Russia will provide a long-term soft loan as part of its debt contribution which also includes a $50 million for preparing a detailed project report (DPR) for which the bilateral agreement was signed last week. Both India and Russia also amended a 10-year-old agreement for the same project. The amendment included the revision of the cost in US dollars and not roubles as envisaged earlier.

Payment of the soft loan will be made in 14 equal instalments only after one year of commercial production of the plant. Since the finalisation of the DPR will take two-and-a-half years and constructions of plant around six years in actual terms, the tenure of the loan works out to be 24 years, sources said. "The loan willbear interest at less then four per cent," they added.

The debt, equity ratio and other financial details of the project are yet to be finalised but the plant will be owned by NPC. Equity contribution will come from the corporation's internal accruals and/or the centre. Foreign partners will not have any equity in the project.

The instrument to raise debt will be finalised at a later date. NPC has urged the government to make available a long-term debt facility. "The gestation period of a nuclear power plant is six or seven years and conventional term loans to NPC are for five years which means that repayment must start while the plant is under construction," sources said.

NPC has other limitations in raising finance. For instance, it cannot set up a project with equity partnership from an overseas company. Even for technological support, it does not get any aid from the West.

Under the present arrangement, the corporation will have to start repaying its debt only after revenue collection from sale ofpower begins. The initial tariff of the project would be competitive with other thermal power projects. However, in contrast to power projects, tariff of nuclear power plants reduces as the plant gets older, sources said.

The DPR will include selection of reactor design, compliance to quality control requirements and details of government estimates.

It will be prepared in consultation with the Atomic Energy Regulatory Board (AERB) to avoid further delay in evaluation.

"Considering the sensitive nature of the project, the report has to examine every aspect of safety and provide solutions to various critical issues," said sources. It will take two years to be ready and six months after that, all formal approvals from the government, NPC and AERB will be obtained and construction will begin.

The Russian team will undertake equipment, procurement and the construction work.

It will also cater to maintenance and supervision of the plant while NPC will be incharge of civil construction. The foreignpartners will provide spares and fuel for the project in future as well.

NPC's 10 power plants generate around 1700 mw of power. In the past few years, the corporation has improved its overall capacity factor to 70 per cent in 1997-98 from 60 per cent two years ago.