NPCIL and NTPC to form joint venture

16 February 2009

National Thermal Power Corporation (NTPC), India's largest power company, and Nuclear Power Corporation of India Ltd (NPCIL) have signed a memorandum of understanding (MoU) to form a joint venture for the construction of new nuclear power plants in India.

The MoU signing ceremony (Image: NPCIL)
The MoU was signed in Mumbai by S K Jain, chairman and managing director of NPCIL, and R S Sharma, chairman and managing director of NTPC.
Under the MoU, NPCIL and NTPC - both state-run companies - intend to establish a joint venture company for setting up new nuclear power plants in India. NPCIL would hold 51% of the joint venture, which is in line with current legislation. It is expected, however, that the rules will be changed in time to allow other competent companies to control nuclear infrastructure.
Although the financial details of the joint venture were not disclosed, Indian media has estimated that investment in the joint venture would total some 150 billion rupees ($3.1 billion) over the next eight years. Details of the project, such as the location and types of the plants to be constructed, will be finalised later.
In March 2008, NTPC's board of directors approved a proposal to amend its association documents to allow the use of nuclear power. At the end of October 2008, the board approved a proposal to approach NPCIL with a view to signing a memorandum of understanding towards new nuclear projects. NTPC has already made clear its intention to operate 2000 MWe of nuclear capacity by 2017.
Union Minister of State for Power and Commerce Jairam Ramesh, who attended the MoU signing ceremony, told The Hindu newspaper, "With nuclear expertise of NPCIL and NTPC's experience in power production, a long-term perspective of the synergy is in the offing. This unique initiative will also shape up the country's plans to achieve the target to produce 20,000 MW of nuclear energy by 2020."
The NPCIL-NTPC joint venture would be the first joint venture in nuclear power generation in India. NPCIL is currently the sole agency generating nuclear power in the country with a capacity of about 4120 MWe.
Private sector involvement
Several private companies in India - including Videocon, Tata Power, GVK Power, GMR Energy, Jindal and Reliance Power - have expressed an interest in entering the nuclear power generating business, possibly through joint ventures with NPCIL. However, Ramesh said that he does not expect to see private companies involved in nuclear generation in India before 2020.
He told The Economic Times, "I do not foresee a role for the private sector in the first generation of production of nuclear power of 20,000 MW on strategic, safety, fuel and management grounds. Expansion of nuclear energy has necessarily to be based either on Nuclear Power Corporation of India (NPCIL) or on its joint venture with public entities as only such companies could take a 10 year perspective without worrying over cash flows, borrowings or meltdown."
Ramesh added: "We should not go overboard on the role of private sector ... it will come but this is not right time. Right now, the requirement is of our consolidation that will come through NPCIL and joint venture public entities."