The N syndrome


Whichever way you look at it, whether as a private investor or a concerned citizen, a robust Nuclear Liability Bill is a necessity, says Prakash Chandra

Sepulchre Graffiti of a crying baby on a wall in the ghost town of Prypiat, Ukraine, with the towers of the Chernobyl nuclear power plant in the horizon
Graffiti of a crying baby on a wall in the ghost town of Prypiat, Ukraine, with the towers of the Chernobyl nuclear power plant in the horizon
Photo: Getty Images

FEW PIECES of legislation have the radioactive potential of the Nuclear Liability Bill (NLB), currently before the parliamentary select committee on science and technology. From all indications, the committee, which is giving final touches to its report to be presented to Parliament this monsoon session, will recommend that the liability of the operator and, indirectly, equipment suppliers be increased. “The limit for operator liability would be enhanced substantially,” says Congress MP T Subbarami Reddy, chairman of the committee, in the report.

In return, operators would be provided recourse to claim damages for liability suffered because of suppliers. This is expected to mollify the opposition to the Bill. The government wants the Bill to be passed in the winter session of Parliament, allowing the Indo-US nuclear deal to finally go through, giving US President Barack Obama something to be satisfied about during his November visit to India.

India’s energy future has hung in a balance, ever since the government tried to push through a Bill, with low liability for foreign suppliers in case of an accident. Coming after the Bhopal mess, this raised widespread concern that India was being armtwisted into accepting lower levels of compensation. Goaded by the standing committee of Parliament, the government is now bracing to go the extra mile and introduce a modified NLB. The new Bill would also address other key issues like the duration of claim for a nuclear accident, which would now be raised from its limit of 10 years.

That a compromise has been in the works is evident from the committee’s recommendations aimed at sweetening the controversial clauses. Reddy said that 28 other countries have their own nuclear liability laws. “It is a shame that India does not have one,” he said. “We must have global participation if we are to meet the target of generating 40,000 MW of electricity by 2020. The Bill provides a legal framework within which we could proceed towards that goal.” The 31-member standing committee — 20 from the Lok Sabha and 11 from the Rajya Sabha — heard the views of nuclear experts, analysts, NGOs and environmentalists, among others, to finalise its recommendations for the Bill’s new avatar.

NUCLEAR ACCIDENTS are rare, but when they do happen, they are prohibitively expensive to deal with, and disastrous for life itself and the livelihood of millions, for generations to come. So the multi-billion- dollar question is: if a nuclear disaster happens, who should pay, and how much, towards compensating the victims and for the clean-up? While it is convenient to blame the operator of the plant, any of the hundreds of suppliers who equipped the reactor could also be held responsible. In India’s case, the operator happens to be public sector companies, which really means that the taxpayer would have to take on a large portion of the burden of compensation.

At present, there are only two nuclear operators in India: Nuclear Power Corporation of India Limited (NPCIL) and the Bharatiya Nabhikiya Vidyut Nigam Limited (Bhavini). Critics are angry that the current Bill channels all legal liability to the operator, largely protecting foreign suppliers at the expense of the NPCIL. The Bill provides for an absolute liability cap of 300 million special drawing rights (SDR), equivalent to $450 million (Rs 2,150 crore). Out of this, the operator’s liability cap is Rs 300 crore, while a foreign supplier’s liability would be a maximum of Rs 500 crore. This, critics say, is too little. According to the former Attorney General of India Soli Sorabjee, since the extent of damage in a nuclear accident cannot be quantified easily, “it is better to frame appropriate guidelines and allow the rest to be determined by a judicial forum”. Says CPM Rajya Sabha member Sitaram Yechury, “Read the fine print. The Bill will let suppliers go scot free, even if an accident occurs due to defective parts.” As for hiking the liability cap,Yechury says: “Why are we talking of this figure when President Obama has asked BP for $20 billion for a non-nuclear event like the oil spill?”

The trouble with nuclear power legislation in India is that it is still strung around the 48-year-old Atomic Energy Act, which is silent on civil liability for accidents involving nuclear power. The same goes for the Radiation Protection Rules of 1971, and ditto for the Public Liability Insurance Act, 1991, neither of which mentions nuclear accidents. The general Indian tort law, a legacy of the English Common Law, is based on the fault principle: if the negligent conduct of a person or agency that caused the damage is established, that person or agency is liable for the full loss. But the ‘N’ word complicates things bewilderingly. The very notion of nuclear liability is an insurer’s nightmare, defying as it does the usual legal concepts like the law of tort. Insurance companies religiously avoid this risk in actuary calculations, while reckoning premiums, choosing instead to shelve it alongside natural calamities like major earthquakes or volcanic eruptions.

THERE ARE several experts in India who believe New Delhi cannot do without nuclear power. For them, the need for a liability Bill is obvious. “Without it, India won’t be able to do any nuclear commerce,” says Dr G Balachandran, senior fellow at the Institute for Defence Studies and Analyses (IDSA), Delhi. “No nuclear trade is possible for any country in the absence of a domestic liability Bill.”

Another senior analyst requesting anonymity said that at one point Russia was keen to do nuclear business with India, if Indian operators absolved the Russians of any responsibility in the event of an accident. But they apparently backed out because India had no law to punish errant operators (even if their culpability could be established). In that sense, it is a Catch 22 situation. Even if responsibility for the damage is fixed, the costs could well nigh prove to be prohibitive. This is a major reason why most countries that invest in nuclear power have their own domestic legal mechanisms in place to deal with such exigencies. Even Sweden, which once shelved its nuclear programme, has now reopened its nuclear options and Stockholm is preparing its own liability Bill.

