PGPPM Module-57

Assignment on Project Management-II Oil & gas Infrastructures (PGPM-34)

Submitted by Bharat Bhushan Lawaniya Reg. no. 210-08-31-8518-2121 Engineer-BHEL Parichha Thermal Power Plant site

Assignments No: 12 Project Management-II Oil & gas Infrastructures

1. Major challenges facing by the transport sector of India. 2. Major changes required in setting up an effective regulatory framework for a speedy infrastructural development in India. 3. Nuclear is the best option to meet Indias growing energy needs noting that the country is dependant on oil and gas imports and its coal supplies are limited. Discuss this statement with substantiating the statement with facts and figures.

Major challenges facing by the transport sector of India Indias roads are congested and of poor quality. Lane capacity is low most national highways are two lanes or less. A quarter of all India's highways are congested. Many roads are of poor quality and road maintenance remains under-funded - only around one-third of maintenance needs are met. This leads to the deterioration of roads and high transport costs for users. Rural areas have poor access. Roads are significant for the development of the rural areas - home to almost 70 percent of India's population. Although the rural road network is extensive, some 33 percent of Indias villages do not have access to all-weather roads and remain cut off during the monsoon season. The problem is more acute in India's northern and north-eastern states which are poorly linked to the countrys major economic centres. The railways are facing severe capacity constraints. All the countrys high-density rail corridors face severe capacity constraints. Also, freight transportation costs by rail are much higher than in most countries as freight tariffs in India have been kept high to subsidize passenger traffic. Urban centres are severely congested. In Mumbai, Delhi and other metropolitan centres, roads are often severely congested during the rush hours. The dramatic growth in vehicle ownership during the past decade - has reduced rush hour speeds especially in the central areas of major cities. Ports are congested and inefficient. Port traffic has more than doubled during the 1990s, touching 650 million tons in 2006-07. This is expected to grow further to about 900 million tons by 2011-12. India's ports need to significantly ramp up their capacity and efficiency to meet this surging demand. public transport systems in India. Trains and buses in most cities are dangerously overcrowded. On suburban rail lines in Mumbai, peak-hour trains must carry more than twice their maximum design capacity, leading to inhuman travelling conditions, with so-called super dense crush loads of 14 to 16 standing passengers per square meter of oor space On peak-hour trains, many passengers are forced to hang out doors and windows or to ride between train cars or even hang on the outsides of

cars. Suburban trains and stations seem hopelessly overcrowded and desperately need expanded capacity.Buses in Indian cities are doubly disadvantaged by congested conditions. Buses themselves are seriously

overcrowded, with some passengers forced to ride on the outsides of vehicles. In addition, however, buses must negotiate extremely congested, narrow streets, with no separate rights-of-way at all, having to ght with amixed array of animal-drawn carts, minivans, cars, taxis, motorized two-wheelers,auto rickshaws, pedestrians, cyclists, and street vendors. Severe roadway congestion has slowed down most buses to a crawl during much of the dayas slow as 6to 10 km per hour in many large cities These congested conditions in public transport vehicles, stations, and rights-ofway not only slow down travel but make it outright dangerous. Tens of thousands of public transport passengers are killed or injured every year in accidents. Many buses and trams do not even have doors and windows that can be closed, and that only encourages passengers to ride by protruding from inside the vehicle or by hanging on from outside. Clearly, riding on the roofs or sides of buses and trains is inherently unsafe and results directly from the severe under capacity of public transport systems in India. Slow, uncomfortable, undependable, and unsafe conditions in the early 1990s led to riots of passengers protesting these inhumane conditions, forcing some of the service expansion eorts. One consequence of insucient service quantity and terrible service quality is that public transport has been losing market share in many cities. Dissatised public transport passengers are increasingly turning to the private car, and even more dramatically, to the relatively low-cost motorized two-wheelers, which have experienced a boom in ownership and use in the past 10 years The deteriorating quality of public transport service reinforces the impact of the rapid decentralization of Indian cities. Both trends encourage a shift away from space-saving public transport toward individual motorized transport. That has greatly increased roadway congestion, further reduced travel speeds, and aggravated trac safety problems. Perhaps because of its separate rights-of-way and thus higher speeds, suburban rail continues to experience strong growth in passenger levels, in spite of crowded vehicles and stations and undependable service. By comparison, bus systems in some cities have suered losses of passengers in recent years, as their overcrowded buses get bogged down in slower and slower trac. Another crucial problem of Indian transport is ineciency, lack of productivity, overstang, excessively high operating costs, and large subsidy needs.

The Crisis of Public Transport in India

Since the mid-1990s, operating decits have been rising rapidly. For bus systemsin the largest cities, the combined operating decit quadrupled (Association of State Road Transport 2002b), and for Indian Railways, the annual operating decit tripled. The major challenges facing the Indian transport system are: 1. Indias roads are congested and of poor quality Most national highways are two lanes or less with the creation of low lane capacity. Almost a quarter ofall India's road highways have recurrent congestion, reducing truck and bus speeds to 30-40 km/h.Recurrent congestion on Indian roads contributes to high fuel consumption and huge pollution. Mostroads are of poor quality and the maintenance of roads remains significantly under-funded with theresult that only one-third of maintenance needs are met. This leads to the deterioration of roads andhigh transport costs for users. Taxes and bribes common between state borders paid by truckers (est. tobe $5 billion per annum)ii Road transport accounts for 8th highest road fatality rateiii 2. Poor access to rural areas Roads are claimed to be a catalyst for the economic development of rural areas. Almost 70 percent ofIndia's populations reside in rural areas. Although the rural road network is extensive, some 40 percentof Indias villages are cut off during monsoon season due to the lack of good access of all-weather roads.This problem is more acute in certain parts of India especially in the northern and northeastern stateswhich are poorly linked to the countrys major economic centers. 3. Railways are facing severe capacity constraints In general, Indias high-density rail corridors face severe capacity constraints. Also, freight transportationcosts by rail are much higher than in most countries as freight tariffs in India have been kept high tosubsidize passenger traffic. Moreover, capacity expansion of rail infrastructure networks is moredetermined by political compulsions rather than commercial opportunities.

