New Delhi, Oct. 16: Oil and Natural Gas Corporation Limited plans to ink a joint venture agreement with Nuclear Power Corporation of India Ltd before the end of this fiscal to set up a 2,000-megawatt (MW) power plant.

“NPCIL has submitted a draft memorandum of understanding to ONGC for review. It is likely to be finalised and the formal agreement is expected before the end of this fiscal,” sources said.

A senior ONGC official said, “The foray into nuclear energy is part of the firm’s strategy to emerge as an integrated energy company.”

According to the draft memorandum of understanding, NPCIL will hold 51 per cent equity in the venture with ONGC owning the rest.

At present, nuclear power plants can be set up only by NPCIL and Bhartiya Nabhikiya Vidyut Nigam Ltd. Others have to enter into an agreement with them to enter the field.

“Subject to approval of the competent authority and establishment of techno-commercial viability, the joint venture may build, own and operate nuclear power plants for energy generation at mutually agreed locations,” the draft MoU said.

The generation of a megawatt of nuclear power requires an investment of Rs 10 crore. The cost of setting up a 2,000MW facility will be around Rs 20,000 crore. NPCIL plans to set up a plant with 70 per cent debt and 30 per cent equity financing.

The approach paper for the Twelfth Five Year Plan (2012-17) said, “In the long term, we must move beyond fossil fuels to non-conventional energy. These new energy sources are significantly more expensive than fossil fuels and increased dependence on them will mean higher per unit energy costs.”

Coal provides 68 per cent of the electricity in the country, but reserves are limited. Gas provides 8 per cent, hydro 14 per cent and nuclear 2.9 per cent. The government intends to increase the share of nuclear power in the country’s energy sources from 2.9 per cent to 9 per cent by 2031-32.

According to an Assocham study, India faces a coal shortage of 142 million tonnes (mt) with the demand rising from 554mt to about 696mt in the current fiscal. The gap has to be met by imports. “Because of the countrywide shortage and poor quality of coal, power generation in the country is only 66 per cent of the installed capacity,” it said.

Nuclear power is one of the best options to enhance energy security, which will reduce the burden on the railways to ferry millions of tonnes of coal to power plants. About 40 tonnes of uranium can run a 220MW nuclear plant for a year, the industry association said.

Nuclear energy is expected to become a major player as it is the only alternative to fossil fuels, officials said.

Hydrocarbons will not be able to meet the future energy needs of the country, which has 16 per cent of the global population but only 0.6 per cent of the total known hydrocarbon reserves. NPCIL intends to set up five more nuclear energy parks, each with a total capacity of up to 10,000MW.

Kudankulam in Tamil Nadu, Jaitapur in Maharashtra, Mithi Virdi in Gujarat, Kowada in Andhra Pradesh and Haripur in Bengal are the identified sites.

Besides this, indigenously developed 700MW pressurised heavy water reactor technology is planned for Kumharia in Haryana (2,800MW), Bargi in Madhya Pradesh (1,400MW) and Markandi in Orissa (6,000MW).

However, the nuclear plants face opposition from the locals, and the government is trying to work out an amicable formula to resolve the issue.