From such concerns was born the Convention on Supplementary Compensation (CSC): an international fund with the International Atomic Energy Agency (IAEA) that helps countries address their liability issues regarding nuclear accidents. A statute of this kind could do away with the compulsion of having to deal with exigencies using the general tort law. Other international conventions that address nuclear accidents include the IAEA’s Vienna Convention, 1963, and the Organisation for Economic Cooperation and Development (OECD)’s Paris Convention, 1960. Once New Delhi legislates the liability Bill, India would be able to join the CSC. And CSC member states are obliged to contribute funds when the compensation amount exceeds 300 million SDR according to a prescribed formula.

There is a rider to this though, as Balachandran points out: “India can draw from the CSC corpus only if other countries, too, join in — at least five states, with a minimum of 4,00,000 units of installed nuclear capacity are needed for it to enter into force.” The US signed into the CSC last year, and America’s massive nuclear deployment takes care of a large chunk of this requirement. Reddy says the CSC rules were “an important consideration” for recommending an increase in operator liability. In fact, there is a school of thought in the committee, according to Reddy, that favours taking a leaf out of the nuclear notebooks of Japan, South Korea, Germany, and Switzerland, and define an unlimited cap on the operator.

According to an IAEA official who spoke on condition of anonymity, liability conventions like the CSC considerably improve the protection of victims in comparison to most national laws. Besides, he said, a number of advantages — enforcement of judgements, free transferability of payable sums and contributions of other states to compensation funds — can only be achieved by international agreements.

Many observers though feel the government has only itself to blame for not hard-selling the Bill. “The controversy surrounding the Bill could have been avoided if the government had taken a more vigorous stance on explaining why it is crucial for meeting the country’s energy needs,” says Arundhati Ghose, former Indian ambassador to the United Nations and a veteran nuclear negotiator. “The most crucial aspect of the Bill is the compensation part,” she said. “Especially immediate compensation — for there’s no point in compensating victims after decades, as happened in the case of the Bhopal gas tragedy.” A liability law may have shortened the time needed for compensation. But, says Ghose, many of the critics have taken a hard position. “They are in principle opposed to anything nuclear — whether weapons or electricity. For them, opposing the Bill is more fundamental than any concern for the quantum of liability.” The debate, no doubt, has run in an emotionally charged atmosphere, especially because of the Bhopal compensation mess. But that does not obviate the need to be careful, and fair, in formulating the country’s first nuclear liability law.


N-fuel biggies eye Indian market

By Sanu Nair

INTERNATIONAL FIRMS ARE LINING up to fuel India’s ambitious nuclear power generation plan. The country aims to expand its nuclear power generation by five times to more than 20,000 MW by 2020 by building 42 reactors, from the 14 civil nuclear reactors, operated by NPCIL, it has currently, and the seven strategic or military ones.

But the sticking point is the fuel — uranium, which the country largely imports, making it crucial to fix long-term deals with global suppliers.

So, officials at NPCIL would have been a relieved lot when Prime Minister Manmohan Singh cleared the decks last month for Canadian companies like Cameco, which accounts for 15 percent of the global uranium supply, to enter India. “The agreement with Canada is significant. With this, we have diversified our fuel supply options,” said S Thakur, executive director of NPCIL. According to NPCIL estimates, India will need 5,000 tonnes of uranium annually for its proposed target, while it produced only about 290 tonnes in 2009.



Indian firms look abroad for N-ties

By Shantanu Guha Ray

THEY ARE CALLING IT the shopping spree, as India’s top companies hunt for deals to enter the $4.27 billion market that is expected to grow to a whopping $100 billion over the next 20 years

Far from the public gaze, Ratan Tata, Larsen & Toubro and brothers Mukesh and Anil Ambani are negotiating for deals to enter the Nuclear power market, the most lucrative in electricity-starved India.

Highly placed sources said that the elder Ambani’s team is in serious negotiations with GE of the US, while the younger brother’s team is seeking tie-ups with Finnish group Fortum that has earned accolades for maintaining some of the most advanced reactors in the world. ADAG officials, it is reliably learnt, also had negotiations with power companies in Canada and France.

But there is a catch. Unless the Electricity Act is changed, private firms will not be able to generate N-power and remain content as mere equipment suppliers. The private players are pushing New Delhi to change the Act and allow N-power plants to be set up by them.





Price Anderson Act, the world’s first comprehensive nuclear liability law, provides $10.5 billion cover without cost to the public or government and without fault to be proven. Covers power, research reactors, and other nuclear facilities.

UK:Energy Act, 1983, sets a limit of 140 million pounds for each major installation. And operators are liable for claims up to this amount

GERMANY : Has unlimited operator liability, with Euro 2.5 billion security, which must be provided by the operator for each plant

FRANCE: Has set a limit of Euro 91 million per plant, while in Switzerland (which has signed but not yet ratified the Conventions) operators have to insure for Euro 600 million. I

SWEDEN: Nuclear liability Act requires operators to be insured for at least 3,300 million Swedish kroner (Euro 302 million), beyond which the state will cover upto SEK 6 billion per incident


CZECH REPUBLIC: Has increased the mandatory insurance cover required for each reactor to Czech koruna eight billion (Euro 296 million)

CANADA: Nuclear Liability and Compensation Act establishes the licensee’s absolute liability for third party damage.

JAPAN: is not party to any international liability convention, but plant operator liability is absolute

RUSSIA: A signatory to the Vienna Convention, it has a domestic nuclear insurance pool comprising more than 20 insurance companies

UKRAINE: Has revised its liability law in 1995 in line with the Vienna Convention, which it joined in 1996

CHINA: Is not party to any international liability convention but is a member of the international insurance pooling system



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