4. Urban centers are severely congested In most Tier I and Tier II cities, roads are often severely congested during the rush hours. The dramaticgrowth in vehicle ownership estimated to be at

some 15 percent a year during the past decade - hasreduced rush hour speeds to as low as 5-10 km an hour in the central areas of major cities 5. Ports are congested and inefficient With liberalization of the Indian economy since the early 1990s, port traffic has more than doubled,touching 521 million tons in 2004-05. The port traffic volumes are expected to grow further to about900 million tons by 2011-12. 6. Airport infrastructure is strained With the entry of low cost carriers in the Indian aviation markets, air passenger and goods traffic has been growing at over 15 percent a year leading to severe strain on infrastructure at major airports, especially in Delhi, Chennai, Bangalore and Mumbai airports which account for more than 70 percent of nations air traffic. . Constraints in Investment Climate Investment climate parameters such as availability of skilled staff, operational issues (land, licenses and clearances, governance) and taxation were perceived as the prime constraints, followed by material costs, contract enforcement and dispute resolution, barriers to entry, and subsidies and fiscal concessions. Foreign contractors who were surveyed cited as the most critical issues cultural bias in project management style, poor governance, bureaucracy and corruption, risk allocation practices and contract conditions, visa and travel document processing for expatriates, and lack of information on the road construction industry. Besides these, foreign contractors also perceived some intangible constraints, such as preference given to domestic contractors during the bidding process. Delays in pre-construction activities are a recurring problem across all road construction contracts. On average for national highway projects it takes 50% more time than scheduled to hand over encumbrance free land to the contractors. Often, encumbrances such as the extent of land acquisition, utilities to be shifted and trees to be removed are not clearly identified and dealt with in a timely manner. These activities are also hampered by cumbersome procedures for obtaining the necessary clearances, unclear laws and regulations and a lack of coordination between the various government departments and levels. There is a distinct lack of a spirit of partnership between the contractor and the employer. This is critical to effective project execution, as evidenced in other countries. The result is time and cost overruns and related disputes that invariably end up in litigation.

Although based on the FIDIC4 framework, the present form of contract is inadequate and often contains unclear clauses that are open to interpretation, which subsequently lead to disputes and/or rent-seeking behaviour. For instance, the role of the Independent Engineer is not clear, weak and often circumvented by the employer, violating the conditions of contract. Most of the employers staff and domestic supervision consultants have little experience in FIDIC conditions of contract. For instance, there is a general lack of awareness that encashment of a bank guarantee can be invoked only upon default in the contractors obligations. Further, the weak accountability framework and an overwhelming fear of vigilance by auditors (not fully conversant with FIDIC and newer forms of contracts) inhibit quick decision-making on time extensions or variation orders. On the other hand, contractors often try to exploit these weaknesses of the employer and raise frivolous contract claims that result in waste of administrative time and resources. Supervision consultants exploit contract conditions by delaying decision-making, work-flow approvals Federation International des Ingenieurs-Conseils (International Federation of Consulting Engineers) that result in extension of the civil works, and thereby their time-based consultancy contracts. A related issue is rampant subcontracting. Often contractors subcontract works to small local firms that otherwise would not have qualified for the works, either to curry favour with the local politician or due to pressure from the employer. Design variations during construction, delays in pre-construction activities and unrealistic project completion schedules are often the cause of disputes on road construction projects. A rough estimate of the amount currently blocked in disputes is around Rs.540 billion ($12 billion) for the entire construction sector in India. About 10-15% of this amount can easily be attributed to the road sector. While the contracts contain a dispute resolution mechanism, experience shows that in most cases the dispute resolution board is established only when a dispute arises. Recommendations of the board are often not reasoned due to lack of capacity and knowledge of the board members. Furthermore, neither the road administration officials, nor the contractors, hardly accept the recommendations of the board those have financial implications against the affected parties and invariably appeal for arbitration / legal intervention. The enforcement of arbitration awards is also time-consuming and often leads to significant delays even much beyond the project completion. This is a potential deterrent for new entrants in the industry that needs to be resolved. The existing institutional structure in many road administration organizations does not provide for clear separation of owner and provider functions. The absence of an independent regulator to safeguard the interests of the various stakeholders, which exists in the telecom, energy and insurance sectors but not in road sector, is also a factor in the sectors slow evolution. In addition, some of the existing customs and foreign investment regulations have adversely affected the sector. On the other hand, the absence of regulation on

worker health, safety and environment is not conducive to the industrys labour productivity and efficiency. Distortions of direct and indirect taxes affect both foreign and domestic road contractors. Non uniformity and multiplicity of taxes, the high level of taxes and duties, cumbersome tax assessment and collection procedures, and an absence of appropriate fiscal concessions have been a serious drag on the efficiency and profitability of the sector. Contractors from other sectors face entry barriers such as strict qualification requirements related to previous technical experience in the sector. Rampant cartelization and collusion among contractors in some states also prevent these contractors and non-regional bidders from even submitting their bids. Furthermore, it is not possible for small and medium contractors to get a rating that would facilitate easier access to credit for expanding their business. The lack of a unified construction law (such as in China and Singapore) with the requisite legal framework governing all aspects of construction is another barrier to entry for players interested in entering this sector. Such a law would also strengthen the dispute resolution mechanism reducing the burden on the courts and the ensuing delays by satisfactory resolution of cases. In the year 2000, the Government of India notified construction as an approved activity under industrial concern but stopped short of declaring the sector as a fully fledged industry. This has limited the sectors opportunity to be brought under industrial regulations and better access to market finance. Supply-side Constraints An analysis of the number of contracts and contractors shows that even in a medium growth scenario, contractor capacity would have to double immediately to handle the increase in work in 2007-08 and beyond. To meet the needs of the high growth scenario, contractor capacity would have to quadruple. But this can happen only with the entry of large construction companies, other sector players and foreign construction companies into the road sector. A related issue here is the vertically integrated nature of state road agencies, some of which may be overstaffed. In this scenario of increased demand on the industry, this may not be the best structure for taking care of all aspects of delivery of road services. Inadequacy of skilled human resources is a major constraint across the road construction industry. Its slow evolution, the rising appeal of other streams of engineering such as computer science, the closure of civil engineering specialization in some institutes, the non-availability of suitable jobs upon graduation (in some states), and the availability of more lucrative jobs in information technology and financial services are all draining the industry of civil engineers. The family-owned-and-managed nature of most of the medium-

