US reactor suppliers must be cognizant of cost effectiveness'

US atomic reactor suppliers should be cognizant of "cost competitiveness" when they set up power plants in India under the historic civil nuclear deal, a top Indian diplomat has said while allaying concerns over the progress in setting up of a Rs 1,500 crore insurance pool.

"The (US) companies should bear in mind the need for cost competitiveness of nuclear power vis-a-vis alternative resources," India's Deputy Ambassador to US Taranjit Singh Sandhu said.
"In future, as India scales up its renewable energy sector, the merit of nuclear power will increasingly be measured by the cost the consumers will pay for it," Singh said yesterday during a Congressional briefing on India-US nuclear energy trade.

US companies could consider localisation and softer credit availability to make themselves more competitive in India's energy market, he said at the event organised by US India Political Action Committee.

India's public sector nuclear operator Nuclear Power Corporation of India Ltd (NPCIL) is in discussions with two US firms –- Westinghouse Electric Corporation and GE-Hitachi -– for setting up nuclear reactors in the country.

Chhaya Mithi Virdi in Prime Minister Narendra Modi's home state Gujarat has been identified for building six reactors for a 6,000 MW project by Westinghouse.
Another site has been identified at Kovvada in Andhra Pradesh for up to six units of GE-Hitachi's new reactor.

"We hope for early finalisation of the timelines by the companies," he said.
Updating Congressional staff and lawmakers on the progress made since January when India and the US reached an agreement on setting up an Indian Nuclear Insurance Pool, Singh said the NPCIL and pool manager General Insurance Corporation (GIC) are channelising these understandings into a contract language.

The pool has been instituted to facilitate negotiations between the operator and the supplier concerning a right of recourse by providing a source of funds through a market based mechanism to compensate third parties for nuclear damage.
It would enable the suppliers to seek insurance to cover the risk of invocation of recourse against them.

According to Nuclear Liability Act, the pool's capacity has to be around Rs 1,500 crore as the liability per incident is capped at the amount.

The government will make available Rs 750 crore to the pool for the first few years till the insurance companies are able to maintain it on their own.

Under the nuclear civil liability law, besides the operator, suppliers are also liable if an accident occurs and compensation of up to Rs 1,500 crore will have to be paid in case of a mishap involving a nuclear plant.

"We will first deploy this insurance pool for our domestic suppliers and then gradually refine it. The international suppliers would be able to see how it all works when their turn comes," he said.
In March, GIC organised a workshop in New Delhi to explain the contours of the pool and to address the questions of key suppliers and insurers, including from the US, Singh said.

"So far not only public sector companies, but many private companies have come forward to contribute to the insurance pool capacity, reducing the level of anticipated government contribution.
"This shows that the idea of the pool is working. The pricing matrix is also in place," Singh said.

"Overall, the pool is designed to be a complete risk transfer mechanism, which will reduce the potential for dispute between operator and suppliers and make the Indian nuclear energy market attractive for our foreign partners, by keeping the premium risk-informed and affordable," the Indian diplomat said.