Nuclear opportunity

The last few years have conclusively demonstrated that the long-term structural story of India has changed for the better. And as India muscles its way into the developed world over the next decade, the more it will need world-class infrastructural support.

While most infrastructure sectors have started showing signs of movement, the one sector that falls woefully short of efforts in proportion to the needs is the power sector. Investments are only trickling in as shortages, tariffs and the dependence on imported fuels continue to rise. And add to that the politically sensitive, albeit urgently needed, distribution reforms, and the recipe for endangering India’s growth story itself is complete. At such a time, Prime Minister Manmohan Singh’s nuclear deal with the US, if it goes through, could provide the Indian economy a shove in the right direction.

According to recent projections by global consultancy major McKinsey & Co., India’s power demand will cross 300 GW over the next 10 years. Meeting India’s galloping demand will need a five-to-tenfold increase in capacity addition. Bridging the gap in supply will also need appropriate environment-related responses. As India’s demand for power grows, so will its greenhouse gas emissions. And India can hardly afford to be nonchalant about global warming as the Indian subcontinent will be one of the regions that will be most vulnerable to climate change. Coal, which is the mainstay of our power production, will need to be replaced. Scalability is a major issue with other green sources of power, such as wind and solar. At best, they are expected to add 20-30 GW to India’s energy basket in a decade’s time, barring a technological breakthrough.

Critics run down nuclear power as expensive, unless backed by subsidies. But, then, as a senior energy expert in India has pointed out rather acerbically, “Unless we have real prices of energy to compare with, comparisons would be odious.”

Given the long-term implications, nuclear energy would seem to be the most pragmatic option for India to secure its energy requirements. Much will change for India once the nod from the Nuclear Suppliers Group and the US Congress comes through. It is expected that, barring some unforeseen circumstances, the deal will go through by end-September as both the Indian and the US governments put their weight behind pushing India’s nuclear dreams through. Yet, that will be the beginning of a long and arduous journey. For, we will need an enabling regulatory regime, the amendment of the Atomic Energy Act, the introduction of the Nuclear Liability Law, and transparent guidelines for issues such as waste management. And for the private sector, it will also be an opportunity to tap world markets in another business.