ONGC enters the fray for n-power; looks for tie-up with NPCIL

Oil and Natural Gas Corporation (ONGC) has initiated preliminary talks to enter atomic power generation.It is in discussions with the Atomic Energy Commission for partnering with Nuclear Power Corporation of India Ltd (NPCIL) and picking up minority stakes in the new 700 MWe pressurised heavy water reactor-based projects on the anvil.

If the proposal goes through, ONGC would join the likes of NTPC Ltd, IOC and Nalco, which are in the fray for partnering with NPCIL for upcoming projects. NPCIL, along with sister concern Bhavini, are the only utilities that are operating nuclear power stations in the country, at present.

Officials at both the NPCIL and ONGC confirmed that initial discussions are under way. ONGC, which has cash surpluses of Rs 15,630 crore, had earlier announced a tie-up with Uranium Corporation of India Ltd to jointly undertake projects to extract uranium.

Roping in PSUs

While a proposal to allow private players to set up nuclear projects in the country, envisaged through an amendment to the Atomic Energy Act, has been put on the backburner, the Centre's alternative strategy to tide over the paucity of funds and ramp up execution capability for nuclear projects hinges on roping in core-sector public sector undertakings and implementing projects through joint ventures with NPCIL. The PSUs will be roped in as junior partners and investors for the joint venture projects on the anvil.

The Atomic Energy Act, 1962, “requires nuclear power generation to be done by a Government company in which at least 51 per cent of shares are held by the Central Government.” Officials said the Act, however, enables limited participation of the private sector firms, in the manufacture of nuclear equipment and other supply chain activities, including construction. Tata Power, Reliance Power, JSW, GMR, Lanco and Videocon are among the private players that have announced plans to enter the sector.

In all, there are 19 nuclear power reactors with a capacity of 4,560 MW in operation in the country. “Of the 20,000 MWe target for 2020, NPCIL — which has a surplus of Rs 12,000 crore, including cash reserves — can manage only about 10,000 MWe through its own financial resources. Hence, funding from other sources is needed to supplement NPCIL's efforts and the best candidates are PSUs, especially those in the core sector with strong financials and cash flows.