(August 21, 1998) Russia plans to sell two nuclear plants to India with below-market financing. The International Monetary Fund (IMF) and the Nuclear Suppliers Group (NSG) object to this deal. The sale goes against the Western call for sanctions against India after its nuclear tests in May.
(496.4905) WISE Amsterdam - Back in 1988 the USSR agreed in principle to supply nuclear plants to India, but the financing was never finally arranged. Via the Nuclear Suppliers Group (NSG), of which Russia itself is a member, the Western world tried to realize a water-tight embargo on nuclear technology and equipment transfers to India after its May nuclear tests. By the end of June 1998, the Russian Minister of Atomic Energy (Minatom) Yevgeny Adamov announced he had agreed to finance 85% over 14 years for the Minatom construction of two VVER-1000s in India, worth US$2.5 billion. Adamov agreed with rate terms of only 4% instead of the OECD rate of interest of 8% for Western nuclear exports.
To prevent a Russian bankruptcy, the IMF put together a US$20 billion loan at a request of Russian President Boris Yeltsin. But given the Russian financial crisis, Moscow can hardly afford this expensive offer to India. Russia's main justification is political, to thwart the Western ban on nuclear exports to India. The rate terms offered were about the same as the terms agreed to with China last year, to finance construction of two VVERs at Lianyungang.
The IMF was pressed to halt lending to India after the tests. The G-7 countries were irritated that the IMF agreed to loan Russia billions which it could then lend to India's nuclear program. Given the very bad financial situation in both Russia and India, construction of the reactors might take 25 years, if they will be completed at all. If the IMF obliges Russia to double its lending rate from 4% to 8% for the financing of the Russian-Indian nuclear deal, it would make the deal too expensive for Minatom.
Source: Nucleonics Week, 25 June & 2 July 1998.
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