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As power shortages loom, here's why the India-Australia uranium deal matters

As India faces a looming power crisis thanks to coal shortages for its thermal power plants, the deal to be signed with Australian Prime Minister Tony Abbott, so that it can finally start importing uranium for its nuclear power plants, will be a welcome one.

Work on an India-Australia agreement has been underway since Australia, which has 40 percent of the world's known uranium reserves, lifted a long-standing ban on selling uranium to energy-starved India in 2012.

Despite the removal on ban, trade between the two nations has not started yet as they ironed out differences after  Australia sought to be convinced that the nuclear fuel would only be used for non-military and peaceful purpose.

 As power shortages loom, heres why the India-Australia uranium deal matters

Representational image. PTI

India's nuclear plants are in dire need of nuclear fuel even as it struggles to ensure consistent supply of coal to its thermal plants. Coal India, the biggest supplier of coal to power and fertiliser plants in the country, has of late been failing meet its targets and even state-owned power firms like NTPC have also raised doubts over the quality of coal supplied.

In addition, there are many stalled hydro-power projects due to environmental issues and protest by locals fearing negative downstream impact.

India operates 20 mostly small reactors at six sites with a capacity of 4,780 MW, or 2 percent of its total power capacity, according to the Nuclear Power Corporation of India Limited.

The government hopes to increase its nuclear capacity to 63,000 MW by 2032 by adding nearly 30 reactors - at an estimated cost of $85 billion.

In its report published in July 2014, the World Nuclear Organisation in its report titled  Nuclear Power in India noted: the per capita electricity consumption figure is expected to double by 2020, with 6.3% annual growth, and reach 5000-6000 kWh by 2050, requiring about 8000 TWh/yr then. There is an acute demand for more and more reliable power supplies."

Being a non-signatory to the Nuclear Non-Proliferation Treaty had cost the country's nuclear power programme dearly and the isolation had resulted in the Indian nuclear industry suffering from a lack of technology and fuel for projects.

"As a result, India's nuclear power program has proceeded largely without fuel or technological assistance from other countries. Its power reactors to the mid-1990s had some of the world's lowest capacity factors, reflecting the technical difficulties of the country's isolation, but rose impressively from 60% in 1995 to 85% in 2001-02. Then in 2008-10 the load factors dropped due to shortage of uranium fuel," the World Nuclear Organisation report said.

India's civil nuclear deal with the US did achieve an end to the isolation, but failed to go much further in reviving the nuclear energy industry due to the limited liability clause that Indian legislators haven't cleared yet. The green signal from the Nuclear Suppliers' Group in September 2008 to buy both reactors and fuel nuclear energy  hasn't resulted in a tangible benefit for the sector either.

The much touted Kudankulam nuclear power project has been running behind schedule for five years and is cited as one of the reasons for the power crisis in the state of Tamil Nadu. The much-publicised 9,900 MW Jaitapur nuclear power plant to be executed by French firm Areva is also stuck due to local protests. The deal with Australia may not ensure the creation of new plants but it can ensure supply for existing plants and future ones.

In its election manifesto, BJP had announced it would boost the use of nuclear power in the country to a considerable extent and the deal with Australia could provide a much needed fillip  to that plan.

with inputs from Reuters

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Updated Date: Sep 05, 2014 13:06:15 IST