The Department of Atomic Energy (DAE) is pursuing the matter with the ministry of finance after no insurance company, including General Insurance, expressed its ability to provide financial cover for nuclear plants considering the huge monetary requirement.
Under the liability law, a compensation of up to R1,500 crore will have to be paid in case of a mishap involving a nuclear plant.
India has 20 nuclear plants at present, and the number is expected to grow as the industry expands.
The move indicates the urgency to insure reactors, especially units 3 and 4 of the Kudankulam Nuclear Power Plant (KKNPP), under the Civil Liability Nuclear Damage Act (CLND), 2010. An agreement with Russia for setting up units 3 and 4 was signed only a week back.
This will also pave the way for insuring big-ticket projects like the Jaitapur Nuclear Power Project (JNPP), where French firm Areva is constructing 6 EPR reactors of 1,650 MW each as also future atomic energy programmes.
In a letter written last week to the ministry of finance, DAE has said the formation of the nuclear insurance pool should be "expedited" on a "priority basis", as suggested by GIC.
The volume of the pool will depend on how much the government contributes for every project.
Interestingly, in Canada, the nuclear law caps liability at an extent, after which the government takes the remaining liability.
DAE and the Nuclear Power Corporation of India (NPCIL) had approached GIC for insurance. However, the public sector undertaking said it did not have the capacity to insure the reactors in view of the high costs and also the number of reactors involved. In response to an RTI filed by Greenpeace, an organisation working in the field of environment, GIC had said that it was not offering any insurance to KKNPP units 3 and 4.
Sources claimed the reason was that the insurance company did not have the resources to insure such big-ticket projects.
DAE has an option of bringing in foreign insurance companies. The atomic agency is, however, strongly opposed to foreign insurance companies because with them come foreign inspectors whom the department does not welcome.
"We are not very keen to have foreign insurance companies as this will attract inspectors of those companies, something which the department is not comfortable with. More importantly, why should a hefty premium be given to foreign companies when something could be worked out internally," said a government official. This has led to the government to decide on forming the nuclear insurance pool along with GIC, in which several insurance companies or other entities could come together to build resources to insure reactors.
With countries like Canada and the US having a sizable number of reactors, they also have nuclear insurance pool to deal with liability clause and also premium involved.