sized construction firms is another impediment to young aspiring civil engineering graduates. While there are limited technical courses for mechanics, welders and operators, there is no classroom or on-the-job training for other semi-skilled workers such as masons, carpenters, and electricians. Figures indicate that the supply of skilled and semi-skilled workers will barely keep up with the requirements of even a low-growth scenario. Under a medium-growth scenario, the supply will fall short by about 18-28%, while under a high-growth scenario, the gap will widen considerably from 55 to 64% over the next eight years. To meet this demand, the number of civil engineering graduates and diploma holders would have to go up by at least a factor of 3. The industry will have to take immediate steps to make the profession more attractive and enhance the starting emoluments to attract fresh graduates. As will be highlighted later in the report, there is also a scarcity of teachers catering to the needs of this industry. As to key construction equipment, to satisfy the average demand over the next eight years under a medium-growth scenario, the supply needs to increase by about 60%. Under a high-growth scenario, the supply would need to increase by a factor of 3 to meet the demand. This will require significant enhancement of production capacities of the equipment manufacturers and streamlining of import procedures. Other measures could be to foster the equipment rental market, equipment bank and leasing concepts, to establish an efficient supply-chain for industry spare parts, and to offer operator/technician training. As for key construction materials, while cement and steel requirements are not an issue, there could be shortages in the availability of bitumen and stone aggregates. Both would have to increase by a factor of 2 or 3 under the medium and high-growth scenarios. Stone extraction and aggregate production face constraints in the form of stringent quarrying/mining regulations and capacity constraints of the crushing plants.

Major changes required in setting up an effective regulatory framework for a speedy infrastructural development in India. GOI, some of the state governments and the other construction industry stakeholders have taken quite a few initiatives to facilitate growth and efficiency of the construction industry in recent times. A few initiatives are outlined below: Key Government Strategies According to Indias Tenth Five Year Plan, the Government aims to modernize, expand, and integrate the country's transport services. It also seeks to mobilize

resources for this purpose and to gradually shift the role of government from that of a producer to an enabler. In recent years, the Government has made substantial efforts to tackle the sectors shortcomings and to reform its transport institutions. These include: 1. Increasing public funding for transportation in its Five Year Plans. 2. Launching the ambitious National Highway Development Program with improved connectivity

between Delhi, Mumbai, Chennai and Kolkata, popularly called the Golden Quadrilateral, in thefirst phase, and now followed by a seven phase program ending in 2015. 3. Financing the development and maintenance of roads by creating a Central Road Fund (CRF)through an earmarked tax on diesel and petrol. 4. Operationalising the National Highway Authority to act as an infrastructure procurer and not just provider. 5. Amending the National Highway Act to expedite land acquisition, permit private financing andallow tolling. 6. Improving rural access by launching the Pradhan Mantri Gram Sadak Yojana (Prime MinistersRural Roads Program). 7. Reducing the congestion on rail corridors along the highly trafficked Golden Quadrilateral and improving port connectivity by launching the National Rail Vikas Yojana (National RailwayDevelopment Program) and more recently the development of dedicated freight corridor. 8. Upgrading infrastructure and connectivity in the country's twelve major ports by initiating theNational Maritime Development Program. 9. Privatization and expansion of the Mumbai and New Delhi Airports. 10. Enhancing sector capacity and improving efficiencies through clear policy directive for greaterprivate sector participation. Large parts of the NHDP and NMDP are to be executed throughpublic private partnerships (PPP). Private financing:

GOI is encouraging the upgrading of main highway corridors through the public/private partnerships (PPP) approach. This would help to supplement financial resources by tapping into the private sector and funds from the market. It is also hoped that implementation on the ground will Improve with full utilization of the managerial expertise of the private entrepreneurs. The model concession agreements stipulate performance-based outputs, which would help the government to shift the design risk to the concessionaires. This would be a welcome move, considering that the current Experience of the road agency getting the detailed project reports prepared by the design consultants is not encouraging. The PPP approach would also lend itself more to fixed cost/fixed time construction of projects with liquidated damages for delay and bonuses for early completion, setting a good example. Standard Indian requirement for a detailed design and engineering report, which includes the social and environmental assessments and all data for estimating the project costs 100% Foreign Direct Investment (FDI) in infrastructure development: The biggest policy initiative over the past two years has been the cabinet approval for wholly foreign owned direct investment in the road sector. It is hoped that this initiative will facilitate rapid investments in infrastructure, but the results of the policy will not become apparent for at least three to five years. Mechanism to implement Dispute Review Board (DRB) decisions: NHAI has recently set up a high-level committee to review recommendations of the DRBs which are in favour of the contractors. It is understood that they have decided in several cases to implement such recommendations and not proceed with further arbitration. This is a healthy trend and would give a right signal to the contracting industry. Skill upgrading of construction workers: The state governments of Madhya Pradesh, Rajasthan, Haryana and Bihar have cooperated with the Construction Industry Development Council (CIDC) to enhance the skills of construction workers. The workers would then be absorbed in various national and state schemes, such as the National Rural Employment Guarantee Scheme. Training centres for construction workers: The Government of Andhra Pradesh, with the support of construction contractors, took a laudable initiative of creating a National Academy of Construction (NAC), with the objective of enhancing the skills of construction workers and equipment operators in the state. The Academy also runs short and long courses on construction management. It is a model agency worthy of emulation by other states. Initiatives by the Infrastructure Industry for Development in recent times includes:

