India’s Nuclear Power Plans to Borrow $6.5 Billion (Update1)

Dec. 17 (Bloomberg) -- Nuclear Power Corp. of India, the nation’s monopoly atomic generator, plans to borrow as much as $6.5 billion to fund six new reactors as the second fastest- growing major economy grapples with power shortages. The state-run company will raise about 140 billion rupees ($3 billion) from loans and bonds to build four 700-megawatt plants, Chairman Shreyans Kumar Jain said in a phone interview from Mumbai today. It will also seek about $3.5 billion in loans for two 1,000-megawatt reactors it’s developing in Kudankulam with Russia’s Rosatom Corp., he said. “We generally borrow from banks through term loans and bonds, floating and fixed,” Jain said. “For Kudankulam, we expect some debt funding from Russia in the form of a soft loan and will raise the remainder from the market.” India has pledged to nearly double generation capacity in the next seven years to end blackouts. The government said before global climate talks in Copenhagen this month that it would voluntarily reduce its carbon emission intensity by as much as a quarter from 2005 to 2020. Nuclear power makes up 2 percent of capacity in India, where supply falls short of demand by as much as 13 percent in peak periods, government data show. Russia agreed to increase nuclear cooperation with India in a deal signed this month. State-owned Rosatom has said it is seeking new projects in India after agreeing to build more reactors at Kudankulam in the southern Indian state of Tamil Nadu and to develop a site in Haripur, West Bengal. Spending Justified “The spending is justified considering nuclear power will help reduce India’s spending on oil and coal imports, which put a significant pressure on the trade balance,” said Hyderabad- based A.V. Kameswara Rao, Executive Director, PricewaterhouseCoopers Pvt., which advises companies in the nuclear energy business. “We don’t think they will face any problem in raising finances.” Mumbai-based Nuclear Power has formed ventures with NTPC Ltd., India’s biggest generator, Indian Oil Corp., the nation’s biggest state-run refiner, and National Aluminium Co. to build atomic energy plants across the country. “The Indian partners could bring in some equity funding,” Jain said today, without elaborating. Nuclear Power sold 13.5 billion rupees of bonds and raised 7.5 billion rupees in loans, it said in a statement today, without specifying what the money was for. France, U.S. Areva SA, the world’s biggest maker of atomic reactors, said Oct. 14 that an agreement with Nuclear Power to build a plant in the western state of Maharashtra, home to the commercial hub of Mumbai, may be signed early next year. The two companies plan to borrow 3 billion euros from European banks for setting up the project, Jain said. Nuclear Power plans to buy two Areva reactors of 1,650-megawatt capacity each and may increase the number to six, according to the preliminary agreement signed in February. The company is waiting for the Indian Parliament to ratify an international nuclear-liability treaty before it can sign agreements with U.S. companies General Electric Co. and Westinghouse Electric Co., a unit of Toshiba Corp., Jain said. Nuclear Power hopes to sign reactor accords with the companies next year, he said. A kilowatt-hour is the electricity consumed by a 100-watt light bulb if it burns for 10 hours.