Indian withdrawal from intl power project over tech transfer issues

This is a slightly delayed note on a tech transfer dispute that is brewing on the power (sic) front in $2 billion, or Rs 8,000 crore, Indo-US FutureGen project.

The FutureGen Alliance is a public-private partnership to build the world’s first near zero-emissions coal-fueled power plant, with a majority of costs borne by the US Department of Energy (DOE), with foreign financial support from governments of India, China, Australia, South Korea and Japan.

Mint had reported about a week ago that India (whose funding contribution came from inter alia, NTPC and PFC) was preparing to withdraw from the partnership after reports that FutureGen “announced a restructuring of objectives and financing plan”.

I have only fuzzy details of the issues in the story: the usual suspects emerge – an inability to keep to the project schedule, and overshooting the project costs. There seems to be some local US Federal politics involved – the restructuring was allegedly directly prompted after DOE threatened to withdraw funding in January this year because Illinois, and not Texas, was picked as the project site.

Latest news from the project has FutureGen Alliance Chief Executive Officer Michael J. Mudd stating that any climate change legislation approved by the US Congress would depend on large-scale projects such as the FutureGen facility. Clearly, he seems to be desperately trying his best to keep the project afloat.

I would like to know what the original agreement for the transfer of technology was, and what the changes were that provoked India’s move. The soft/hard power game is implicit in this story, even if India’s contribution to the project in financial terms may not be that large. At any rate, the eventual tech transfer (depending on whether or not it occurs) has implications on transnational issues like global warming and climate change, for the project has all the biggies involved (India and China as coal consumers, and Australia as supplier, etc). If India’s move sets a domino effect rolling, there might be trouble ahead, albeit in a small way.

On a related note, I came across this OECD paper attempting a regression analysis on tech transfer and economic implications of strengthening IPRs in the BRIC countries. It does not speak specifically of either the power sector, or of outward FDI as a source of tech transfer, but I reference it just in case anyone finds the paper interesting. It links also to many many issues SpicyIP has been writing about, including, most recently, the impending Bayh-Dole type legislation in India.