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If You Can't Build Nukes At Home... Try Indonesia, Where Westinghouse Is Vying For A Big Deal


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IF YOU CAN'T BUILD NUKES AT HOME... Try Indonesia, where Westinghouse is vying for a big deal

Think what you may about atomic energy. But give Westinghouse Electric Corp. credit for keeping the faith. Even though the world seems to be saying "no nukes," and no U. S. utility has ordered a unit in 13 years, Westinghouse, its subcontractors, and the U. S. government have wagered $200 million to develop a next-generation reactor. Now, President Bush wants nuclear energy back on the agenda, and a recent Gallup poll shows 73% of Americans think atomic energy should play a key role in meeting new power demands.

But the brightest ray of hope for Westinghouse may be beaming in faraway Indonesia. The power-hungry country is talking about building 12 reactors over the next 30 years--by far the largest order looming on the horizon. And Westinghouse is running hard for the inside track, leading U. S. and European rivals in a race with the Japanese.

GOOD TIMING. No matter that construction of the first unit wouldn't begin before 1997. After all, that's about when Westinghouse may be ready with the AP600, the advanced light-water reactor on which rest its dreams of a nuclear comeback. With Europe and the rest of Asia dominated by other contractors or slowing their nuke programs, Indonesia may be the only AP600 market this decade. "It's important not only for the number of plants Indonesia is talking about," says Howard J. Bruschi, director of Westinghouse's new-plant programs but also for the timing of the presumed order.

The AP600 is one of several new reactors developed, in part, with Energy Dept. funding. It involves no radical new technology but has been streamlined to make it easier to build and cheaper and safer to operate. Its features include simplified controls and an emergency cooling system that relies more on natural forces, such as gravity, than on error-prone pumps. This nukes-made-simple approach--and allusions to generous technology transfer--appeals to some Indonesians, who figure that helping to build the new reactors will boost the country's high-tech aspirations.

The AP600's toughest competition so far comes from Westinghouse's closest partner in Japan, Mitsubishi Heavy Industries Ltd. To add to the irony, Mitsubishi is offering standard, pressurized-water reactors (PWRs) based on technology licensed from Westinghouse. Some Indonesian officials favor PWRs because they will be far cheaper than the AP600. A proven technology also would reassure Indonesians who are queasy about being the AP600's guinea pig. "Let the industrialized country first implement the design," says Nengah Sudja,

system-planning manager for the state-owned utility. "Then, we can check if it is really safe, cheap, and clean."

Mitsubishi seemed to win round one on Aug. 23, when Jakarta awarded an $11 million feasibility study to a subsidiary of Kansai Electric Power Co., which operates several Mitsubishi-built PWRs in Japan. But Westinghouse is countering by helping Jakarta develop software to work out detailed construction-cost projections. Executives also hint that the AP600's $1.7 billion price tag is negotiable. And Westinghouse says it may one day make Indonesia a global supplier of some AP600 components.

No matter who gets the nod, no one loses outright. If the AP600 wins, Mitsubishi will still help with construction. If Mitsubishi prevails, Westinghouse supplies parts and some engineering. Says Bruschi: "We both think it is in our benefit to work together in the scarce markets that exist."

Right now, Westinghouse and Mitsubishi dominate the field. But the longer Indonesia delays, the more time such companies as Siemens and France's Framatome have to catch up. Westinghouse says it's ahead of General Electric Co. in the new, 600-megawatt reactors. But GE, along with Toshiba and Hitachi, is building two 1,200-Mw advanced boiling-water reactors in Japan. And Asia Regional Manager Richard D. Bolsinger says GE will step up its pace as Indonesia's plans become clear.

BIG BACKERS. That may be awhile. Many analysts doubt Indonesia, with a $45 billion debt, can afford 12 reactors. Rules governing the Organization for Economic Cooperation & Development, to which Japan and the U. S. belong, preclude subsidizing the financing of nuclear exports. And some wonder why Indonesia needs nukes at all. Its vast natural gas reserves could fire conventional plants.

Yet the country needs something. The World Bank estimates the island of Java alone must add 9,600 Mw of capacity by the year 2005. Moreover, nuclear power has the backing of Indonesian President Suharto and Bucharuddin J. Habibie, the influential Research & Technology Minister.

Already, Westinghouse has brought 10 Indonesian engineers to the U. S. to work on the new design. Bruschi calls them "part of our AP600 team." Now, the question is, will Indonesia itself sign on the dotted line?Pete Engardio in Hong Kong and Margot Cohen in Jakarta, with Michael Schroeder in Pittsburgh and bureau reports


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