Not a pittance

Nuclear liability

Construction and operation of nuclear power plants, involves not only very high technology but also extremely careful handling and operation to ensure totally accident free and environmentally safe operations for long periods of the order of 15 to 20 years. Even the final disposal of the radioactive waste, after the useful life of the nuclear power plant, demands careful planning and execution.

The potential catastrophic hazard in a nuclear accident, in addition to the immediate large scale damage to property and people, could extend over a considerable period after the accident due to the delayed effect on people exposed to hazardous radiation, which could cause dust-related diseases, loss of hearing, deadly leukemia and even genetic disorders.

In spite of the extreme care taken, accidents such as the Chernobyl in Russia and the Three Mile Island in Pennsylvania, US, could occur, both of which were fortunately well contained. Even though the modern nuclear reactors are very robust, accidents due to design deficiency, use of substandard materials, poor quality control or natural calamities cannot be ruled out.

It is therefore essential to ensure that the nuclear plant manufacturer and the operator take adequate insurance to provide compensation to the victims of such an accident, even if the possibility is remote.

The extent of damage from any nuclear power plant accident clearly depends on five major factors, viz, the type, location, power level and usage of the reactor and the robustness of the reactor containment.

The spectre of the meagre compensation paid to the victims of the Bhopal tragedy is still haunting us, even 26 years after the accident. A major nuclear accident, could be of magnitude more destructive compared to the Bhopal tragedy, in addition to leaving its scars even on future generations.

Recognising the impracticality of insuring against the consequences of any hazard for an open ended and unlimited amount, it was implicitly clear that the liability of nuclear operators need to be capped at a reasonable amount, beyond which the state government has to assume the liability.

The cap on liability would clearly depend on the estimation of probability of an accident occurring and assessment of the magnitude of damage it might cause to people and property, both of which are extremely difficult to compute. The estimates of the probability of occurrence of a nuclear accident varies from one in a hundred thousand to one in a million.

The extent of injury to lives and damage to property due to a nuclear accident could be as much as 5,000 killed and 50,000 injured or even more, with the accompanying damage to property which could range from about $5,00,000 to $10 billion, the higher amount being for a complete meltdown of the reactor.

Pooling
Since no single insurer can provide insurance protection for the large amounts, which may be involved in such accidents, many insurance companies join together to pool their resources to provide the required insurance coverage. The cap on liability, to be realistic, has also to take into account the capacity of the pooled amount available from the participating insurance companies, which in the early 1960s was estimated to be around $100 million.

The present available amount in the pooled insurance market is probably double that amount. The second important criteria, which will have a bearing on nuclear reactor insurance, is the magnitude of the insurance premium to be paid. While the actual premium is negotiated between the insurance pool and the reactor operator, it is generally around $1,000 to $ 2,000 per year for an insurance of million dollars, depending on the type and complexity of the reactor.

Even in the case of spacecraft launches, the country or the party owning the spacecraft has to obtain third party liability insurance for any accidental damage or destruction of people or property caused by failed rocket launch, for a minimum of $500 million, beyond which the state owning rocket launch facilities assumes the liability.

Accordingly, when ISRO launched INSAT satellites from Cape Kennedy, the Government of India had to take insurance for $500 million for each launch at a premium of $1,00,000, in spite of the fact that the damage due to catastrophic failure of a space launch is essentially limited for the duration of the launch.

Moreover, unlike the nuclear reactors of 1950s’ vintage which were of a few hundred mega-watts capacity, the current nuclear reactors have a power capacity of 2000 to 5000 mega watts and hence, their destructive power is far more than the earlier nuclear reactors in case of an accident.

The fear of accelerated global warming due to the emission of greenhouse gases like carbon-di-oxide is driving even energy starved nations to augment their power generation capacity by installing nuclear power reactors, even though they are at least twice as expensive as the conventional coal based plants.

With the rapid increase in the installation of nuclear reactors the probability of nuclear accidents is bound to go up.  The cap of Rs 500 crore liability for a nuclear power station supplier or operator, which is now being debated, is certainly very meagre and inadequate considering the much larger scale of destruction accompanying any nuclear accident.

Prudence demands that the nuclear accident insurance should be preferably capped at $1,000 million but certainly not below $500 million (Rs 2500 crore), which was the level fixed in 1960s for much smaller nuclear reactors.

(The writer is former chairman, ISRO and secretary, department of space)

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