 Devising a grading system for construction companies Developing common lending norms to facilitate financing Designing quality assurance systems and several programs for upgrading workers skills. Formation of two separate associations by CIDC: the Construction Industry Professional Development Training Association for senior and executive levels and the Construction Industry Vocational Training Association for worker and supervisory levels. Setting up a separate body: the Construction Industrial Arbitration Centre in association with Singapore Institute of Arbitration The above initiatives of the Government and the industry are laudable, but there is a need to speed up their implementation. Moreover, the PPP mode of road project delivery would help as far as re-distribution of risks is concerned, but the actual delivery of the road works will still depend on the capacity of the Construction industry in this sector. Given the rapid growth of Indias largest cities and the desperate need for better and expanded public transport, it is crucial that policies change to improve theentire range of public transport services oered. Unfortunately, the Indian government has been emphasizing instead the need to further develop the nascent automobile industry in India and has actually encouraged more private car owner-ship and use. Indian cities are simply not equipped to handle increased volumes of private vehicle use. Roadways are already hopelessly congested, with average speeds declining each year. Even for automobile users, it will be important to improve public transport, if only to remove some trac from the streets and thus reduce congestion to manageable levels and increase travel speeds. Clearly, public transport must be given priority attention to avoid further deterioration of air quality, trac safety, congestion, and noise in Indian cities. While some improvements can be made even with existing funding levels, most would require massive infusions of new funding for expanded and modernized bus and rail systems. Equally important, state and local governments must give trac priority to buses, both through special bus lanes and signal priority over private transport. With more than 90 percent of public transport passengers in Indian cities relying on buses, it is especially important to upgrade bus services through modern, safe vehicles and priority on the congested roadways. The heavy, high-

oor buses currently in service in most cities are noisy, polluting, fuelinecient, and unsafe. They are built on truck chassis with such high oors that boarding is slow and dicult. Moreover, they have slow acceleration as well as poor fuel economy due to their weight, and are inappropriate to urban use. Many buses do not even have closable windows and doors to protect passengers from the weather and from falling out of the vehicle. It is essential to replace these outdated buses with modern, safe, clean, and fuel-ecient vehicles. Improving and expanding rail systems is also crucial, since they are insulated from the congestion delays caused by roadway trac. Unfortunately, they are usually very expensive, and it is not realistic to expect that even most large Indian cities will be able to aord new rail systems. Moreover, for medium and small cities, where public transport services are either nonexistent or very infrequent, as well as slow and crowded, improved bus service is the only feasible option. Private vehicles have a much higher share of total trips in small and medium-sized cities precisely because the bus services there are so inadequate.

2. Nuclear is the best option to meet Indias growing energy needs noting that the country is dependant on oil and gas imports and its coal supplies are limited.
Energy resources are available to supply the world's expanding needs without environmental detriment. Ethical principles seem increasingly likely to influence energy policy in many countries, which augurs well for nuclear energy. The competitive position of nuclear energy is robust from a sustainable development perspective since most health and environmental costs are already 1 internalised." Until about 20 years ago, energy sustainability was thought of simply in terms of availability relative to the rate of use. Today, in the context of the ethical framework of sustainable development, including particularly concerns about global warming, other aspects are also very important. These include environmental effects and the question of wastes, even if they have no environmental effect. Safety is also an issue, as well as the broad and indefinite aspect of maximising the options available to future generations.Sustainable development criteria have been pushed into the front line of energy policy. In the light of concerns about climate change due to human enhancement of the greenhouse effect, there is growing concern about how we address energy needs on a sustainable basis. Geopolitical questions of energy security are central to the assessment of sustainability for individual countries.

The Indian economy has grown phenomenally in the past two decades, and experts believe that it would be sustainable only if India invests heavily in infrastructure. Energy is a key component of this, as it promotes industrialization, and thus drives the economy to a great extent.

Traditionally, India has relied on fossil fuels for its energy needs, be it coal or petroleum (including natural gas). However, these resources are fast depleting and generating power from these non-renewal sources of energy has an adverse impact on the environment as they release pollutants into the atmosphere contributing to health hazards for humans besides contributing to global-warming. Hence, like the developed world, India has been on the lookout for renewable energy sources, which are both sustainable and have a low carbon footprint. Besides, apart from fulfilling the energy demands of its flourishing industrial sector, India has to cater to the energy needs of its burgeoning population as well, which in itself is a major challenge for any government. There are several options available as sustainable sources of energy, such as nuclear power, natural gas, biogas, geothermal power, hydroelectricity, wind power, solar power, and tidal power. Each of these renewal energy sources has its advantages and disadvantages. Some depend heavily on geographic and climatic conditions, while others depend heavily on expensive technology and a high risk of damaging the ecosystem. India has explored some of the alternate energy sources, such as nuclear power, hydroelectric power, wind power, and to an extent solar power. These have remained niche power generation sources due various factors, including high cost of producing power. However, it is believed that nuclear power is the most economical to produce in the long run, and has the lowest impact on the environment. Nuclear power contributes to almost 65% of the energy needs of France. No wonder, it has one of the cleanest airs among the industrialized European countries. Over 20% of the energy needs in the US is met through nuclear power. China is committed to building over 20 nuclear reactors to cater to its energy requirements to fuel industrial growth. Hence, nuclear power generation is fast gaining preference over other sustainable energy sources due to cost considerations and improvements in technology enabling more efficient production.

Nuclear power growth in India

India now envisages to increase the contribution of nuclear power to overall electricity generation capacity from 2.8% to 9% within 25 years.]By 2017, India's installed nuclear power generation capacity will increase to 10,080 MW. As of 2009, India stands 9th in the world9th in the world in terms of number of operational nuclear power reactors. Indigenous atomic reactors include TAPS-3, and -4, both of which are 540 MW reactors. India's US$717 million fast breeder reactor project is expected to be operational by 2012-13. The Indian nuclear power industry is expected to undergo a significant expansion in the coming years thanks in part to the passing of the U.S.-India Civil Nuclear Agreement. This agreement

