian nuclear programme and defence procurement, are holy cows that are tightly sealed off by a firewall insulating them from reasoned public scrutiny; all this is managed and scripted by bureaucrats, lobbyists and keepers of ‘national interest’ who hold the keys. The Indian establishment of recent times seems to have grown very big pockets and a big-time ‘folie de grandeur’ where the bigger, more expensive, noisier, higher, shinier are seen as better benchmarks. (A sign of times we are in, that India’s Prime Minister walks about in clothes with his name printed on it all over.) Undue influence of foreign vendors and big Indian and foreign firms and lobbyists is a new reality in the corridors of our decision-making circles. That a new corporate-military industrial complex is shaping India’s drive down this road is a matter which should be the subject of social and economic enquiry by the academia. That is the Indian side of the picture.

But what is driving the French establishment in this foray into India?

The French authorities and the corporate elites see India (and China) as the new market to push their wares. It’s as banal and straight as that. It’s mostly about shoring up economic ties and in the process principally to bailout two crises-ridden sections of the French economy, namely, the civilian nuclear sector and the sagging military-industrial sector. Both of these continue to exercise a considerable hold over the French elites.

Dassault, the French aircraft-maker, has been selling military aircrafts to India for decades. In the 1990s it was Mirage 2000 — whose upgrade for the Indian Air Force had became a white elephant; and now the incredibly expensive Rafale is in the line for sale to India. Dassault originally offered the Rafale combat aircraft with comprehensive transfer of technology (ToT) for $ 10 billion. But after winning the tender, it increased the cost to over $ 30 billion. In 2012 India announced the 20 billion dollar purchase of 126 multi-role combat aircraft and Dassault’s Rafale had won the contract. Be that as it may, Dassault has seen its sales sag over the past years—it saw a drop of 17 per cent in consolidated net sales in 2014. So the India sale is important to keep the assembly lines up and working and take care of sagging finances.

Let us look at the story of the crisis-ridden French civilian nuclear programme to under-stand why the sale of the French EPR reactors for the proposed Jaitapur nuclear park is important to the French.

The French civilian nuclear programme is one of the biggest in the world and the share of nuclear energy in French energy production is 75 per cent. It has 58 operating nuclear reactors all of which are now old. According to the latest report of the Cour des Comptes, the French national audit office, it would cost over $ 100 billion to extend the life of all French reactors for another 40 years.

The European Pressurised Reactor or EPR was a new generation design and a big bet of the French reactor-maker, Areva NP. The initial optimism from the EPR and the orders for new plants—first in Finland in 2003 (Olkiluoto), then in France in 2006 (Flamanville) and thereafter in China in 2007 (Taishan)—has dissolved with both Olkiluoto and Flamanville now nearly three times over-the-budget and at least 10 years and five years late respectively. Even the Chinese plants under construction are running late. Not a single functioning nuclear plant running the EPR reactor exists so far. There have been huge problems with the reactor design and construction quality despite years of experience in nuclear plant engineering in France. The highly trusted and independent-minded French nuclear safety agency (ASN) has found problems with the pressure vessel forgings in the Flamanville plant.

“On June 4, 2014 the French satirical newspaper, le Canard Enchaîné, had revealed that the concrete of the containment building of the nuclear plant in Flamanville being cast for the EPR in Flamanville was full of holes, like Swiss cheese. Because it was built under bad weather, tiny fractures of up to 42 cms appeared. The construction was delayed by four months to fix the damages. And this was not the first time there have been problems in the building site, including because of the use of bad quality concrete EDF had imported from low-cost steel from Russia for the “polar bridge”, a structure 60 metres above the ground used to load and discharge the reactor vessel with its uranium fuel. The quality of the steel was never checked.” (See: http://leblogdejeudi.fr/jaitapur-les-experts-lepr-dareva-echec-industriel/)

The initial cost of the French EPR reactor was to be 3 billion euros but current estimates say it would be close to 11.5 billion euros. [One billion euros come to Rs 7000 crores and one French reactor would cost more then Rs 70,000 crores whereas the annual plan outlay for Maharashtra is Rs 47,000 crores.] The very largely state-owned company, Areva, that made the EPR has been running huge losses. In 2014 the losses were close to 5 billion euros. In July 2015 Areva sold off its reactor business to the French state-run electricity utility, EDF, which is also the biggest operator of nuclear power plants. Now the EDF, which has been economically sound, will have to manage the many very economically risky foreign projects of the former Areva. Experts say the EPR’s design problems and costs have dragged down Areva economically and the EDF is unlikely to want a similar fate for itself. The EDF has been developing its own designs for smaller nuclear reactors. Given the construction and operation problems of the EPR there is a possibility that the EDF could shelve the EPR’s giant reactor programme and place it in long-term cold storage.

