France close to $9bn Indian nuclear deal

France has taken a lead over rivals including the US and Russia for a €7bn ($9.3bn) deal to build two nuclear power plants in India.

This comes amid concerns that new nuclear liability legislation heightens the risks of doing business in India and as France supplies similar reactors to neighbouring China.

Anne Lauvergeon, chief executive of Areva, said on Monday the French energy company had signed a preliminary agreement with India’s Nuclear Power Corp to build the reactors and supply fuel for 25 years. The reactors are expected to be in operation within eight years.

Work on the advanced pressurised water reactors – the first in a series of six that, once built, will generate 10,000MW – could begin within six months once financing is agreed.

Ms Lauvergeon also said Areva was negotiating with its Indian partner over access to the group’s uranium mines, collaboration in other parts of the fuel cycle and making India an export hub for nuclear technology and expertise.

Power companies from Russia, France, the UK, the US and Canada are eager to help India meet its energy demands. The contribution of nuclear energy in India is forecast to increase from 4,000MW to 470,000MW in the next 40 years.

France’s nuclear ambitions in India were the centrepiece of a four-day visit to India by Nicolas Sarkozy, the president.

Ms Lauvergeon said the laws requiring greater compensation payments in the event of a nuclear accident were not a “dealbreaker” but regulators needed to consider where liability should lie for a reactor near the end of its life and under the control of a local utility.

“We would like to develop a strong base in India and [nuclear] exports from India,” she said. However, the legal framework was a concern. “The stability of the system needs to last for decades and decades. You can’t change the rules every 10 years. Stability is mandatory for us,” she said.

The French deal follows a civil nuclear agreement with the US at the end of 2008 that helped clear the way for India to buy plants, technology and fuel from the nuclear club of nations.

India, officially a nuclear weapons power since 1998, had been denied access to civilian nuclear technology since it tested a nuclear device in 1974 and its refusal to sign the 1968 non-proliferation treaty.

During his visit, Mr Sarkozy said France would support Indian membership of multilateral nuclear groups. A similar message was delivered by Barack Obama on his visit last month. However, the US president placed greater emphasis on drawing India into multilateral non-proliferation initiatives.

India operates 17 nuclear plants, and Russia is building two in Tamil Nadu.