The contentious Civil Liability for Nuclear Damage Bill is likely to delay the entry of US companies into India?s $150 billion nuclear market. Indo-American Chamber of Commerce executive vice-president Gautam Mahajan told FE, ?Any deferment will reduce the American involvement in the nuclear industry. France and Russia are far ahead in developing the India market and America will be left behind.?
The liability issue has delayed things, putting US firms at a competitive disadvantage over Russian and French firms whose accident liability is underwritten by their governments, said sources.
Failure to pass the legislation would prevent suppliers including GE Hitachi Nuclear Energy, Connecticut-based GE, Westinghouse Electric Co, a subsidiary of Japan?s Toshiba Corp from competing for $175 billion of orders. The Russian and French have already been awarded contracts.
According to Mahajan, the US companies will now have to be on the sidelines for a while.
GE Energy CEO (India) Kishore Jayaraman told FE, ?Nuclear liability regimes are very important for the development of nuclear power. They ensure that adequate compensation is available the public in the unlikely event of an accident. They are also important to suppliers as insurance against such liability is not available to private firms.?
?India recognises the importance of establishing an adequate nuclear liability regime and has indicated it intends to adopt a law that conforms to the multilateral convention on Supplementary Compensation for Nuclear Damage (CSC),? Jayaram said.
In a nuclear accident, the CSC establishes common international standards for addressing claims, a supplemental international fund for victims and designates a single court for handling claims. In 1997, the treaty was signed at the IAEA and, in May 2008, ratified by the US, he explained. The deferred Bill seeks to limit the liability of a nuclear plant?s operator in case of an accident at Rs 500 crore, there will be Rs 2,133 crore in the form of SDR (special drawing right). According to sources, ?It is essential to have a nuclear liability framework. And more important is that there has to be a prompt compensation to the victim.?
The maximum compensation amount to be paid by the government or by the Nuclear Power Corporation of India Ltd (NPCIL) is Rs 2,200 crore.
The proposed Bill is aimed at constituting a multi-member commission to facilitate speedy disposal of compensation cases and make the whole system fool-proof.
Under the present system no Indian private entity can transact nuclear business with any foreign enterprise and therefore the government is the sole authority to conduct nuclear business under the Civil Nuclear Agreement which ended India?s nuclear apartheid.
France and Russia have been demanding such a framework. This is based on international practice and international legal mechanisms, sources said.
The passing of the Bill in Parliament is a crucial step that India is required to take under the 123 Agreement with the US. Private companies in the US are not willing to sell nuclear equipment to India without such a law in place.
?The US companies will now have to wait for a while,? pointed out Mahajan. The country needs boilers, reactors and turbines to meet its target of boosting nuclear generation 10-fold to ease peak-hour power shortages that jumped to 13% in the year to March. European competitors including Paris-based Areva SA and Russia’s Rosatom Corp. are covered by sovereign immunity because they are fully or partially controlled by governments.