Under fire for inadequate budgetary support to the Nuclear Power Corporation of India Limited (NPCIL), resulting in India’s frontline atomic energy utility falling back on its repayment obligations to the Russians for supplies to the Kudankulam nuclear project, Finance Ministry has resorted to a three-fold increase in the allocation for the utility in revised estimates for this fiscal.
As against the budget estimate of Rs 1,665 crore for 2018-19, the revised estimates show an allocation of Rs 4,665 crore under the capital head. The increase in the allocation should largely take care of an estimated funding gap of around Rs 2,870 crore, alongside the spending under the investment head by the utility, a government official involved in the exercise said. For the next fiscal (2019-20), the allocation for NPCIL under the capital head is Rs 3000 crore.
The problem of non-payment of Russian credit on account of a reduction in the provision for Russian credit to NPCIL over the last couple of years was flagged before a parliamentary panel last year, responding to which the Department of Expenditure in the Finance Ministry had subsequently “conveyed” the concerns to the Budget Division of the Department of Economic Affairs in the same Ministry for “further necessary action”. The sanctioning of higher funds in the latest budget comes at a time when NPCIL’s budgetary support requirement has gone up in light of the utility taking up 10 new projects that had been cleared by the government in May 2017.
Under a credit arrangement between the governments of Russia and India, as soon as equipment leaves Russia for Indian projects such as the nuclear station in Kudankulam, that much money is released by the Russian government to the suppliers, which then becomes a loan on the Government of India. This loan is then supposed to be routed to NPCIL by way of a budgetary provision. Against that, the same money would be given back to the Centre so that it becomes a loan on NPCIL.
This arrangement has come under strain over the last couple of years due to reduction in budgetary allocation under the ‘investment in PSUs’ head, which had affected the loans payable to NPCIL towards ‘Russian credit utilisation’ that is outstanding in the books of the Controller of Aid Accounts and Audit —the division within the Department of Economic Affairs entrusted with the responsibility for withdrawal of loan and grant proceeds for all official development assistance where India is the recipient.
According to official estimates, while budgetary support to NPCIL had gone up from Rs 370 crore in the budget estimate for 2017-18 to Rs 1435 crore in the revised estimate for the year (entailing a total of Rs 685 crore under the investment head and Rs 750 crore as loan), the actual requirement in form of budgetary support submitted by the DAE was thrice that amount — Rs 4305 crore. The higher amount, official said, was primarily on account of a shortfall of earlier years in receipt of equity to tune of Rs 402 crore and obligations under Russian Credit of Rs 3,903 crore.
For 2018-19, while the allocation was hiked to Rs 1,665 crore in the budget estimate, it still left a funding gap of around Rs 2,870 crore, according to DAE estimates. The situation was exacerbated by 10 new projects based on the indigenous 700 MWe (mega watt electric) pressurised heavy water reactors (PHWRs) that had been sanctioned in mid-2017, due to which budgetary support requirement had also increased. NPCIL is currently operating 22 commercial nuclear power reactors with an installed capacity of 6,780 MWe, while it has another eight reactors under various stages of construction totaling 6200 MWe capacity.
Russia and India had, in 2015, agreed to actively work on projects deploying 12 additional Light Water Reactor nuclear reactors, for which, the localisation of manufacturing in India under the NDA government’s flagship ‘Make in India’ initiative and the commencement of serial construction of nuclear power plants was flagged as a joint initiative.
In this context, the Programme of Action for localisation between Russian state-owned utility Rosatom and the DAE was finalised during Prime Minister Narendra Modi’s Moscow visit in 2015. At the Kudankulam site, where two Russian-designed VVER-1000 series reactors have being installed, nearly 100 Russian firms and organisations are involved in documentation, supply of equipment and controlling construction process.