will allow India to carry out trade of nuclear fuel and technologies with other countries and significantly enhance its power generation capacity. When the agreement goes through, India is expected to generate an additional 25,000 MW of nuclear power by 2020, bringing total estimated nuclear power generation to 45,000 MW. India has already been using imported enriched uranium for light-water reactors that are currently under IAEA safeguards, but it has developed other aspects of the nuclear fuel cycle to support its reactors. Development of select technologies has been strongly affected by limited imports. Use of heavy water reactors has been particularly attractive for the nation because it allows Uranium to be burnt with little to no enrichment capabilities. India has also done a great amount of work in the development of a thorium centered fuel cycle. While Uranium deposits in the nation are limited (see next paragraph) there are much greater reserves of thorium and it could provide hundreds of times the energy with the same mass of fuel. The fact that thorium can theoretically be utilized in heavy water reactors has tied the development of the two. A prototype reactor that would burn Uranium-Plutonium fuel while irradiating a thorium blanket is under construction at the Madras/Kalpakkam Atomic Power Station. Uranium used for the weapons program has been separate from the power program, using uranium from indigenous reserves. This domestic reserve of 80,000 to 112,000 tons of uranium (approx 1% of global uranium reserves) is large enough to supply all of India's commercial and military reactors as well as supply all the needs of India's nuclear weapons arsenal. Currently, India's nuclear power reactors consume, at most, 478 tonnes of uranium per year.[47] Even if India were quadruple its nuclear power output (and reactor base) to 20 GW by 2020, nuclear power generation would only consume 2000 tonnes of uranium per annum. Based on India's known commercially viable reserves of 80,000 to 112,000 tons of uranium, this represents a 40 50 years uranium supply for India's nuclear power reactors (note with reprocessing and breeder reactor technology, this supply could be stretched out many times over). Furthermore, the uranium requirements of India's Nuclear Arsenal are only a fifteenth (1/15) of that required for power generation (approx. 32 tonnes), meaning that India's domestic fissile material supply is more than enough to meet all needs for it strategic nuclear arsenal. Therefore, India has sufficient uranium resources to meet its strategic and power requirements for the foreseeable future.

Nuclear power plants

Currently, twenty nuclear power reactors produce 4,780.00 MW (2.9% of total installed base.

Power station Operator

State

Type

Units Total capacity (MW)

Kaiga

NPCIL

Karnataka

PHWR

220 x 4 880

Kakrapar

NPCIL

Gujarat

PHWR

220 x 2 440

Kalpakkam

NPCIL

Tamil Nadu

PHWR

220 x 2 440

Narora

NPCIL

Uttar Pradesh PHWR

220 x 2 440

Rawatbhata

NPCIL

Rajasthan

PHWR

100 x 1 200 x 1 1180 220 x 4

Tarapur

NPCIL

Maharashtra BWR (PHWR)

160 x 2 1400 540 x 2

Total The projects under construction are:[50][citation needed] Power station Operator State Type

20

4780

Units

Total capacity (MW)

Kudankulam

NPCIL

Tamil Nadu VVER-1000 1000 x 2 2000

Kalpakkam

BHAVINI Tamil Nadu PFBR

500 x 1 500

Kakrapar

NPCIL

Gujarat

PHWR

700 x 2 1400

Rawatbhata

NPCIL

Rajasthan

PHWR

700 x 2 1400

Banswara

NPCIL

Rajasthan

PHWR

700 x 2 1400

Total

6700

This is a list of States and Union Territories of India by installed capacity of power utilities with generation mode break-up as of 31-03-11 published by the Ministry of Power with figures in millions of watts (megawatts). Total Installed Capacity Total Thermo

Rank

State/Union Territory

Nuclear

Hydro

RES**

India

173626.40

112824.48

4780.00

37567.40 18454.52

Maharashtra

22645.29

15813.98

690.14

3331.84 2809.33

Gujarat

15722.65

12390.86

559.32

772.00

2000.47

Tamil Nadu

15515.43

7056.62

524.00

2122.20 5812.61

Andhra Pradesh

15035.58

10297.28

275.78

3695.53 766.99

Karnataka

11546.14

5075.29

254.86

3599.80 2616.19

Uttar Pradesh

9,646.73

4057.09

190.90

3518.20 1880.54

West Bengal

9891.66

9220.19

92.88

315.88

262.71

Madhya Pradesh

6,780.01

3435.93

151.04

3031.57 161.47

Punjab

6,426.15

3774.03

469.00

1456.82 726.30

10

Rajasthan

8,471.69

6470.14

740.00 [1] 1162.00 99.55

11

Haryana

8,530.29

7054.03

76.16

1331.40 68.70

12

Orissa

4072.46

0865.23

0.00

1174.93 32.30[1]

