Compensation for nuclear damage: US welcomes India's move

The United States has welcomed Indian government's move to ratify the Convention on Supplementary Compensation (CS) for Nuclear Damages, stating that the "important step" will facilitate participation by American companies in the construction of nuclear reactors in India.

"The United States welcomes the action by India to join the Convention on Supplementary Compensation for Nuclear Damage, otherwise known as CSC," the State Department Spokesman John Kirby yesterday told reporters.

Indian membership in the CSC marks another important step towards creating the global nuclear liability regime called for by the IAEA Nuclear Safety Action Plan, he said.

"It will also facilitate participation by companies from the US in the construction of nuclear reactors in India, which will mean more reliable electricity for Indians, will reduce India's reliance on carbon-intensive sources, that will benefit the environment, and will offer India greater energy security for its large and growing economy," Kirby said.

When asked if it would help the implementation of Indo-US civil nuclear deal, Kirby said, "We believe it's an important step toward creating a global nuclear liability regime, and it will facilitate international cooperation in expanding the use of nuclear power in India".
Meanwhile an eminent Indian American expert from the private sector, who has been closely involved in various aspects of Indo-US civil nuclear deal described this as a milestone.

"This is a big accomplishment. This was the pledge that India made. This important step would facilitate the commercial suppliers to close their nuclear deals with India that would end up in generating at least 12,000 MW if both the US companies go ahead," Vijay Sazawal, an expert on US India nuclear agreement, told PTI.

Without specifically mentioning the name, Sazawal said a leading American nuclear reactor vendor is planning to submit its proposal by the end of February to NPCIL with an objective of having some kind of agreement with that can be signed at the time of Nuclear Security Summit on April 1.

Currently, only one vendor – Westing House -- is fully engaged with NPCIL. In a significant move aimed at putting an end to the contentious nuclear liability issue and assuage suppliers concerns, India on Thursday ratified the Convention of Supplementary Compensation for Nuclear Damage, marking an important step in addressing matters related to civil nuclear liabilities.

The move will help establish a worldwide liability regime of enhanced compensation for nuclear damages. "The contract that NPCIL and the American nuclear vendor are negotiating has many parts. They have to agree on who would be responsible for doing what work, who would provide financing and when, the contract terms and conditions, which would include the supplier liability as per the Indian nuclear liability law," Sazawal said.

"And finally TCO – technical commercial offer -- how much the reactor would cost and what would be tariff that can be charged to the consumer to ensure that the vendor and the operator both make reasonable profit while providing a requisite tariff goals consistent with the region where the plant will be located and supply electricity," Sazawal said.

Sazawal, who has been actively involved in promoting the nuclear cooperation between the two countries since 2005, said "the last step in all these negotiations is the most complex and time consuming".

The expected April agreement would mostly likely touch on the fact that the two sides would have an understanding of various aspects of the offer that India is looking for, which would cover a sale of six reactors as against two that were originally being discussed with each American nuclear reactor supplier.

The six reactors will generate between 6000 to 6500 MW. It is learnt that General Electrics has proposed a larger size reactor potentially generating about 1600 MW. However, current detailed negotiations involve only with Westinghouse. General Electrics has said that they would negotiate with India only after India ratifies CSC.

Westinghouse has said they are willing to take General Electric site in Andhra Pradesh if the latter is not interested. After the deal is signed hopefully this year, expectations are that it will take 6-7 years to complete construction of the first reactor, but so far no reactor recently has been built in the West in this time frame.

"I expect this year that US nuclear supplier will sign a preliminary agreement with India when Prime Minister Narendra Modi is here in April, but the details of the actual contract will take time and would not be formalized by then. Both sides are expecting this to be signed by this fall. India is keen that the full contract be signed during President's Obama's tenure," Sazawal said.

One of the thing that India has to still decide – is the implementation of the Indian Nuclear Insurance Pool, he noted. Because of two reasons, first because it is required under Indian nuclear liability law and both the operator and supplier and must subscribe to their policy before actual work can be initiated.

Secondly, the financial institutions that would finance the loan must have a good understanding of the liability exposure and premium to be paid by the American nuclear vendor before they would offer their terms for the loan, he said.