India seeks US funding for Westinghouse nuclear project

23 September 2016

India is negotiating with the US Export-Import Bank for an $8-9bn loan to finance six Westinghouse Electric nuclear reactors, Reuters reported, citing two sources familiar with the talks. However, a freeze on lending at the bank is impeding progress, two sources familiar with the talks said. While India has allocated a site for the NPP at Kovvada in Andhra Pradesh for the US project, commercial negotiations have been slow because of US concerns about India’s nuclear liability provisions. However, an insurance scheme has now been put in place which addresses most of those concerns. India plans a tenfold expansion in nuclear capacity to 63,000MWe by 2032, and has been in discussions with suppliers from the US France and Russia. While France has also held back pending agreement over liability issues, Russia has already constructed two NPP units and has two more under construction with others planned. 

The deal with Westinghouse (part of Japan’s Toshiba Corp) is also contingent on financing and Eximbank cannot approve loans in excess of $10m, because of a dispute in the US Congress over board appointments stemming from a campaign by conservatives to close the government lender. Only two of five seats on the bank’s board are filled and the appointment of a third director - the minimum needed to clear board decisions - is being opposed by the Senate Banking Committee Chairman, Republican Richard Shelby.

"Financing of the reactors is the critical piece; everything is down to this," said one source involved in protracted negotiations to build the reactors, according to Reuters. The source said Indian negotiators and bank officials were trying to set the terms of the financial package in anticipation of an end to the freeze on the bank, which is affecting potential sales of several major US companies.

India is also seeking funding from Japan and South Korea for the reactors and Eximbank had asked a South Korean export credit agency if it would be interested in partly financing the Westinghouse deal, since some of the nuclear equipment and materials are expected to come from South Korea, an official at the agency with direct knowledge of the discussions told Reuters. The agency was willing to fund a part if a Korean contractor was involved, with Eximbank providing the majority of the total, the official said. Eximbank has not made any request to its Japanese counterpart to extend loans to the project, a source with direct knowledge said in Tokyo.

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