Tough law to seal escape routes of suppliers

The report of the Parliamentary Standing Committee on Science and Technology was tabled in both Houses of the Parliament on Wednesday. The Union Cabinet is expected to consider the amendments recommended by the panel in a meeting on Thursday.
The Parliamentary Standing Committee not only recommended increasing the cap of compensation, to be paid by the operator in case of a nuke disaster, from Rs 500 crore, as prescribed in the original bill, to Rs 1,500 crore.

To make it sure that no private operator could run a nuke plant, the panel also recommended amendments to make the Nuclear Liability Bill applicable “only to nuclear installations owned and controlled by the Centre either by itself or through any authority or corporation established by it or a government company as defined in the Atomic Energy Act, 1962.”

The controversial Civil Liability for Nuclear Damage Bill 2010 was introduced in the Lok Sabha on May 7 last. The Rajya Sabha chairman Hamid Ansari in consultation with the Lok Sabha Speaker Meira Kumar had referred the Bill to the Parliamentary Standing Committee on Science and Technology.

The operator liability in the event of a mishap was capped at Rs 500 crore in the original Bill. But the parliamentary panel termed the amount ‘inadequate’; keeping in view “the disastrous effects of a nuclear incident and the consequent loss or injury to life, damage to property, economic loss, cost of measures for reinstatement of the damages to the environment.”

“The Committee also feels that a lower amount may result in the operator marginalizing the issue of safety and security of the nuclear power plant, which may lead to an incident. Since the operator holds a no-faults liability and is being held responsible for a nuclear incident, the Committee is of the opinion that it should bear a substantial cost of payment of compensation for the nuclear incident,” the panel stated in its report.
It agreed with the suggestions of some experts that the nuclear operators could create a nuclear liability fund by charging a nominal amount in the unit energy cost to lessen the government’s liability in course of time.

The panel also recommended amendments to ensure clear-cut liability on the supplier of equipment or materials if they are found defective. It recommended that the Clause 17 (b) of the Bill could be modified to ensure supplier’s liability in case an incident occurs as a consequence of latent or patent defect, supply of sub-standard, defective equipment or services or from the gross negligence on the part of the supplier of the material equipment or services.

The Clause 17 (b) was a major cause of dispute between the Government and the critics of the Bill as it had originally made the supplier liable only if the mishap was caused due to its “willful act or gross negligence”. The critics said that the provision enabled foreign companies which would supply nuclear equipments and services to go scot-free even if mishaps were caused due to their faults.

The panel said that the supplier’s willful act or gross negligence would be difficult to establish in a civil nuclear compensation case. “Even though the supplier is liable to the operator as per Clause 17(A), (B) and (C) of the Bill, the panel recommends that if a contract between the operator and the supplier provides for the right to recourse, the operator may, after compensating the victims, exercise the right of recourse against the supplier in accordance with the provisions of the contract,” the report said.