N-projects to get equity boost on NPCIL’s JV plans with PSUs

The move comes amid festering concerns over India’s nuclear liability provisions holding up the deployment of imported light water reactor-based projects in collaboration with global vendors. The proposal by NPCIL to strike joint ventures with cash-rich PSUs is being seen as an alternative strategy to tide over the paucity of funds and ramp up execution capability for new projects using the indigenous pressurised heavy water reactor technology.

At present, only two PSUs — NPCIL and Bharatiya Nabhikiya Vidyut Nigam Limited (BHAVINI), which are under the control of the Department of Atomic Energy, can operate nuclear power plants in the country. The Atomic Energy Act, 1962 prescribed that a company in which not less than 51 per cent of the paid-up share capital is held by the Central government can operate nuclear stations. However, the licensing of joint ventures was a grey area. The new law amends the Atomic Energy Act, 1962 to change the definition of a “government company” as described in the Act with a view to widen its scope. The JV firms with these three public sector energy majors — Anushakti Vidyut Nigam Ltd (NPCIL and NTPC), NPCIL-Indian Oil Nuclear Energy Corporation Ltd and NPCIL- NALCO Power Company Ltd have already been incorporated.

Currently, nuclear power reactors are being funded by a mix of debt and equity and are executed by NPCIL. The equity requirements are met from internal resources of the NPCIL, a PSU under the DAE, and domestic budgetary support, a DAE official said.

The leveraging of NTPC, IOC and Nalco’s project execution capabilities is part of the DAE’s medium-term plan. Under the short-term capacity expansion programme, the NPCIL is already working on ramping up the existing capacity of 5,780 MWe by three folds by the year 2023-24.

While NPCIL itself has about Rs 12,000 crore of investible surplus, the three other PSUs, including NTPC, Nalco and IOC, have broadly agreed to bring in Rs 10,000 crore each. The plan entails IOC, NTPC and Nalco each picking up 49 per cent equity in atomic projects proposed to be set up in partnership with NPCIL, which will hold majority equity in the three proposed ventures.

NPCIL now operates 21 reactors with a generation capacity of 5,780 MWe. “Of the 20,000 MWe target for 2020, NPCIL, with Rs 12,000 crore surplus, can manage only about 10,000 MWe of new capacity through its own resources. Hence, funding from other sources is needed to supplement NPCIL’s efforts and the best candidates are PSUs, especially those in the core sector with strong financials and cash flows,” an official said.