13

Damodar Valley Corporation

3854.00

3710.00

0.00

144.00

0.00

14

Delhi Territory

3,677.34

3045.20

47.08

585.06

0.00

15

Chhattisgarh

3,607.05

3312.90

0.00

120.00

174.15

16

Kerala

3514.05

1545.82

80.09

1769.10 119.04

17

Uttarakhand

2,383.03

301.05

16.28

1955.73 109.97

18

Jammu and Kashmir

2,158.95

509.62

68.00

1469.50 111.83

19

Jharkhand

2,152.57

1972.52

0.00

176.00

4.05

20

Bihar

1,969.99

1846.59

0.00

73.00

50.40

21

Himachal Pradesh

1,896.47

156.43

14.08

1540.84 185.12

22

Assam

980.30

522.19

0.00

431.00

27.11

23

Goa

357.23

327.18

0.00

0.00

30.05

24

Meghalaya

288.08

28.05

0.00

229.00

31.03

25

Pondicherry Territory

256.62

239.51

17.09

0.00

0.02

26

Tripura

243.36

165.35

0.00

62.00

16.01

27

Sikkim

193.09

76.98

0.00

75.00

41.11

28

Arunachal Pradesh

180.14

36.88

0.00

98.00

45.26

29

Manipur

158.86

71.41

0.00

81.00

5.45

30

Mizoram

119.33

67.86

0.00

34.00

17.47

31

Nagaland

102.67

21.00

0.00

53.00

28.67

32

NLC

100.17

100.17

0.00

0.00

0.00

33

Chandigarh Territory

93.46

41.58

4.84

47.04

0.00

34

Dadra and Nagar Haveli Territory

80.78

78.80

1.98

0.00

0.00

35

Daman and Diu Territory

71.10

69.12

1.98

0.00

0.00

36

Andaman and Nicobar Islands Territory

65.40

60.05

0.00

0.00

5.35

37

Lakshadweep Territory

10.73

9.97

0.00

0.00

0.76

"Nuclear Power is a genuine economic option in terms of Long Range Marginal Cost (LRMC) advantages for power supply at locations far remote from coal reserves , particularly if hydel sources are not available in these areas" India is poised to embark upon a comprehensive nuclear power programme with an emphasis on a new series of nuclear power plants, including some of higher capacities. In a bid to achieve rapid growth in the installed nuclear power capacity, a revised Nuclear Power Programme is being formulated. In India, the total nuclear installed capacity is 1840 MWe as compared to 3,46,000 MWe of the world. India's nuclear power programme is at a threshold and is now set for rapid expansion as a distinct possibility. There are three reasons to prioritise nuclear power plant. The first reason is that in terms of Long Range Marginal Cost (LRMC) advantages, nuclear power is a genuine economic option for power supply at locations far remote from coal reserves, particularly if hydel sources are not available in those areas. Further, the teething problems faced during indigenising the technology used in manufacturing nuclear power equipments in the mid 80s were over by the early 90s. Today, India is one of the few countries which is entirely self reliant in this field, more so than comparable countries like South Korea. The third feature is that in recent years, India's nuclear power plants have been running at good capacity utilisation levels. PLFs are now close to design levels and this means costs are close to normative levels. We can now look at details. A country should choose an optimal mix between thermal, hydro, nuclear, renewable and non-conventional energy sources. In fact there is no standard prescription to choose this optimal mix, but it should be studied in detail specifically for each country as solutions differ for every country. Thus, India has to choose its own mix and proceed accordingly. While economic considerations are one of the important inputs to choose such a mix, there are others too. For example, one of the reasons why Japan is going for Nuclear Power in a big way is to ensure energy security. This seems to be applicable for India also, especially in view of the technological control regime prevailing in the world. The question of feedstock for meeting energy needs has to be modelled taking into account transport costs of inputs and transmission costs. This work was done systematically for the first time in a Planning Commission sponsored study on Energy Modelling for India by Ram Prasad Sengupta. Table - 1 gives the lead distance of coal movements to load centre power plants. Table - 2 gives the LRMC/Unit of energy supply at Busbar in different regions of India. The advantage of nuclear feedstock in the West and the South is clear. Table - 3 gives the results of optimal supply alternatives in the year 1999/2000 from different sources. Again, these results will need some more fine tuning with recent data but primarily, are robust enough to hold.

Considering the projected demand for electricity in the medium and long terms in the country, it is imperative to utilise all possible sources of energy. Although large parameters in new electricity generation systems are expected to be from thermal and hydel power plants with all the prevailing constraints, nuclear power is definitely a viable option to supplement the energy requirements of the country. The progressively increasing role of nuclear power will be at locations away from coal mines to relieve to the extent possible, the load on transportation infrastructure for movement of coal. In the long run, the nuclear option will be called upon to play an increasing role for the augmenting power generation in the country upto 10 to 15 %. At present, among available energy, apart from coal and hydro, nuclear energy is the only attractive alternative which can fill the increasing gap between demand and supply. It is necessary to develop nuclear power, independent of short term economic considerations, also for the following reasons :Long-term need to develop alternative energy systems; Utilisations of Uranium resources and large amounts of Thorium the country is endowed with. It is estimated that indigenous thorium deposits can sustain about 300,000 MWe of electricity generation capacity for about 300 years; The necessity to diversify the energy resources for energy security and energy independence; Saturation effects that may throttle other technologies like constraints in transport and infrastructure; To limit green house gases such as carbon dioxide from thermal stations; To limit long term energy needs which cannot be met by the limited fossil resources which are also required for consumption in sectors other than the power industry; Keeping abreast with nuclear power technology among the developed and developing countries, especially in Asia; The nuclear power industry is almost totally indigenous for the entire nuclear fuel cycle. Thus, installation of nuclear power plants can give a fillip to other Indian industries.

It is worth noting in this context that countries such as China, which have larger resources of coal than India are developing nuclear power at a rapid pace. Japan, South Korea and South East Asia are also increasing their nuclear power capacities in a big way. Even Indonesia with good oil reserves, Thailand, Malaysia and Vietnam etc. are going for nuclear power in a big way. In the long run, nuclear option will be called upon to play an increasing role for augmenting power generation in the country upto 10 to 15%. Nuclear power in India has been established as a safe, environmentally benign and economically viable source of power generation. The operating performance during the previous financial year has shown remarkable improvement and NPCIL has generated 7983 MUs and achieved and overall capacity factor of 60% and thus made a net profit of 156.3 crores in the financial year 1995-96. The main reasons for unsatisfactory performance of nuclear power plants are turbine failure and boiler failure. The average tariff for older power station of NPC varies from 63 paise to 147 paise. It is necessary to improve the operational performance of NPC in

respect of PLF, plant availability, ratio between cost and generation and tariff for generating internal resources for financing the expansion programme of the corporation. Argument in a Nutshell The economics of nuclear power in India depends on the cost of electricity generated by a nuclear power plant vis-a-vis cost of generation of electricity from coal fired thermal power plant. The coal deposits in India are concentrated in the Eastern regions. The setting up of a coal fired power plant in Western India and in the North-west, entails transporting coal over distances exceeding 1000 Km. as the distance involved in the transportation of coal from a mine mouth exceeds 1000 Km., the economics of nuclear power becomes favourable. There is a feeling in certain quarters that nuclear power is more capital intensive and requires a large fraction of imported components. This does not seem to be true for the following reasons : If one considers the total investment in a power plant, and all associated facilities such as fuel cycle facilities including coal mine development and investment needed to transport coal, the difference between the two options may not be significant at all. Further, the method for comparison such as single station cost and system cost also influence the feasibility of the coal vs. nuclear power plant. The comparison between coal and nuclear options on the basis of station cost method may give misleading results. The reason being that the single station method fails to take an analytical account of system interactions. This could result in the plant being pushed lower down in the operational merit order as it ages and as new, more advanced plants with lower marginal operating cost join the system. 9th year Plan The 15th Electric Power Survey of India has estimated that by the end of IXth Plan, 570 billion units of electricity will be required to be generated at power stations busbar. Further, peak demand at busbar will be around 96,000 MWe. For IXth Plan 32,000 MW capacity projects have been identified which includes 880 MWe from nuclear power projects. This corresponds to 2.74% of the identified projects for the IXth Plan. In view of difficulties in availability of coal and liquid fuels, the importance of nuclear power has increased. Measures to reduce costs and improve economics of nuclear power which need to be followed up seriously by DAE are as follows : Simplifying and standardising the designs of reducing the system complexities to reduce costs.

