Since we import almost 80 per cent of our requirement, that is a welcome relief on the oil import bill, and more importantly, on the oil subsidy bill. There is the decline in the price of a host of other commodities, from steel to cement, which is gradually being reflected in tempered inflation numbers.
And there is the global reduction in lending rates as the world moves towards an equilibrium on a lower price plane. All these developments also mean that India, if it negotiates well, should get its spanking new nuclear power plants at rates that are more competitive than estimated earlier.
It is well known that India intends to expand its nuclear power capacity ten-fold over the next decade or so by importing reactors and fuel worth tens of billions of dollars. The aim is to hike capacity from about 4,000 mw to 40,000 mw by 2020.
Though this 4-to-40 move will not dramatically increase the contribution of nuclear power to the overall power generated in the country - its share in the electricity basket is unlikely to exceed 6-8 per cent - this is a significant capacity addition in absolute numbers.
By 2032, India expects to have a nuclear power capacity of 60,000 mw, which is almost equal to the capacity that France has today - and France is the country where nuclear power accounts for the largest share (77 per cent) of the total electricity generated.
This will entail huge orders for the four international vendors - General Electric, Westinghouse, Areva and Rosatom - that the Nuclear Power Corporation (NPCIL) is currently negotiating equipment imports with.
And that too at a time when there could be a deferment or cancellation of plants in the pipeline in other countries due to the precarious financial situation globally. As Shyam Saran, special envoy of the Prime Minister, said at a conference recently, India may find itself in some kind of a buyer's market as the so-called nuclear renaissance stalls in some countries.
Since bilateral negotiations of the kind that are currently ongoing between the NPCIL and the vendors are always suspect, perhaps tariff-based competitive bidding should be considered for importing the reactors. This would yield an indisputable "best" (read lowest) price of power. This view is also backed by Planning Commission member Kirit S Parikh.
India needs to ensure that the nuclear reactors are imported, and technology transferred, at the most competitive rates. This will, in turn, ensure that the price of power generated with uranium is not only "comparable" with that generated from coal and gas, but actually lower. And that is possible.
NPCIL chairman S K Jain recently told Business Standard that the cost of nuclear power would be well within Rs 4 per unit, which is about the average cost of power around the country today. There are those who worry that the cost of nuclear power would actually be double that number if all the costs of nuclear power are brought above board - capital expenditure (estimates range from Rs 7 crore to Rs 30 crore per mw), operational expenditure (including rigorous safety measures like mandatory two-second shutdowns) and decommissioning expenditure (currently charged @ 2 paisa per unit) - and if the normative return on equity (14 per cent) is provided for. This is even after factoring in the longer (60 years or more) life of nuclear plants.
NPCIL, under the aegis of its parent Department of Atomic Energy, and in consultation with the central electricity authority and in compliance with norms of the central power regulator, does take account of all these heads. The cost of power from its plants ranges from about Rs 1.39 to Rs 2.08 per unit. In contrast, power from imported coal can cost as much as Rs 3.50 per unit.
The maths followed for computing the nuclear power tariff is not completely clear, and neither is the accident liability burden, but the fact is that NPCIL is a profit-making company, which is recovering its costs. With the price of uranium also on the decline, there are those within the government-owned NPCIL who are already talking of a cost not more than Rs 3 per unit from the new imported plants - that, despite the slide in the rupee.
On another front, the rupee slide also benefits the domestic nuclear industry. The sealing of the Indo-US nuclear deal means that there is an export opportunity open for India in the field of small- and medium-sized reactors, also known as SMRs.
All of India's reactors fall in the SMR category - typically defined as reactors not exceeding 700 mw of output. These are ideal for countries with limited grid capacity and constrained finances. Besides, there is the opportunity to build up capabilities in the nuclear supply chain - from nuclear-grade batteries to smaller items like castings and forgings.
There clearly is no slowdown threat to the nuclear renaissance in India.