'The Nuclear Liability Bill in line with existing conventions'

However, India’s nuclear planners feel that this rapid expansion will not be possible without recourse to importing foreign nuclear technology. Now, as India re-integrates into the international nuclear order, it naturally has to also move towards putting in place a legal framework that facilitates the participation of foreign nuclear companies.

A primary piece of legislation sought after by all foreign reactor suppliers is a law that governs compensation for civil nuclear damage. Barring this, the attractiveness of India as a nuclear business destination diminishes vis-a-vis say, China, which also is rapidly expanding its nuclear programme through import and already has liability laws in place.

Such laws are typically framed on the lines of the Paris (1960) and Vienna (1963) conventions and the post-Chernobyl Convention on Supplementary Compensation (1997). While not all countries with nuclear liability legislation are members of these conventions, they nevertheless follow the principles enshrined in them.

The first two conventions were framed at a time when governments around the world were seeking to promote nuclear power even as they wanted to adequately assuage the public with regard to safety and post-damage compensation — much like the situation today.

In seeking to reconcile these objectives, new liability doctrines specific to nuclear power were framed. It was agreed that compensation must be limited in scope and time so as to ensure that operators can get insurance coverage. It is not difficult to understand that unlimited liability in both time and scope would scare away anybody from setting up a nuclear plant and is impractical for a business entity.

However to protect the interests of those who may get affected by a nuclear accident, liability is made strict and is legally channelised towards the operator. By making the liability of the operator exclusive (and exonerating the supplier) states ensure that victims have a single point of redressal for their claims.

At the moment India has no mechanism for compensating the victims of nuclear damages. Both the Atomic Energy Act (1962) and the Public Insurance Act (1991) are silent on the issue. Thus in the event of a major nuclear accident compensation would be driven essentially by political will or the lack of the same.

Misunderstanding
Seen in this light the new bill is a positive development that envisages a maximum national liability equivalent of Rs 2,133 crore and an operator cap of Rs 500 crore. This translates to a total liability cap of about $450 million which is in conformity with the 1997 IAEA amendment to the Vienna convention. Moreover in keeping with international practice of financial security for the liability amount, this bill also enjoins upon the operator to maintain an escrow account for the same.

So, what is the brouhaha about? The detractors are attacking the amount stipulated by the bill as maximum operator liability for being too low. Their argument is based on the bill letting off foreign nuclear operators too easily in a hypothetical future where the Atomic Energy Act is amended to allow FDI into the nuclear sector. However the truth is in the medium term there will not be any privately owned nuclear plant in India much less one operated by a foreign company.

Therefore it is not very difficult to see why the government has kept the operator liability amount seemingly low for the time being. Any operator would naturally seek insurance cover for the liability amount and the premium would get reflected in the cost of power.
It is this cost of power that the government seeks to keep in check by appropriating a lion’s share of the responsibility for possible civil nuclear damage even as it assuages foreign reactor suppliers by putting in place a contemporary liability framework.

Certain vested interests are criticising the operator liability amount precisely because they want to hike up the cost of nuclear power in India, which they can later use to denounce nuclear power as a whole on the grounds of being expensive.

The probability of a reactor meltdown event in today’s reactors is as low as one in a million. In fact that is the primary reason why risk premiums for nuclear power haven’t risen as much as one would have imagined post-Chernobyl. Nevertheless the operator liability amounts will always be guided by what national and international insurers at any point of time find acceptable.

(The writer is an independent consultant on energy)