What exactly is the nuclear deal?

At the crux of this entire political conundrum, the core issue, which lays quite forlorn and forgotten is the nuclear issue. Today the politicians might have turned it into an opportunity to topple the UPA Govt but few remember that it all started with the nuclear deal.

Surely few of these politicians would have actually taken the effort to read the 82-page nuclear deal and tried to understand what it is all about. Somehow that does not come as a surprise at all! So without getting into the “political” angle of it, let us take a look at what exactly is this nuclear issue. What would India gain if UPA wins the vote and what we stand to lose if the deal gets cancelled?

What exactly is nuclear power?

Nuclear power is generated using Uranium, which is a metal mined in various parts of the world. It produces around 11% of the world's energy needs, and produces huge amounts of energy from small amounts of fuel, without the pollution that you'd get from burning fossil fuels.

Where does India currently stand on nuclear power?

In India, nuclear power is being produced under the Nuclear Power Corporation of India. Seventeen reactors are under operation and five reactors are under construction. These power projects are highly capital intensive and currently, takes care of 2.8% of the power needs of the country. Amongst the 30 countries in the world that use nuclear power, India’s rank at 27 is one of the lowest.

Why nuclear power?

To take India’s economic growth rate to greater heights, there is no doubt that power would be required as the main fuel for this growth. Though coal, thermal and hydro fuel would remain India’s dominant energy mix, it cannot continue to depend on coal alone. Global warming considerations and the immediate availability of clean coal technologies may constrain the coal route at least in the short term. Hydropower may also face constraints that arise from changes in the hydrological cycle triggered by long term climatic change. Hence having nuclear power in India’s energy portfolio is crucial for preserving India’s energy security

What does 123 agreement mean?

The 123 Agreement is the terms of engagement which operationalizes the treaty agreement between India and USA for transfer of civil nuclear technology. India’s right to test nuclear weapons, guarantees of lifetime fuel supply and India’s right to reprocess the spent fuel have all been covered in this agreement.

What is the Hyde Act?

The Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, it is known as the Hyde Act. It is the legal framework for this deal and provides the legal basis for the 123 Agreement with India.

What would the deal with USA mean for India?

The Govt has chalked out a roadmap wherein over the next 25 years, through the deal, it has set a target of generating 20,000 MWe (unit of nuclear power) as against the current 3,900 MWe.

The biggest advantage, which the UPA Govt is actually seeking is projecting to the world that it an ally of USA, which is a superpower in the world of today. The deal would provide India with access to American civilian nuclear technology. It would finally open up the door to US military technology, especially the fascinating US missile defense system.

Once the new reactors are set up, and they go critical without any time overrun, the nuclear power generation would take care of 8% of India’s total power requirement. More than 80% of the power generated in India comes from coal and thermal. And that will continue but just as oil has become critical today, coal will also one day reach such a stage. And unless we have backups ready, our entire country could get unplugged. Having nuclear power could help India, over the long run, offset the rising cost of coal.

Yes, price of uranium is also mounting. Between 2005 (when the India-US nuclear deal was first proposed) and 2007 (when the 123 Agreement was finalised), since then, the spot price of uranium has quadrupled. According to a June 2008 market assessment, a further 58 per cent increase is expected. But remember unlike oil, we are dealing with more mature economies here who will supply uranium and hopefully, they will prevent the present cartelization which we see in oil.

What is the cost of nuclear power?

At present, power from existing nuclear reactors costs, after huge subsidies, between Rs 2.70 and Rs 2.80 per kWh. The coal-fired Sasan mega power project in Madhya Pradesh will be supplying power at Rs 1.196 per unit. The real cost of power from existing nuclear reactors is around Rs 4 per unit; the cost of power produced by new reactors will be around Rs 5.50 per unit. But the economies of scale would soon start giving the advantages. Plus, these costs are today at the present levels of coal price, so when price of coal escalates further, cost would only go up.

What would the deal mean to Indian companies?

India has plans to set up 15 plants over the next 20 years. Business worth $100 billion is expected to be generated from this nuclear deal over the next 20 years. Apart from USA and France, which would benefit immensely, Indian companies too will get a part of this juicy pie. Over 400 Indian companies are expected to benefit, mainly for those involved in making equipment for nuclear power plants.

Why did the Left withdraw support?

The Left alleged that the deal would undermine the sovereignty of India's foreign policy. It has also stated that the Indian government was hiding certain clauses of the deal, which would harm India's indigenous nuclear program.