French energy firm Areva, the world's largest nuclear power company, has signed an agreement with state-owned Nuclear Power Corporation of India (NPCIL) to supply about 300 tonnes of uranium annually. This is the first major nuclear fuel supply agreement by the Indian firm after the approval of the Indo-US civil nuclear deal earlier this year. The fuel is enough to generate about 1,500 mw power, which is over 35 percent of the country's installed nuclear power generation capacity.

Confirming the agreement, Minister of state for power and commerce Jairam Ramesh said, "Availability of fuel will help NPCIL's existing plants to start operating at full capacity from June 2009." NPCIL plants are running at 45 percent plant load factor (PLF) due to fuel shortage. NPCIL operates 17 nuclear reactors at six locations with a total generation capacity of 4,120 mw.

India's estimated uranium reserves are sufficient to generate only 10,000 mw. The fuel supply agreement with Areva also ends India's nuclear isolation from the Nuclear Suppliers' Group (NSG). So far, the country was dependent on domestically sourced uranium and some fuel from Russia.

Other than from the fuel supply agreement, Areva is also interested in supplying 1,700 mw nuclear reactors to NPCIL which would be the largest reactors to be used in the country. Areva is offering NPCIL incentives such as an equipment warranty of up to 60 years and assistance in reprocessing nuclear waste.

NPCIL is also getting 1,000 mw reactors from Russia for its 4,000 mw nuclear power plant at Kudankulam. "The first in the series of four 1,000 mw Russian reactors would be put up by September 2009," Ramesh said.

"We would be happy to create a supply chain in India since Areva has expertise in all nuclear cycle. This gives Areva advantage over some other firms in the US or Russia," Jean-Jacques Gautrot ,President, Areva added.

Areva's competitors include GE-Hitachi Nuclear Energy, which is a joint venture between General and Hitachi, U.S-based Westinghouse Electric Corp., and Russia's Atomstroyexport to supply reactors to India.

Besides France and Russia, the department of atomic energy (DAE), the agency for coordinating nuclear power generation activities in the country, is negotiating with non-NSG countries such as Namibia and Niger to access their huge uranium resources.

NPCIL wants to add over 10,000 mw capacity in the 12th five-year Plan to cover for shortages in the existing plan.