Generating benefits will take time

Listen to this article


After the US Senate cast its vote on Wednesday to approve its country’s civil nuclear deal with New Delhi, many Indians have the promise that the lights will go on and stay on.

Across India, power supply is intermittent. Electricity supply is estimated to fall 15 per cent short at peak hours. Offices and houses have back-up generators and candles at the ready. Even in the centre of Delhi, the country’s capital, a heavy rainstorm last month knocked out the electricity supply.

The nuclear deal, championed by the country’s media, is widely seen as a panacea that will transform the country and do away with the generator. But the benefits will only be felt in 20 years.

“In the summer, there are more power cuts, because everyone is using air-conditioning. But it’s worst in the villages,” says Surinder Kumar, a resident of North Delhi whose family comes from Punjab state.

“People there are using more and more energy. In the Punjab, people are getting more money . . . and then they want televisions, fridges and air conditioners. India is using too much energy, that’s why we’ve signed a deal to get more uranium.”

The nuclear agreement, which brings India’s nuclear programme out of the cold after more than three decades, is the crowning achievement of prime minister Manmohan Singh’s time in office. Many local commentators identify this as his – and indeed US President George W. Bush’s – legacy project and a big step along the road to India becoming one of the world’s most powerful nations.

But unless the Congress-led government can convince Indians of immediate benefits, local politicians and commentators do not see the deal as a likely vote winner come the general election expected before May, with inflation running at double-digit rates and more frequent terror attacks.

The deal allows India access to US civilian nuclear fuel and technology although Delhi has never signed the non-proliferation treaty and has conducted two nuclear tests since 1974. The agreement allows other countries, such as France and Russia, to sell India nuclear technology and fuel.

The Confederation of Indian Industry predicts that up to $27bn (€19.5bn, £15.3bn) could be invested in 18-20 plants over the next 15 years. In the short term, however, India is piling on coal-powered generating capacity to meet a surge in demand for electricity.

The benefits though are a long way off. Nuclear power is a small part of India’s energy basket – current generation is little more than 4,000 megawatts from 17 state-run power stations, and will grow to only 10,000MW under the government’s five year economic plan.

Nuclear energy’s contribution is dwarfed by coal and oil, which together account for over two-thirds of energy supply. But the government expects domestic coal supply to run out in 45 years, and it sees nuclear power as the future guarantor of energy security. This explains the aggressive target of generating 50,000MW from nuclear power by 2030.

“The nuclear contribution is insignificant. It takes decades to launch a nuclear reactor,” says Philippe Scholtès, regional director of the United Nations Industrial Development Organisation. “But I must admire the resilience of the prime minister.”

There are also concerns that local opposition could delay plans. The Left parties have been vociferous in their criticism of the nuclear deal, saying India has become a stooge of the US and that the biggest winners are US corporate interests. Their hostility has raised the spectre of grassroots opposition to plants when they come to be built in India.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from and redistribute by email or post to the web.