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India-South Korea Relations: The Nuclear Enterprise

South Korean President Lee Myung-bak’s visit on the occasion of India’s 61st Republic Day marked the beginning of a new era in India-South Korea relations. His visit not only brought the expansion of trade and commerce but also a possible civilian nuclear tie up between the two countries. India and South Korea are politically and economically liberalized. Trade between the two has thrived right from the beginning of this decade which is evident from the various treaties and MoUs signed by the two countries. Bilateral trade between the two countries amounted to US$15.6 billion in 2009 and the targets have been set to double it to US$30 billion by 2014. Moreover, the South Korean Pohang Iron and Steel Company (POSCO) steel project in the southern state of Orissa is the single largest foreign direct investment in India amounting to US$12 billion.  

The proposed India-South Korea nuclear cooperation would be a stepping stone in transforming the bilateral relations between the two nations from an economic partnership to the level of a strategic partnership. In fact, South Korea supported the Nuclear Supplier Group (NSG) waiver offered to India to engage in nuclear trade and commerce. India has already signed civil nuclear agreements with the United States, Russia, France, Argentina, Kazakhstan, Mongolia and Namibia, while the civil nuclear cooperation deal with Canada is expected to be completed by June this year. Russia is already building two reactors and a deal has now been signed for it to build four more reactors at Kundankulam. On the other hand, India has much to gain from AREVA NP, Areva’s subsidiary in charge of building the European Pressurized Reactors (EPR) in France, an advanced third generation nuclear reactor.

India has a lot to gain from a civil nuclear cooperation with South Korea. South Korea is the world’s fifth largest atomic energy producer which accounts for 40 per cent of South Korea’s power generation. The Korea Electric Power Company (KEPCO) is the flag bearer of South Korean nuclear power generation and it recently secured the US$40 billion nuclear deal to build and operate four nuclear reactors in the United Arab Emirates (UAE). South Korean victory in the UAE nuclear bid is remarkable since the French AREVA and United States-Japan reactor supplier GE-Hitachi were also engaged in discussions with the UAE on the nuclear deal. According to Mohamed al-Hammadi, Chief Executive Officer of the Emirate Nuclear Energy Corporation (ENEC), the reason behind the Korean victory is its adherence to the safety norms and its demonstrated ability to meet the UAE programme goals. Moreover, South Korea has always been a safer choice for UAE. South Korea offers a long term commitment and does not dominate the region politically whereas as UAE might have been skeptical about the nuclear deal with United States which politically dominates the region; moreover, UAE-US nuclear cooperation agreement does not provide an unconditional access to US nuclear technology.

Further, KEPCO’s APR-1400 (an Advanced Pressurized Water Reactor) is a much talked about design in the nuclear industry. This is a third generation reactor and bears the US Nuclear Regulatory Commission design certification. Its cost is expected to be 10 to 20 per cent less then the Korean Standard Nuclear Plant/Optimized Power Reactor-1000 (KSNP/OPR-1000) which apparently was designed for Asian markets, particularly Vietnam and Indonesia. According to the Korean government data it is reported that the cost of APR-1400 at the end of 2009 is US$2300/kW as compared to US$2900/kW for Areva’s EPR and US$3580/kW for GE-Hitachi Advanced Boiling Water Reactor (ABWR). Moreover the power generation cost per kilowatt-hour of APR is considerably low as compared to Areva’s EPR or GE-Hitachi’s ABWR. It is 3.03 cents/kW-h as compared with an estimated 3.93 cents/kW-h for Areva’s EPR and 6.86 cents/kW-h for GE-Hitachi’s ABWR.  

India can therefore reap huge benefits from the civil nuclear cooperation with South Korea. It would be cost effective, reliable and equipped with world-class safety features. With the entry of KEPCO in India, competition with other stake holders like Areva is foreseen, it cannot however be termed as a negative effect. It would in fact project India as the destination for nuclear commerce for other nations. Electricity demand in India has been increasing rapidly. The shortage of the fossil fuel is driving the nuclear investment in India. India has been largely excluded from nuclear commerce for almost thirty-four years. With the signing of India-US nuclear deal, the gates for nuclear commerce has opened for India. India produces 4,120MW of nuclear power now and aims to generate 20,000MW of nuclear power by 2020. To achieve this aim, the country needs more investments in nuclear sector. The initiative taken by Prime Minister Manmohan Singh and President Lee Myung-bak is an exceptional step towards meeting the growing energy needs of India and building a lasting relationship between the two countries.