In an effort to give first priority to American firms once the India-United States civilian nuclear agreement is consummated, the Nuclear Power Corporation of India has already begun talks with 'interested US companies', according to a letter from the Government of India to the Bush administration.
The missive by Foreign Secretary Shiv Shankar Menon to Under Secretary of State for Political Affairs William Burns on September 10, the day on which President Bush submitted the 123 Agreement to US Congress for ratification, said, 'Nuclear Power Corporation of India has commended a preliminary dialogue with interested US companies to ensure that the benefits accruing from the India-US agreement are realised at the earliest.'
A copy of the letter obtained by rediff.com said, 'India also recognises the importance of establishing an adequate nuclear liability regime and it is the intention of the Indian government to take all steps necessary to adhere to the Convention on Supplementary Compensation for Nuclear Damage prior to the commencement of international civil nuclear cooperation under the Agreement.'
Menon wrote, 'As states possessing advanced nuclear technology, the United States and India have committed to work together to expand civil nuclear energy cooperation and to promote nuclear energy.'
The foreign secretary assured Burns that 'in the spirit of this partnership and without prejudice to the provisions of the agreement, it is the intention of the Government of India and its entities to commence discussions with US nuclear energy firms, and conclude agreements after entry into force of the Agreement for cooperation in the construction of nuclear power units at least at two sites approved by the government of India, which would be capable of generating a minimum of 10,000 MWs on the basis of mutually acceptable technical and commercial terms and conditions that enable a viable tariff regime for electricity generated.'
The letter added, 'It is the expectation of the Government of India that this partnership will contribute towards providing energy to India's population in a manner that takes into account affordability, sustainability of nuclear fuel resources and credibility of nuclear waste management.'
'We look forward to the timely commencement of that cooperation, and to early participation by US companies in the expansion of India's civil nuclear sector following the Nuclear Suppliers Group's decision of September 6, 2008,' he said.
Menon informed Burns that 'India undertakes that the reactor facilities and nuclear fuel supplied by the US firms shall remain under International Atomic Energy Agency safeguards in accordance with the provisions of the 'Agreement between the Government of India and the International Atomic Energy Agency for the Application of Safeguards to Civilian Nuclear Facilities,' approved by the IAEA Board of Governors on August 1, 2008.'
On September 18, Burns, while testifying before the powerful Senate Foreign Relations Committee, told lawmakers, 'We expect that the success of the US nuclear industry in the Indian market will flow from the high quality of the products and services they provide.'
But he cautioned that 'without approval and implementation of the 123 Agreement, US nuclear firms will be precluded from competing in this important new global market.'
Burns argued that 'reflective of our new relationship with India, the Indian government has publicly stated its intention to work with US nuclear firms. But international competition will, inevitably, be intense and we want to avoid exposing US firms to any unnecessary delays.'
He said that 'the Administration has taken a number of steps to ensure the US nuclear industry will not suffer any competitive disadvantages during the 123 Agreement review process.'
And, then apparently going by the assurances provided by Menon in his letter to him, Burns told the lawmaker, 'The Indian government has provided the United States with a strong Letter of Intent, stating its intention to purchase reactors with at least 10,000 MW worth of new power generation capacity from US firms.'
'India has committed to devote at least two sites to US firms,' he said, and added, 'India has also committed to adhere to the Convention on Supplementary Compensation for Nuclear Damage.'
Burns said that 'adherence to this international liability regime by the Indian government is an important step in ensuring US nuclear firms are competing on a level playing field with other international competitors.'
He said, 'The expansion of US nuclear firms into India's growing market will provide a boost for our revitalized domestic nuclear industry. Cooperation also will provide the United States with an important new partner in concluding advanced research and development of nuclear technology as we strive to develop new sustainable sources of energy.'
When asked by Virginia Democrat Senator Jim Webb as to why the Administration was pushing this agreement in the short time-frame and asking for waivers of the 30 day consulting requirement by members, Burns said it was based on two factors.
'There is a considerable momentum that we've built over the course of the years that we negotiated this agreement,' he said.
Burns said this momentum has been built up with the leadership in India, 'which has shown remarkable political courage in helping to get both of us to this point and it just seems to us that now's the time to take advantage of that momentum to lock this progress.'
Burns pointed out that 'both of us are countries that face elections and transitions,' and hence it was imperative 'to try to lock in that progress and create an even stronger foundation for the nest administrations in both countries.'
'The second factor really has more to do with commerce,' he said, 'Even though the Indian government has provided very important assurances that it wants to create a level playing field for American firms and its not their intent to conclude bilateral cooperation agreements with other countries till the 123 Agreement is finalised, there is still a risk with passage of time that after the NSG exception that other countries are going to be able to take advantage of this process to do more business in India at the expense of our firms.'
Acting Under Secretary of State for Arms Control and International Security John Rood, who also was a witness at the hearing, said, 'The Agreement, as a legal matter, is, as I say, only an enabling piece of legislation.'
'It's not a government activity to produce nuclear fuel. It's a commercial activity in the US, and we in the US government would -- could not legally compel American firms to provide fuel to India if they did not wish to do so.'