Atoms for liable cooperation

Years before the Indo-US nuclear deal, diplomatic concerns on the southern shore set Indian thought process on nuclear liability in motion. The new N-liability regime had its origin in the Indo-Russian inter-government agreements of 1988 and 1998 for 1000 MWe Kudankulam 1 and 2 reactors. Nuclear liability was given a priority because of the proximity of Sri Lanka, which could be an inadvertent victim of any accident in Kudankulam where India was to set up a nuclear park.

Till then India did not have a liability regime, even though it was operating nuclear power plants from Rajasthan to Tamil Nadu. There was no provision either, in the Atomic Energy Act of 1962, which governs the nuclear sector. In the year 2000, a two-member committee comprising two Bangalore-based experts - S Rajagopal of National Institute of Advanced Studies and V B Coutinho from the Government Law College, was formed to draft a liability regime based on other countries’ legislation. As many as 28 out of 30 countries operating nuclear power plants have a liability law, India and Pakistan being the two exceptions. The Rajagopal-Coutinho panel report was never made public, but concepts described in the liability legislation is understood to have originated from that report.

At the international level there are four instruments for nuclear liability and individual national legislation reflect the spirit of these four instruments. The OECD’s Paris Convention of 1960 (came into force in 1968) was further strengthened by the Brussels Supplementary Convention (BSC) in 1963 and the IAEA’s Vienna Convention of 1963 (came into force in 1977). The fourth instrument,  the Convention on Supplementary Compensation (CSC) is yet to come into effect as only four countries - Argentina, Morocco, USA and Romania - accounting for 350 Giga watts of energy have ratified it. Nine other countries signed the convention but did not ratify. The CSC will come into effect only when nations accounting for 400 GWe ratify the convention.

For instance, India currently produces about 4.5 GWe nuclear power and when three other projects in advanced stages of completion become functional, it will still produce a mere 7 GWe. In other words, CSC will not be an immediate reality as some major nuclear-powered nation like the UK, Russia or France have to ratify it to make it operational.

Notwithstanding the international conventions, India required a nuclear liability law to kick-start its impending nuclear commerce era following its re-entry into the nuclear club. The two immediate gainers would be France and Russia, which are to supply large reactors to set up a 10,000 MW nuclear park at Jaitapur in Ratnagiri district of Maharashtra and Kudankulam, where four additional 1000 MWe Russian reactors will be installed.

Nuclear commerce

India proposes to buy about 40 nuclear reactors from various suppliers in the next few decades for an ambitious nuclear power programme. Some of them will definitely be from the US-Japanese companies GE and Westinghouse though the business deals are not close to maturity. For a nuclear commerce of that magnitude, a nuclear liability legislation is an imperative. Another key factor behind the Liability Bill is the Bhopal gas tragedy experience and care has been taken to ensure that victims of a potential nuclear accident don't have to run from pillar to post for compensation and have enough time to claim damages.

But when the Bill was introduced in Parliament, the opposition parties came down heavily on the government for keeping the compensation ceiling low and not fixing accountability of the supplier. After much debate and discussions, the government came up with a set of 18 key amendments, including one that addressed the supplier issue from a practical rather than ideological perspective. The government accepted the Parliamentary Standing Committee on Science and Technology recommendation to raise the cap on compensation, to be paid by the operator of a commercial nuclear power plant in case of a nuke disaster, from Rs 500 crore to Rs 1500 crore. It also approved amendments to create new categories like spent fuel reprocessing plant (Rs 300 crore), whereas for research reactors below 10 MW, other fuel cycle facilities and transportation of nuclear material, the liability will be Rs 100 crore.

A more contentious issue was supplier’s liability. In the Indo-Russian agreements, the liability is believed to have been channelled exclusively to the operator, safeguarding the supplier. Only two state-owned units - Nuclear Power Corporation of India (NCPIL) and Bharatiya Nabhikiya Vidyut Nigam (BHAVINI) - are the nuclear-power operators and in case of any nuclear accident, it is actually the government, which will pay the victims as per the polluter pays principle. This will continue in the future too as the new legislation does not allow the private sector to run a nuclear power plant. The private sector  will be restricted to a supplier.

The industry has a problem in fixing liability on the supplier. Citing the recent accident involving two ships off the Mumbai port and the resultant oil spill, a NPCIL official said that the operators of the ship are having an absolute liability to cover the damages and nobody was seeking damages from the manufacturers of the ship or suppliers of the ship’s components. Same is the case with the Bhopal gas tragedy where the liability is on the operator and not the supplier of the valve of the chemical plant which gave way.
Nuclear analysts too caution that any Bill that goes beyond the norms of international conventions in assigning supplier liability would stymie India’s import programme of procuring reactors and nuclear equipment from foreign suppliers as its long-term energy security needs will substantially rely on nuclear power.

The compromise clause finally states that the operator has a right of recourse after paying the damages provided the right is explicitly written in the commercial contract or there is strong evidence to show that the nuclear accident has taken place due to sub-standard equipment or material from the supplier or there was a deliberate intent to cause nuclear damage.

The Section 17 (B) (supplier’s liability) is almost a replica of the Korean liability law. Since all major nuclear equipment suppliers USA, Canada, France and Germany are supplying to Korea without any objection, there should not be any hitch for India.

The debate on the Bill, the targets set for electricity generation from nuclear energy and the steady expansion of dialogue for nuclear cooperation have shown how foreign policy and domestic priorities were exceptionally inter-twined, indicating the said Foreign Secretary Nirupama Rao.