INDIA-KOREA - Asia-Pacific Business and Technology Report

ENERGY
by Anshu Shrivastava
As one of the fastest
growing economies
of the world, India
is ramping up its nuclear
energy sector to meet
its burgeoning energy
demands.
An illustration representing nuclear energy with text on green background.
© Joanna Waksmundzka | Dreamstime.com
INDIA-KOREA
Glorious Past Bright Future
Nuclear Energy: India & South Korea Cooperation
In the quest for nuclear energy, the country
has signed civilian nuclear power cooperation
pacts with a number of countries,
including the US, France, Russia, Canada,
Mongolia, Kazakhstan, Argentina, Namibia,
and South Korea, which became the ninth
country with which India signed such an
agreement.
These two countries inked the agreement
last year in July when India’s President
Pratibha Patil visited South Korea. It
paves the way for South Korea-based companies
to enter India’s nuclear construction
market. “South Korea has a lot of technology
in energy infrastructure which they can
help India with,” Rajiv Biswas of IHS Global
Insight said to the press. “It also recognises
India as a key future market. This is a very
big opportunity for Korea to expand into
the emerging economies. All in all, it is a
very positive deal for both the nations.”
Both the countries had for the first time
discussed about a possible civil nuclear cooperation
agreement during Indian foreign
minister SM Krishna’s visit to South Korea
in June 2010. Earlier this year in March,
Indian Prime Minister Manmohan Singh
asked South Korean businessmen to help
India expand its burgeoning nuclear power
sector and invest in environment friendly
technology, while South Korean President
Lee Myung-bak requested that India set
aside specific allotment for South Korean
nuclear reactors.
Unlike India, where only 3 percent of its
energy needs are met by the nuclear energy
sector, South Korea’s 21 active nuclear reactors
fulfil 30 percent of the country’s electricity
needs. The country is planning to increase
this to 40 percent by 2040. For South
Korea, nuclear energy is a strategic priority.
“Our long-term power supply plan is to increase
the portion of nuclear power from
the current 30 percent to 40 percent by
2040 and the plan has not changed,” the Korea
Herald newspaper quoted an unnamed
official from the Knowledge Economy Ministry.
In addition to 21 active nuclear reactors,
the country has seven reactors under
construction, and it plans to build 11 new
reactors by 2030. It plans to increase the capacity
by 56 percent to 27.3 GWe by 2020,
and then to 43 GWe by 2030.
South Korea is Asia’s fourth-biggest
economy and is currently the sixth largest
nuclear energy exporter. The country’s
nuclear energy program dates back to the
1950s. In the early 1960s, the country began
the operation of its first nuclear reactor and
in 1978, the operation of its first power reactor.
The country is now aiming to become
a major exporter of nuclear energy technology.
In January, 2010, South Korea’s Ministry
of Knowledge Economy Minister said
that there is the aim to achieve exports of
80 nuclear power reactors worth US$400
billion by 2030, in the course of becoming
the world’s third largest supplier of such
technology, with a 20 percent share of the
world market, behind the USA and France
or Russia. “Nuclear power-related business
will be the most profitable market after automobiles,
semiconductors and shipbuilding,”
the Ministry of Knowledge Economy
said in a statement.
In comparison to South Korea’s nuclear
power industry, India’s nuclear energy sector
is still in its initial stages and is dependent
on foreign investors to take it to the
next level. The country’s civilian nuclear
program has suffered because of international
sanctions after its nuclear tests in
1974 and in 1998. And since India has not
signed the Nuclear Non-Proliferation treaty,
which aims to prevent the spread of nuclear
weapons and technology and promote
peaceful uses of nuclear energy, it wasn’t allowed
to sign deals for nuclear reactors and
materials for civilian nuclear programs. In
2004, India and the U.S singed the civilian
nuclear program agreement, which heralded
a new era for the country’s nuclear
energy sector.
Despite not being part of the Non-Proliferation
treaty, the country succeeded in
getting a much needed waiver from the Nuclear
Suppliers’ Group (NSG) in 2008 – due
to India’s commitment to non-proliferation
– which opened the doors for international
civilian nuclear energy cooperation with
other countries.
India is aiming to fulfil 25 percent of
its electricity needs from nuclear power
by 2050. According to reports, the country
expects to have 20,000 MWe of nuclear capacity
on line by 2020 and 63,000 MWe by
2032. Additionally, the country plans to set
up around 30 reactors.
India and South Korea both can gain “significantly”
from the civilian nuclear cooperation
agreement. South Korea aspires to
become a major exporter of nuclear technology
and materials, while India is seeking
partners that can help it develop its
nuclear energy sector. In 2009, a South Korean
company won a US$40 billion contract
to build and operate a 5600 MWe capacity
NPP with four APR 1400 units for the UAE.
This contract has established the country
as a credible supplier of nuclear technol-
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ogy. Last year, the country signed a bilateral
agreement with Saudi Arabia for cooperation
on the development of nuclear energy.
An international panel of nuclear safety experts
from the International Atomic Energy
Agency (IAEA), after their two-week mission
for the Integrated Regulatory Review Service
in July of 2011, concluded that South
Korea has strong regulations pertaining to
the operation of atomic energy facilities
safely and in preventing accidents.
Pranamita Baruah, researcher at the Institute
for Defence Studies and Analyses
(IDSA), a non-partisan, autonomous body
dedicated to objective research and policy
relevant studies on all aspects of defence
and security, wrote in an article that “the
nuclear deal will provide the South Korean
companies a framework to participate in
India’s ongoing nuclear expansion programme.”
Baruah also wrote that over the last few
years it has become difficult for a number
of western countries to enter the Indian
nuclear energy sector, as Japan holds the licenses
for critical components of their reactor
designs. French nuclear firm Areva and
the U.S-based General Electric had signed
agreements to sell nuclear reactors to India,
but they would have to face liability issues,
as both the companies use reactor vessels
produced by Japan Steel Works.
Japan agreed to grant a crucial waiver to
India in 2008 as part of the 46 nation Nuclear
Suppliers Group (NSG), but despite that,
it has avoided doing nuclear trade with India,
which has constantly refused to join
the NPT. Also, the country is having second
thoughts about nuclear power following
the Fukushima nuclear accident. Japan’s
reluctance to give nuclear technology and
materials to India is expected to benefit
South Korea. In the absence of Japanese cooperation,
South Korea can become a major
player in the Indian nuclear energy sector.
Industry experts believe that South Korean
companies will succeed in nuclear
power-related business, and emulate the
success stories of Hyundai, Samsung, and
LG in the Indian market. Also, it’s said that
the nuclear liability issues may not trouble
South Korean nuclear companies – KHNP
and KEPCO – as they are state-backed. Plus,
the Korean nuclear energy industry aims to
be 100 percent self-sufficient with no residual
intellectual property constraints.
In August of 2009, the state-run Korea
Electric Power Corporation (KEPCO) signed
an MoU with the Nuclear Power Corporation
of India Ltd (NPCIL) for bilateral cooperation
on technical exchange of data and
experience.
Enumerating the disadvantages for
South Korean companies, Ji-yeon Jung,
Ph.D.c., South Asian Studies at Jawaharlal
Nehru University, noted in a report that
South Korea has limited information and
accessibility to Indian government’s policymaking
process; and India favors continuing
exchanges with countries with which it
has already established reciprocal relations
such as France, Russia, Canada, and the US.
However, he also noted that the fact that India
is diversifying its cooperation channels
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