The in-principle sale of six EPR reactors to India is a bet for the rescue of the crisis-marked French nuclear sector — imagine an injection of 60 billion euros if the price is, say, 10 billion dollars a piece. There was a joint venture by Areva and L & T, the Indian engineering major, which is negotiating the price of building the Jaitapur reactors with the Nuclear Power Corporation of India (NPCIL). They say the will bring down the price by sourcing the parts under a ‘make an India’ bid. All this will need to be reworked with the EDF being the new French entity in charge.

The recent experience in regard to the building of the Kudankulam plant needs to be kept in mind. There have been major engineering problems, it seems. The large experience in India has been with Canadian reactors and it took years of training and close relations. Building and running the new French EPR reactor, which no one has seen function so far, is a very risky proposition with little engineering experience of building and running these in India. It is a risky road India should avoid.

For the first time in France trade unions in the nuclear and electricity sectors have issued a warning to the French state that the cost over-runs and engineering problems in foreign projects of the Areva and now EDF should be put on hold as there is the risk of dragging down the parent companies in France. Indian decision-makers need to pay heed and not go for a long-term lock-in situation that they can’t get out of. There is still time to put on hold the Jaitapur EPRs.

After Fukushima policy-makers everywhere had a rethink with regard to nuclear energy programmes. But in India nothing seems to have happened and it appears we don’t have and independent nuclear energy regulator for which there has been widespread demand in this country. Nor have we scaled down our nuclear energy programmes. Strategic reasons seem to have more importance in these matters on which decisions need to be taken with sane economic considerations in mind.

References and further reading

1. Cour des Comptes,“Le coût de production de l’électricité nucléaire”, Communication to the Enquiry Commission of the National Assembly, May 27, 2014, p. 227. http://www.ccomptes.fr/Actualites/A-la-une/Le-cout-de-production-de-l-electricite-nucleaire

2. Colère des salariés d’Areva devant le gâchis industriel (Le Monde|14.09.2015)http://www.lemonde.fr/economie/article/2015/09/14/colere-des-salaries-d-areva-devant-le-gachis-industriel_4756739_3234.html

3. http://www.world-nuclear-news.org/RS-Flamanville-EPR-vessel-anomalies-under-scrutiny-0704154.html

4. Pièce non conforme à Flamanville: EDF remet le couver(cle) [8 février 2016] http://energie-climat.greenpeace.fr/piece-non-conforme-a-flamanville-edf-remet-le-couvercle

5. Areva: la folle histoire d’un désastre Par?Bertille Bayart (Publié le 27/01/2016) http://www.lefigaro.fr/societes/2016/01/27/20005-20160127ARTFIG00448-areva-la-folie-des-grandeurs-puis-la-descente-aux-enfers-du-groupe-cree-par-annelauvergeon.php

6. "France to merge Areva’s nuclear business with EDF controlled JV.", Power Technology, June 5, 2015. http://www.power-technology.com/news/newsfrance-to-merge-arevas-nuclear-business-with-edf-controlled-jv-4594497

7. Autorité de sûreté nucléaire (2015), ‘Flamanville EPR reactor vessel manufacturing anomalies’, April 7, 2014. http://www.french-nuclear-safety.fr/Information/News-releases/Flamanville-EPR-reactor-vessel-manufacturing-anomalies

8. Projet nucléaire d’EDF au Royaume-Uni : Il est urgent d’attendre !
1er février 2016 lhttp://www.force-ouvriere.fr/projet-nucleaire-d-edf-au-royaume-uni-il-est-urgent-d-attendre?lang=fr

9. Vivekananda International Foundation (VIF), “A Vibrant Military Industrial Complex for Self Reliance”, VIF Occasional Paper, No. 4, 2012.

The author is an independent researcher familiar with the political and economic situation in France.