INTERNATIONAL BUSINESS
Sunday, April 11, 2004
Asian nuclear 'renaissance' has global suppliers licking their lips
REUTERS
SINGAPORE : From India to China , energy-deficient Asia is spending billions of dollars to build nuclear power plants, sparking fierce competition among global equipment makers for the bonanza.
The blossoming of nuclear power in Asia , where 18 of the world's 31 units under construction are located, is dubbed by some as a renaissance of the sector, and has become a massive magnet for European, Canadian and Russian suppliers. The lure is so strong that the US may relax its curbs on the sensitive technology transfer to select Asian nations, as China has other sources of nuclear expertise.
"Nuclear power will certainly continue to increase as a share of the region's capacity and that's mainly driven by activities in China and India ," said Charles Chang, Asia power and gas analyst at rating agency Fitch. Nuclear fuel makes up 1.4-3.7% of the power output in Asia 's two most populous nations, below the 35-40% for Japan and South Korea and 78% for France .
Few projects have broken ground in the West in the past few years as environmental, health and security concerns have persisted since the Chernobyl accident in 1986.
A growing number of ageing nuclear plants in Europe are reaching their expiry dates and it has not been decided if they will be replaced. To clinch the lucrative contracts in Asia , nuclear equipment suppliers have focused on their safety records as well as competitive investment and production costs, analysts said. Suppliers also have to convince their own governments to let them export such sensitive technologies. The governments must also build good ties to win such deals, industry experts said.
The suppliers include Framatome ANP, a venture between France 's Areva and Germany 's Siemens, Electricite de France, and Atomic Energy of Canada, an unlisted global nuclear equipment maker, and Russia . Framatome said on its web site it "is ready to take part in the new development phase of the Chinese nuclear programme" and "is ready to issue the most suitable proposal to allow the Chinese industry to become more and more self-sufficient."
Washington bars firms such as Pittsburgh-based Westinghouse Electric, a unit of state-owned British Nuclear Fuels, and General Electric, from building reactors in China . But industry sources said Washington was expected to ease its control on China in September. " US firms are not allowed to provide a whole set of equipment to China , let alone signing contracts and providing loans to build the plants for us. But this September the restriction is expected to be lifted," said Liu Changxin, deputy secretary general with the Chinese Nuclear Society in Beijing .
China is about to build four 1,000-megawatt (1m kilowatt) plants, costing $6bn as part of its drive to quadruple nuclear capacity to 32,000 MW between '05 and '20. Beijing plans to tender the projects in '05, said the World Nuclear Association (WNA). Westinghouse would bid to supply its latest reactors, known as AP 1000s. The projected cost for the AP 1000, scheduled to get design approval in September, will be $1,000-$1,200 per kilowatt. Framatome would also make a bid, said the WNA, which represents nuclear companies and organisations.
Westinghouse spokesman Gilbert Vaughn said the use of "a series of AP 1000s in China " could support as many as 5,000 skilled US jobs over the course of construction.
"These jobs would help to load Westinghouse design-and-manufacturing facilities as well as those of US-based suppliers, including major architectural, design and construction organisations," Vaughn said.
US firms are now allowed to provide engineering services for China , which uses reactors from France , Canada and Russia . Russia 's equipment is cheaper and Moscow has political clout over its neighbour due to China 's demand for its arms, Liu said.
Most of the world's 440 nuclear plants, which supply 16% of global electricity, are in Japan , Europe and North America . The cost of building a nuclear plant is high but its fuel is cheaper than other alternative fuels. China and India are trying to emulate Japan and South Korea , which built their first nuclear power plants decades ago with US or European technology, but are now capable of making their own reactors and even exporting them, analysts said.
Japan 's Mitsubishi, Toshiba and Hitachi supplies nuclear power parts to China . India , which began construction on six plants in '02 and aimed to have 20,000 MW of nuclear capacity by '20, mainly uses equipment and technology from Canada and Russia . Russia is supplying India 's first large nuclear power plant via a Moscow-funded $3bn contract, the WNA said.
In India and China , nuclear equipment makers are usually required to bid with proposals to fund the projects. The funds are normally via loans from the bidding firm's governments. Although China and India are tapping the domestic bond market, the projects will remain largely out of reach of private capital, analysts said. "They will never get project finance. It is too political," said Vijay Sethu, Asia power banker at ANZ Investment Bank.
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