Budget support for nuclear power down 10%

At a time when the government has renewed focus on nuclear power generation as a means to cut carbon emissions and achieve energy security, the fund allocation for nuclear power in the Budget 2010-11 has been slashed by over 10 per cent.

The Union Budget for the next financial year, tabled in Parliament by Finance Minister Pranab Mukherjee last Friday, provides for a support of Rs 1,848 crore for nuclear power schemes, as against an allocation of Rs 2,065 crore provided in the revised estimate of 2009-10.

While the Budget increased the overall plan outlay for nuclear power by over 29 per cent to Rs 4,739 crore over the revised estimate of the last financial year, this increase has been mainly on account of the over 81 per cent jump in the Internal and Extra Budgetary Resources (IEBR) of Rs 2,891 crore during 2010-11.

This money will be generated by the Nuclear Power Corporation of India (NPCIL).

India currently faces a gap of over 12 per cent in the demand and supply of power. Nuclear power plants account for 4 per cent of the overall installed power generation capacity in the country. The state-owned NPCIL, with an installed capacity of 4,120 Mw from 17 reactors, is the only domestic producer of nuclear power.

The Budgetary support for NPCIL for 2010-11 stands at Rs 34 crore as against the Rs 651-crore support provided in last year’s revised estimate. The company, however, has denied the need for any Budgetary aid to fund its expansion plans.

“For the last four years, we (NPCIL) have not drawn any budgetary support. We have a cash surplus of Rs 14,000 crore and can support around 10,000 Mw of projects from our own resources in the future. There is no possibility of any negative impact on our projects,” said a senior official from NPCIL.

The company plans to set up an additional 2,660-Mw capacity through five reactors by March 2011. The current cost of setting up nuclear power plants in India is Rs 6-7 crore per Mw, according to experts.

Industry observers are puzzled over the cut in the Budget allocation for nuclear power schemes. “It is unusual that the government has cut down the expenditure for something it wants to encourage. Given the five-fold jump in the nuclear power generation capacity that the government is aiming at, there is definitely a need for a massive increase in the capital outlay,” said Kuljit Singh, head (transaction advisory services), Ernst & Young.