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Much before the nuclear research reactor known as Canada India Research U.S., or CIRUS, became operational in 1961-62, India already had Apsara, a 2-megawatt nuclear research reactor at the Bhabha Atomic Research Center. These two projects trained thousands of personnel, who today man India’s nuclear power plants.
Trudeau’s policy stayed in place until January this year, when Canada wisely decided to participate in a project worth more than US$200 billion, building 30 to 40 nuclear power plants in India.
Oil is expensive, coal impacts the environment, harnessing sun and wind to generate energy on a large scale is in its infancy – so the only alternative for countries like India is nuclear power. It took a huge political effort on the part of Indian Prime Minister Manmohan Singh and U.S. President George W. Bush to dump the three-decade-old policy and let India have new nuclear technology. They will also make a buck out of it.
Canada was slow to react to the above changes. The first thaw appeared last year when Canada decided in favor of a “clean exemption” for India from the Nuclear Suppliers Group, which would allow the export of nuclear technology to India. Now Trade Minister Stockwell Day concluded on Jan. 19 a post Indo-U.S. nuclear deal agreement to cooperate in building nuclear power plants in India.
As a matter of fact, India had every reason to be sore at Canadians. They left a US$140 million nuclear power plant under construction in Rajasthan unfinished in 1974. This author watched the situation unfold from a nearby fertilizer plant in Kota. Unfinished concrete blocks, steel and other equipment were left lying around waiting to be used.
In any commercial deal if contractual obligations are not fulfilled, penalties are in order. India let Canada off the hook and decided to finish the nuclear reactor itself. It took six years longer, but it was completed in 1980. To justify its obtuse behavior, Canada continuously needled India on nuclear proliferation and the nuclear test ban treaty for three decades. Only when Singh and Bush agreed on a nuclear deal in 2006 did Canadian policymakers find themselves on the wrong end of the policy.
CIRUS was commissioned in 1961. It was 13 years after the reactor went critical that the nuclear device was detonated by India. This warded off nuclear blackmail by China. In that period the reactor hardware had been updated. It had an indigenous natural uranium core and heavy water, although the initial supply of 21 tons of heavy water came from the United States. Hence other than the initial Canadian benevolence, it was entirely an Indian operation. A few pounds of plutonium for nuclear detonation came from the Indian-supplied uranium core. Making a bomb requires much more than plutonium alone.
Now common sense has prevailed. Canada has “Candu” reactor technology, which is known to be safe, and India needs it. Also India is familiar with this technology, as the CIRUS and Rajasthan reactors of Candu design have been operating in India for the last 48 years. Also Canada has uranium, which India needs for its existing and future reactors.
Four competing technologies are being pursued by India for this massive venture. U.S. companies Westinghouse and GE together with the Japanese are offering pressurized water reactors; the French Areva, with vast experience in building nuclear power plants, is offering evolutionary power reactors; Canada with Candu reactors is in the forefront in its offer.
The Russians also have a large foothold in India. They have supplied a number of reactors, which are operating successfully. They have concluded an agreement to build two more reactors and supply uranium for them.
As per the Indo-U.S. deal, the United States will lift sanctions on uranium enrichment technology and help in building spent-fuel reprocessing plants, which will make operations more efficient.
Canadian participation in this venture is an asset. Each power plant on a brown-fielded site will cost close to US$4 billion. Canadian supplies will be worth about $1 billion for each plant. That will be equivalent to 4,000 jobs during construction, not to mention the supply of high-grade materials and components. Anybody would welcome that.
Canada has hinted at partnering with Indian engineering and construction giant Larsen and Toubro. They jointly will develop the Canadian-design ACR-1000 model for Indian conditions. Their collective expertise will be an asset.
On the political side, Canadian diplomatic efforts accelerated following the visit of India’s National Security Advisor, M.K. Narayan, to Ottawa. Not to be left behind, Canada speeded up commercial and technical efforts on its sales pitch. Now Canada is a bit ahead of the United States, which is also gearing up for its sales pitch. Already the French and Russians have signed an agreement to supply their evolutionary power reactors.
India is open to all suppliers. It is in a rush to plug the power shortage gap in the next 10 to 15 years; hence the first 20 plants should be operating as soon as possible.
International obligations to be completed before supply could begin included the conclusion of an agreement with the International Atomic Energy Commission to allow international inspections of civilian nuclear reactors. This India completed on Feb. 2, though it still requires full ratification by the government of India and the IAEC Board of Governors, which should happen in the next three months.
The Candu reactor is a superior design. Although it requires heavy water to begin with and to sustain continuous operations, yet its ability to use a range of fuels including natural uranium, enriched uranium and other fuels from light water reactors adds to its versatility.
The first export country for Candu reactors was India in 1961 (CIRUS) and 1972 (Rajasthan). Since then Romania, South Korea, Argentina, China and Pakistan have become customers – Pakistan with a very small reactor. The Canadian nuclear supply industry is humming over the export potential associated with these developments.
The key word now is financing. The foreign exchange component is likely to be financed through external financing deals. Finance for internal construction will come from the public as well as from external borrowing. Who gets better access to the Indian market will be determined by who puts together a better financing deal.
Innovative financing can include part ownership; the involvement of local companies in supplies will make participation successful. World Bank, Export Credit Agency and government-to-government long-term loans are other means of financing. For the next 10 years, US$20 billion a year will be needed. Later funding will be determined by India’s economic progress and the success of nuclear power.
All Canadian nuclear sales to India are subject to IAEC safeguards. Hence Canadian interests are well protected. India has to protect its own interests on its investment and commercial success. Any sudden withdrawal of aid as in 1974 will be subject to severe international penalties. Although this situation may never arise again, penalties and alternatives, including the enhancement of local capabilities in case of withdrawal, should be considered now rather than later.
In short, it is good to know that Canada has dumped its three-decade-old nuclear trade policy with India. In return, India will guarantee prosperity for Canada’s nuclear industry for a long time to come.
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(Hari Sud is a retired vice president of C-I-L Inc., a former investment strategies analyst and international relations manager. A graduate of Punjab University and the University of Missouri, he has lived in Canada for the past 34 years. ©Copyright Hari Sud.)
