India Delays $2.6 Billion Russian-Built Nuclear Plant on Protest

Nov. 3 (Bloomberg) -- India will delay the start of a $2.6 billion nuclear plant built with Russia’s help at Kudankulam in the south because negotiations with local villagers opposing the project are taking time, a minister said.

Groups of experts from the federal government and the state administration will address the safety concerns of the villagers, V. Narayanasamy, minister in the Prime Minister’s Office, said in an interview Nov. 1, without mentioning a new start date. Commissioning the plant “will take a little more time and ultimately, we will be able to resolve the issue.”

The plant near the southern tip of India in the state of Tamil Nadu will be part of the 60,000 megawatts of nuclear capacity planned by Prime Minister Manmohan Singh nationwide to battle a shortage of power in Asia’s second-fastest growing major economy. Residents of nearby villages intensified their protest in August, five months after an earthquake in Japan triggered the world’s worst nuclear disaster in 25 years.

Singh has roped in former President A.P.J. Abdul Kalam, who is from Tamil Nadu, to help resolve the standoff, said Narayanasamy, 64. Kalam was the architect of India’s missile program and played a key role in the 1998 nuclear tests that prompted international sanctions against the country.

“While delay is now inevitable, this should not become the beginning of a complete slowdown on all expansion plans,” said C. Uday Bhaskar, a New Delhi-based strategic analyst. “Kudankulam has become an example of challenge because India cannot afford to abandon its nuclear energy program and neither can it ignore the public mood.”

Safety and Security

Nuclear Power Corp. of India, the state-owned monopoly, is building two 1,000-megawatt reactors with Russia’s Rosatom Corp. at Kudankulam. The first unit was scheduled to start in December, according to Nuclear Power’s website. Communities near the site of the plant were wiped out during the 2004 Indian Ocean tsunami.

Protesters have asked the government to shut the plant, demanding that more be done to ensure the safety, livelihood and security of the people, said Narayanasamy, a Congress Party member of parliament from Puducherry, a former French coastal enclave south of Chennai, the capital of Tamil Nadu.

Scientists and employees of Nuclear Power have been prevented from entering the site and food supplies have been blocked, the minister said.

“The groups are trying to give a political color to their agitation” by including problems related to Tamils in Sri Lanka, said Narayanasamy. “This is not advisable.”

Liability Concern

India’s nuclear energy program got a boost when it won access to atomic fuels and technology in September 2008. The 45- member Nuclear Suppliers Group lifted a three-decade ban on exports to the country on a proposal backed by the U.S.

While the meltdown at Japan’s Fukushima Dai-Ichi nuclear plant and subsequent protests haven’t deterred Prime Minister Singh’s plan to build atomic power stations, overseas suppliers have expressed concern about India’s nuclear liability law.

The law, which is more sweeping than a global agreement signed by 80 nations, has made it difficult for U.S. companies to enter the market. India’s legislation holds suppliers liable for accidents, while the global treaty limits damages to operators of the plant.

Prospective vendors including General Electric Co. and Westinghouse Electric Corp. are seeking changes to the law that allows Nuclear Power to claim compensation for defective supplies. U.S. Secretary of State Hillary Clinton urged India in July to amend the liability law this year to ensure it complies with international accords.

Regulatory Bodies

Any change in the Civil Liability for Nuclear Damage Act may be difficult, said Narayanasamy. The government has been continuing discussions with U.S. companies on transfer of technology and setting up a power plant at an undecided site.

Legislation to create two regulatory bodies as part of measures to strengthen safety at India’s atomic plants is being scrutinized by a panel of lawmakers and the government is keen to get it approved in the next session of parliament scheduled to start on Nov. 22, Narayanasamy said.

Protests hit another facility at Jaitapur on India’s western coast where Areva SA plans to build a 9,900-megawatt project. Mamata Banerjee, chief minister of West Bengal, announced in August that her state won’t allow a 1,000 megawatt nuclear plant on its soil.

--With assistance from Archana Chaudhary in Mumbai. Editors: John Chacko, Sam Nagarajan

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net