Nuke liability a sticking point in deal on KNPP unit

India and Russia are unlikely to clinch the deals for the new reactors for Kudankulam Nuclear Power Project in Tamil Nadu during Prime Minister Manmohan Singh’s visit to Moscow next month, as the dispute over applicability of the nuclear liability law has not yet been resolved.

Though Singh is set to travel to Moscow in October for the annual summit with Russian President Vladimir Putin, the two countries are yet to narrow differences on the issue of applicability of the Civil Liability for Nuclear Damage Act on the third and fourth units of the KNPP and its implication on the cost of the reactors.

Sources told Deccan Herald that although India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation would meet in Moscow later this week, a breakthrough on the impasse over the new reactors appeared unlikely.

The 1000 MWe first unit of the KNPP is likely to start generating powers soon and the second will do so in about seven or eight months. Uncertainty, however, looms large over the third and fourth units of the project.

After the last annual summit in New Delhi on December 24, 2012, Singh and Putin had stated that the negotiation on the third and fourth reactors for the KNPP had made “good progress”.But, according to the sources, despite a series of meetings over the past nine months, the negotiators could not narrow differences on the remaining key issues, which included financial implications of bringing the new reactors for the proposed Unit III and IV of the KNPP within the ambit of the Civil Liability for Nuclear Damage Act.

Moscow and New Delhi on July 17 last year inked a protocol on the new units of the KNPP, with Russia agreeing to provide India with a state credit of $ 3.4 billion for works, supplies and services for construction of the new reactors and related fuel supplies.

Negotiations on the techno-commercial deal for the new reactors for the KNPP hit roadblocks when Russia argued that India’s Civil Liability for Nuclear Damage Act would not apply on the new reactors to be installed at the plant.

Moscow pointed out that India had no legal regime for nuclear liability, when the intergovernmental agreement was signed by Mikhail Gorbachev and Rajiv Gandhi in 1988, or when the JSC Atomstroyexport and Nuclear Power Corporation India Limited clinched the deal for the first two reactors in 2002. It claimed that the two new reactors it wanted to supply to India for the third and fourth units of Kudankulam were continuation of the partnership agreed upon by the two countries in 1988 and 2002.

The two countries also signed agreements on nuclear cooperation in December 2008 and March 2010, before India’s liability law came into effect in November 2011.

New Delhi made it clear that all atomic power projects in the country would come under the Civil Liability for Nuclear Damage Act.

Moscow initially disagreed, but later argued that it would substantially raise the cost of the reactors to be supplied by it for the Unit III and IV of the KNPP. Sources said that Moscow would seek re-negotiation of the $ 3.4 billion credit protocol,  New Delhi insisted on bringing the new reactors under the ambit of the nuclear liability law.