Building a larger number of successive units with one time commitment and standardised design to reduce manufacturing cycles, manufacturing costs and overall project costs. Reducing the gestation period for nuclear power projects by improving construction, planning and methodology, better project management, etc., as well as by streamlining clearances from AERB, MOEF, Pollution Control Board etc. Significantly, with a view to expedite fresh generating capacity addition in the private sector, a decision has been taken that competitively-bid power projects with an investment of upto Rs. 1000 crores that have been exempted from seeking the Central Electricity Authority's (CEA) approval will henceforth not require environment clearance either. Improving the plant load factor of existing nuclear power plants. Possibility of joint sector projects and private sector participation to mobilise additional financial resources should be explored. R & D on specific development tasks in the field of nuclear power technology should be fully supported by the Government as a part of the national policy. There is a need for standardised system for annual revision of tariff. The problem of shortage of funds would be solved to a large extent when tariffs are fixed on an objective basis for power generation from different sources. While economics is an important consideration for harnessing any energy source, I would like to recall Dr. Bhabha's remark made four decades ago. He said ' No power is costlier than no power' meaning lack of power could impose a severe economic penalty. With the national electrical peak capacity deficit estimated at about 29%, the loss production in the economy due shortage of power is enormous. The case for a higher priority to nuclear power is now impressive and deserves very serious considerations in the Ninth Plan. The Prime Minister has personally supervised a more active policy on power sector planning and reform.
REFERENCES [1] OECD (Organisation for Economic Co-operation and Development), (1999), OECD Policy Brief No. 8, OECD, Paris, France. [2] OECD (Organisation for Economic Co-operation and Development), (1999), The OECD Three-Year Project on Sustainable Development: A Progress Report, OECD, Paris, France. [3] IEA (International Energy Agency), (1998), Key World Energy Statistics from the IEA Data for 1996, IEA, Paris, France. [4] RHODES, R., and BELLER, D., (2000), The Need for Nuclear Power, in Foreign Affairs, January/February 2000, Vol. 79, No. 1, Washington, United States. [5] Worldwatch Institute, (1999), State of the World 1999, W.W. Norton & Company Inc., United States. [6] IEA (International Energy Agency), (1998), World Energy Outlook, OECD, Paris, France. [7] IEA (International Energy Agency), (1999) Energy Balances of Non-OECD Countries 1999 Edition, OECD, Paris, France. http://www.igcar.gov.in

Energy demand
A number of factors are widely agreed. The world's population will continue to grow for several decades at least. Energy demand is likely to increase even faster, and the proportion supplied by electricity will also grow faster still. However, opinions diverge as to whether the electricity demand will continue to be served predominantly by extensive grid systems, or whether there will be a strong trend to distributed generation (close to the points of use). That is an important policy question itself, but either way, it will not obviate the need for more large-scale grid-supplied power, especially in urbanised areas, over the next several decades. Much demand is for continuous, reliable supply of electricity on a large scale, and this qualitative consideration will continue to dominate. The key question is how we generate that electricity. Today, worldwide, 68% comes from fossil fuels (41% coal, 21% gas, 5.5% oil), 13.4% from nuclear fission and 19% from hydro and other renewable sources. There is no prospect that we can do without any of these.

All India Energy Installed Capacity: Fuel Total Thermal Coal Gas Oil Hydro (Renewable) Nuclear RES** (MNRE) MW 111324.48 92,418.38 17,706.35 1,199.75 37,367.40 4,780.00 18,454.52 %age 64.75 53.75 10.3 0.7 21.73 2.78 10.73

Projected Primary Energy Requirement of India up to 2030

Fuel Range of Requirements in Mts 6321022 350486 100197 Assumed Domestic Production 560 35 100 Range of Imports# 72462 315451 097 Import (%) 1145 9093 049

Coal including lignite Oil Natural gas including coal bed methane (CBM)

Total commercial primary energy

13511702

3871010

2959

Demand supply Gap: India is well-endowed with both exhaustible and renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources. Indias energy policy, till the end of the 1980s, was mainly based on availability of indigenous resources. Coal was by far the largest source of energy. However, Indias primary energy mix has been changing over a period of time. Despite increasing dependency on commercial fuels, a sizeable quantum of energy requirements (40% of total energy requirement), especially in the rural household sector, is met by non-commercial energy sources, which include fuel wood, crop residue, and animal waste, including human and draught animal power. However, other forms of commercial energy of a much higher quality and efficiency are steadily replacing the traditional energy resources being consumed in the rural sector. Resource augmentation and growth in energy supply has not kept pace with increasing demand and, therefore, India continues to face serious energy shortages. This has led to increased reliance on imports to meet the energy demand. Coal and Oil Reserves Coal India now ranks third amongst the Coal producing countries in the world. Being the most abundant fossil fuel in India till date, it continues to be one of the most important sources for meeting the domestic energy needs. It accounts for 55% of the countrys total energy supplies. Through sustained increase in investment, production of coal increased from about 70 MT (million tons) (MoC 2005) in early 1970s to 382 MT in 2004/05. Most of the coal production in India comes from open pit mines contributing to over 81% of the total production while underground mining accounts for rest of the national output (MoC 2005). Despite this increase in production, the existing demand exceeds the supply. India currently faces coal shortage of 23.96 MT. This shortage is likely to be met through imports mainly by steel, power, and cement sector (MoC 2005). India exports insignificant quantity of coal to the neighboring countries. The traditional buyers of Indian coal are Bangladesh, Bhutan, and Nepal. The development of core infrastructure sectors like power, steel, and

