Feedback from the industry for India achieve its nuclear targets

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Indian nuclear energy industry has set a target to reach 22,480 MW by 2030-31. There are a myriad of opportunities for the Indian and foreign suppliers with regards to the upcoming fleet mode projects and the light water reactor (LWR) projects. However, there are few important points that need to be considered to have a clear roadmap of achieving the target.

Some of the challenges faced are issues related to land acquisition, regulatory clearances, site issues at early design stage and delays in equipment and material supplies which eventually affects the cost of the project.

Indian suppliers feel the biggest challenge in the nuclear power project is the time and cost overrun. In order to address them, one of the key aspects is to invest time and energy in technology and to do things right the first time. Thus, it is important to maintain the continuity of work, which will help suppliers to retain the talent pool and maintain nuclear culture across the organisation. 

Some of the suggestions that the Indian suppliers propose to Nuclear Power Corporation of India (NPCIL) are:

(1) Currently there has been a huge gap (usually 12 to 24 months) between the tendering and order placement stage. This has led to projects being delayed and eventually increasing the cost. As NPCIL is considering giving opportunities to new suppliers, the Indian suppliers propose that NPCIL should be looking at companies which have a proven track record of handling nuclear projects. Hence it is important to focus on the technical evaluation criteria, so that once the company is qualified as lowest bidder in tenders, they have the capability and capacity to deliver those critical equipment on time.

(2) One of the measures the industry should look at for smoother contract management and tendering process is bulk ordering. Currently the suppliers get orders for 1 or 2 reactor units and then for the next subsequent units, orders are again placed for tendering. With the lack of visibility of future orders, it is difficult for suppliers to plan for future investments.

(3) The technical specifications in tenders should also be frozen especially for the fleet mode projects in order to avoid any delays due to pre-bid tendering, technical queries and solving those queries. This will help to cut down the cycle time from tendering to order stage.

(4) Performance based allocation – NPCIL can place the initial orders to the suppliers and then based on their performance, repeat orders can be given. This will motivate the suppliers since the equipment is performing well and hence they can invest more in the infrastructure and the talent pool.

(5) Optimum utilization of each stakeholder in the supply chain is crucial. In the supply chain there are many stakeholders like NPCIL, large Indian companies and also Micro, Small and Medium Enterprises (MSME) vendors. Thus, items which can be manufactured by MSME vendors easily eg.fastener should be manufactured by MSME vendors and not the large Indian companies, so that the capacity and strength of each and every stakeholder is used to save time. 

(6) There is also a need for corporate coordination between customer and supplier every quarter, where customers and suppliers can discuss their problems and chalk out solutions. This can mutually benefit both the parties so that the projects are completed on A lot of inputs from the NPCIL and the suppliers can be shared on a common platform which will help to cut down the delays in projects and will eventually solve the problem of cost overruns.

(7) Considering the long duration and cycle time of the project, typically for equipment it may go up to 5 years, hence managing working capital is crucial for every industry. A supplier entering the nuclear energy market for the first time may find difficulty in managing cash. Hence the industry feels that an NPCIL should work with the Government of India in supporting the industry in managing the financial terms Eg- payment terms should be flexible so that there is a continuous cash flow to the industry in order to stick to the delivery schedules

From the NPCIL point of view the cost overruns can be prevented by the support of 3 aspects :

  1. Engineering
  2. Supply of equipment on time
  3. Construction work

To a large extent the first two factors i.e the engineering and supply of equipment on time has been taken care of in the future projects. But the important factor that needs to be worked on is the construction work. Few of the difficulties encountered by vendors are understanding the technical and commercial requirements and maintaining financial cash flow. These issues are marginally solved by supplying the equipments before time, integrating 3D engineering and also by standardization, where the procurement and quality assurance plan can be frozen which can be included in the tender itself

NPCIL agrees that constructive feedback should be taken in a formal manner so that appropriate actions can be taken.

The localization for the project starts with the balance of the plant and not directly from the nuclear island. For the international suppliers who wants to participate in the Indian nuclear energy programme, the industry feels that they have a great opportunity in the LWR projects in India eg. Rosatom, EDF or Westinghouse projects. In the upcoming projects, the Indian industry feels that there will be potential possibilities of localization for the EPR project and AP1000 projects, whereas in the VVER project, the amount of localization for Kudankulam 5 and 6 will be quite less. 

The international suppliers need to identify the gap where they can support the Indian suppliers and have technology tie up to maintain the commercial viability of the project. In the pressurized heavy water reactor (PHWR) projects, currently almost all the equipments are indigenized and hence there are not many opportunities for international suppliers to get involved.

NPCIL also urges the international suppliers to do surveys in the Indian industry for locating potential partners and make them part and parcel of the supply chain from the beginning.

One of the important criteria for localization of projects is the government funding. It is evident that every country will provide funding to support their industries. Hence if the localization activities are to be carried out by Indian nuclear industry, the Government of India should check measures on how the funding can be supported

Thus, all the stakeholders, instead of working in silos, should collaborate and work with each other to maintain continuity of work, which will eventually help in achieving the target.

Input for this article was provided during the keynote session of India Nuclear Business Platform Lite 2021 which featured Nuclear Power Corporation of India Ltd, Atomic Energy Commission, L&T Heavy Engineering, Avasarala Technologies Ltd. and Tata Consulting Engineers Ltd.

By |2021-06-24T15:54:47+08:00June 24th, 2021|industry-insights, nuclear-industry|0 Comments