India imports Uranium Fuel & NPCIL revenues improve dramatically

Author at Liberty Bell Philadelphia

Government of India (GOI) signs plethora of MOUs/IGAs/Joint Declarations in recent past with several countries benefiting from Indo-US 123 Agreement and NSG waivers. Main success story revolves around importing Natural Uranium as fuel for domestic Heavy Water Reactors of PHWR type.  

Department of Atomic Energy (DAE), Government of India (GOI) had signed many Agreements MOUs in the past 7 years with several countries. Agreements/Memorandum Of Understanding/Joint  Declarations with USA, France, Russia, Namibia, Mongolia, Republic of Korea, Argentine Republic, United Kingdom, Republic of Kazakhstan, Canada, Sri Lanka and Australia. Out of these the Inter-Governmental Agreement (IGA) signed with Russia is for construction of nuclear power plant at Kudankulam (KK Nuclear Power Project 1-4), the Pre-Engineering Agreement (PEA) signed with M/s AREVA, France is for assessment of licenseability of the Evolutional Pressurized Reactor (EPR) project proposed to be set up in Jaitapur in Ratnagiri District of Maharashtra state and Preliminary Contract for Technical Feasibility Study for AP 1000 reactors signed with Westinghouse Electric Company (WEC), USA is for the proposed Site  at Mithivirdi Site in Bhavnagar, Gujarat.

MOUs and Agreements with countries such as Australia, Kazakhstan, and Canada etc were made to procure natural Uranium in the form of Yellow Cake and use it in the nuclear power plants that are open for international inspection under IAEA supervision. DAE supplies this Uranium to NPCIL and it has helped Nuclear Power Corporation (NPCIL) to better utilize its Pressurized Heavy Water Reactor (PHWR) type domestically developed nuclear power plants. The revenue of NPCIL has increased from INR 3500 crores in 2007-2008 jumped to INR 8900 crores in 2014-15.

Russians succeed over others in exporting reactors while others excelled in fuel export:

Signing 123 Agreement with USA in 2007 and  with Nuclear Supplier Group (NSG) removing embargo in 2008 have helped India to buy Uranium from open market at negotiated price for 3-5 year contractual terms. However, DAE & NPCIL have not made any meaningful progress in last 8 years on importing nuclear power plants , LWRs from USA and France. Only Russians succeeded in selling 4 reactors of VVER type  and obtained further commitment from GOI to buy 8 more VVERs. Six (6) of them to be installed at Kudamkulam site in Tamil Nadu and six (6) more at a site to be identified by GOI. 

The Nuclear Suppliers Group (NSG) granted full waiver to India in the year 2008. Before this period India was barred from purchasing nuclear materials, equipment’s, technology and services from the NSG member countries for its nuclear power program. Following this event, DAE in India made one of the smartest moves by quickly entering into nuclear fuel import contracts with countries having Uranium Mines. Fuel was received as Uranium Ore Concentrates and Uranium fuel pellets from France, Kazakhstan and Russia. Quantities ranged between 300 Metric Tons (MT) to 3000MT, to be delivered over a period of 5-6 years. Australia has also signed MOU and negotiations to sell Uranium from mines located in this country. General Atomic is a lead mine owner in Australia and may start negotiations with DAE to supply yellow cake in the years to come.

The industrial logic for importing nuclear fuel for domestic power program was straight forward. It has been widely known that domestic availability and supply of Natural Uranium in India is inadequate. This imposed limitation to sustain indigenous nuclear power program based on Pressurized Heavy Water Reactors (PHWRs) that have been built and operated by NPCIL during past 30 years. It is to be noted that currently 19 out of 21 operating reactors are of PHWR type requiring natural Uranium fuel and all of them were starved from reaching their full capacities. The capacity utilization factor (CUF) was restricted to below 60%.

NPCIL revenue that was under 500 Million USD in 2008-09. Once imported fuel was available, revenue went up to 1.2 billion USD in just under 5 years, without adding a single MW of new nuclear capacity. Data & statistic given below is the proof of the durable jump in capacity utilization factor (CUF) of Indian nuclear power plants from the year 2011 on-wards.
Financial Year: 2014-15 2013-14  2012-13  2011-12  2010-11 2009–10                                              CUF in %:               82%        81%        80%         79%        71%          61%

The substantial hike in NPCIL revenue had materialized due to high Capacity Utilization Factor (CUF) attained each year, beginning from 2011 on-wards. The data given below indicates doubling of Revenue and quadrupling of Profit After Tax (PAT) from 2011 to 2015 ( Source of data is published on NPCIL web site).
Financial Year: 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09
Total Revenue ( Crores INR):       8957  8580  8090  7960  6068  3837   3038
Operating Income (Crores INR): 2993  2894  2525    2318  1609    576    433
Net Profit (In Crores INR):             2201   2299  2101     1906  1376    416    441

(NOTE: 1 Crore = 10 Million)

Full credit is to be given to DAE and NPCIL management for its foresight and their nuanced methodology to procure Uranium from diverse sources. This strategy has brilliantly worked.

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