Obama, Modi welcome preparatory work for India reactor project

By Valerie Volcovici and David Brunnstrom

WASHINGTON (Reuters) - U.S. President Barack Obama and Indian Prime Minister Narendra Modi on Tuesday welcomed the start of preparatory work for six nuclear reactors in India, a key step in closing the first deal stemming from a U.S.-India civil nuclear accord struck more than a decade ago.

A joint U.S.-India statement said India and the U.S. Export-Import Bank were working to complete a financing package for the project, and that the Nuclear Power Corporation of India and Toshiba Corp's Westinghouse Electric had confirmed engineering and site design work would begin immediately.

It said the companies would work toward finalising the contract by June 2017. That is a year later than Westinghouse Chief Executive Daniel Roderick said he hoped for in an interview with Reuters in late March.

Asked about the delay, a Westinghouse spokeswoman, Courtney Boone, said: "the negotiations continue."

Westinghouse has been negotiating the project since 2005.

A longstanding obstacle has been the need to bring Indian liability rules into line with international norms, which require the costs of any accident to be channelled to the operator rather than the maker of a nuclear power station.

Asked if Westinghouse was satisfied with the provisions on liability, Boone said great progress had been made, but Westinghouse would "continue to monitor and support the efforts of the Indian government to provide a solution."

She said the Indian government could begin site work, but Westinghouse could only do so once an "enabling work agreement" was in place, which it hoped for in the "very near term."

The senior U.S. State Department official for South Asia, Assistant Secretary of State for South and Central Asian Affairs Nisha Desai Biswal, said last month that India had addressed concerns over liability to the satisfaction of the U.S. government and it was now up to individual companies to determine whether they were comfortable to do business with India.

John Morton, senior director for energy and climate at the White House, told reporters Tuesday's announcement "represented a clearer and more definite statement about both countries' commitments" that the reactor project would move forward.

(Reporting by Valerie Volcovici and David Brunnstrom; editing by Bernard Orr and David Gregorio)