cement are dependent on coal. About 75% of the coal in the country is consumed in the power sector (MoC 2005). Oil and natural Gas The latest estimates indicate that India has around 0.4% of the worlds proven reserves of crude oil. The production of crude oil in the country has increased from 6.82 MT in 1970/71 to 33.38 MT in 2003/04 (MoPNG 2004b). The production of natural gas increased from 1.4 BCM (billion cubic metres) to 31.96 BCM during the same period. The quantity of crude oil imported increased from 11.66 MT during 1970/71 to 81 MT by 2003/04. Besides, imports of other petroleum products increased from 1 MT to 7.3 MT during the same period. The exports of petroleum products went up from around 0.5 MT during 1970/71 to 14 MT by 2003/04. The refining capacity, as on 1 April 2004, was 125.97 MTPA (million tons per annum). The production of petroleum products increased from 5.7 MT during 1970/71 to 110 MT in 2003/04. Indias consumption of natural gas has risen faster than any other fuel in the recent years. Natural gas demand has been growing at the rate of about 6.5% during the last 10 years. Industries such as power generation, fertilizer, and petrochemical production are shifting towards natural gas. Indias natural gas consumption has been met entirely through domestic production in the past. However, in the last 4/5 years, there has been a huge unmet demand of natural gas in the country, mainly required for the core sectors of the economy. To bridge this gap, apart from encouraging domestic production, the import of LNG (liquefied natural gas) is being considered as one of the possible solutions for Indias expected gas shortages. Several LNG terminals have been planned in the country. Two LNG terminals have already been commissioned: (1) Petronet LNG Terminal of 5 MTPA (million tonnes per annum) at Dahej, and (2) LNG import terminal at Hazira. In addition, an in-principle agreement has been reached with Iran for import of 5 MTPA of LNG. Percentage of Nuclear Power in total Installed capacity The huge potential of the atom had been envisioned in India in the ancient times and references to the same can be found in some of the ancient scriptures. Such references provide us a tantalizing glimpse into the ancient Indian history and, indeed, into the level of advanced thinking that these civilizations had reached in those times. In the modern times, it was Dr. Homi Bhabha, who foresaw, as early as in 1944, the potential of harnessing nuclear power in improving the quality of life of the millions of people stated: Any substantial rise in the standard of living in this region that can be sustained in the long term will only be possible on the basis of very large imports of fuel or on the basis of atomic energy.

The issues of energy sustainability and inevitability of nuclear power, which are only now receiving global attention, was foreseen by him over half a century ago. When the rest of the world was working on the military applications of atomic energy, he focused on harnessing atomic energy for the improving the quality of life. In the 1950s, nuclear power in the world was still in its infancy and India had just gained independence. The nascent nation was essential a rural economy, with practically no technology or industrial base. Therefore, realizing such a technology-intensive vision, which involved complex reactor and fuel cycle technologies must have seemed like a fantasy. However, with his clear vision, Dr Bhabha went ahead, building institutions R&D facilities, research reactors, industrial units to develop technologies and to deploy them. Soon, a sequential three-stage nuclear power program, aimed at optimum utilization of Indias nuclear resource profile of modest uranium and abundant thorium, with the objectives of improving the quality of life of the people and self-reliance in meeting the energy needs of the nation was conceived and adopted with a long-term vision. The three stages comprise Pressurized Heavy Water Reactors (PHWRs) in the first stage, Fast Breeder Reactors (FBRs) in the second stage and thorium-based systems in the third stage. Based on a closed fuel cycle, where the spent fuel of one stage is reprocessed to produce fuel for the next stage. This multiplies manifold the energy potential of the fuel and greatly reduces the quantity of waste. It is thus a single-basket solution for meeting the countrys energy needs in a sustainable manner, securing its energy future in the long term. Facilities for Production of Nuclear Materials and Backend Facilities for production of fuel, heavy water and other materials for the nuclear power program were set up under the aegis of the Department of Atomic Energy (DAE). Indian Rare Earth Limited was incorporated for mining and processing of rare earths like zircon and thorium for the program. Uranium Corporation of India Limited (UCIL) was set up to mine and process uranium ore. The company now has mines in Jharkhand and Andhra Pradesh and an entire PHWR reactor fleet till recently was fuelled by the fuel mined by UCIL in the country. Nuclear Fuel Complex (NFC) was set up for fabrication of fuel bundles/ assemblies. Given the special requirements of instrumentation for nuclear plants, Electronics Corporation of India Limited (ECIL) was set up to develop and manufacture the special instrumentation. Heavy Water Plants were set up for production of heavy water for the PHWRs at various locations in the country Facilities for back end of the fuel cycle reprocessing and waste management plants were developed in the DAE and set up at various locations for reprocessing spent fuel of the first stage. India today is recognized as a country with advanced nuclear technologies. Comprehensive indigenous capabilities have been developed in all

aspects of nuclear power and associated fuel cycles. It has a large R&D base, qualified human resource and facilities for continual development of human resource, industrial capability and capacity as well as robust regulatory framework. The performance of Indian nuclear power stations and implementation of projects have been comparable to international benchmarks. The technologies for several complex in-core operations have been developed and deployed successfully. Nuclear power reactors in operation have achieved high availability factors of 85% and higher consistently over the last several years. The highest performance in terms of uninterrupted operation has been 529 days, with eight reactors achieving continuous runs of over a year without scrams, and other reactors, too, registering nearly the similar feat. This indeed evidences the sound technology, design and operation and maintenance competencies in safe and reliable operation of Indian nuclear power plants. Sustainability of nuclear power depends on management of wastes. Thus, advanced technologies in partitioning and conditioning as well as disposal, including deep geological depository development, are priority area. Following above mentioned reasons are for using nuclear energy as the nuclear has so many potential to meet the India energy requirement.