Areva in $10bn Indian nuclear rectors deal

Areva, the French nuclear group, agreed on Wednesday to supply India with up to six nuclear reactors in one of the first deals since the subcontinent's nuclear programme was brought into the international fold last year after decades of isolation.

In a preliminary agreement with the state-owned Nuclear Power Corporation of India, Areva will provide technical co-operation on two of the heavy-duty 1600MW EPR reactors, at Jaitapur in the state of Maharashtra.

The deal could be worth more than Euro 8bn ($10.3bn).

The agreement, which could extend to six reactors, also calls for Areva to supply fuel to Indian reactors over the expected 60-year lifecycle.

The Areva deal is regarded as a breakthrough for Paris, which is keen to use the nuclear group as a trailblazer to boost French exports to emerging markets.

The agreement brings to at least 14 the number of EPRs almost certain to be launched in the next decade, giving Areva's French-designed technology a clear headstart on new-generation reactors built by rivals such as Westinghouse Toshiba or General Electric.

The French group was dealt a severe blow in 2006 when China gave its first, and biggest, contract to Westinghouse, designer of the AP1000 reactor, amid concerns over the skyrocketing costs of the EPR.

Beijing subsequently awarded a contract for two EPR reactors to Areva.

Many now expect other French companies active in the nuclear sphere, from the reactor operator EDF to turbine maker Alstom, to follow Areva into India.

However, future orders are likely to be shared between other countries such as the US and Russia, people with knowledge of the subject said.

International power companies from France, the UK, Russia, the US and Canada are flocking to India seeking opportunities to help one of the world's fastest growing emerging economies meet its energy demands.

More nuclear power contracts are expected to be signed in the coming months.

The deal follows a civil nuclear agreement with the US at the end of last year that helped clear the way for India to buy atomic power plants, technology and fuel from the nuclear club of nations.

India, officially a nuclear weapons power since 1998, had been denied access to civilian nuclear technology for more than 30 years because of its test of a nuclear device in 1974 and its refusal to sign the 1968 Non-Proliferation Treaty.

India operates 17 atomic power plants. It has about 4,000MW of installed nuclear power capacity, with another 2,600MW under construction.

Its national energy plan calls for 30,000MW of nuclear power by 2020 and double that figure by 2030.

Areva said discussions would now begin on pricing and timing for the new reactors and a final contract could be signed by the end of the year.

If successful, the first EPR could be running by 2016, although it was still too early to say.

Copyright: The Financial Times Limited 2009