India's indigenous prototype Fast Breeder Reactor that can produce 500 megawatts of power at rates cheaper than existing atomic reactors will begin functioning by 2010.

The PFBR, which will remain outside the purview of International Atomic Energy Agency inspectors under the proposed civilian nuclear deal with the US, is being built at Kalpakkam in Tamil Nadu and the construction work is progressing as per schedule.

"Work on the PFBR is on schedule and we expect it to be completed by 2010," Atomic Energy Commission Chairman Anil Kakodkar told reporters in Delhi on Thursday evening.

The PFBR will produce electricity through the recycling of plutonium and depleted uranium recovered from spent fuel of pressurised heavy water reactors.

The technology will allow the nuclear power generation capacity to grow to around 350,000-mw, independent of any additional uranium availability.

The right to reprocessing of the spent fuel from future reactors is one of the contentious issues in the negotiations on the 123 Agreement to operationalise the civilian nuclear deal with the US.

"The unique feature of this reactor is that it produces more fuel than it consumes, thus reducing power generation costs," Kakodkar said.

The reactor is expected to supply electricity to the state grid at Rs. 3.22 a kilowatt hour or 'unit'.

Advanced reactors can produce electricity at Rs 2 a kwhr.

India plans to establish four more nuclear fast breeder reactors to cater to the increasing energy needs.

The prototype is being built with an investment of Rs 3,500 crore approximately. Of the other four reactors in the pipeline, two would be built at Kalpakkam and two elsewhere.

The future reactors are expected to deliver electricity at even lesser cost. Construction work on the first two of the future FBRs will begin in 2011 and will be completed in 2017.

Kakodkar said the pre-licensing review of the Advanced Heavy Water Reactor has been completed by the Atomic Energy Regulatory Board and preparation of the project report was being done.

The construction on the indigenously developed AHWR is expected to begin this year.

A brain child of Kakodkar, the thorium-based AHWR will be a technology demonstrator reactor and take about five to six years to complete.

The reactor, which will cost between Rs 5 and 6 crore per mega watt, has a life span of 100 years and has several innovative safety measures.

India has a four-phased roadmap for utilisation of thorium resources which includes development of AHWRs, Compact High Temperature Reactor and an accelarator driven fast breeder reactors.

India has thorium reserves to the tune of 2.25 lakh tonnes, which have an electricity potential of 1.55 lakh Giga Watt Year.