A parliamentary panel has recommended key changes in the draft nuclear liability Bill that, if implemented, would treble the accident compensation burden for the reactor operator and also make private equipment suppliers liable for payment of claims.
That would increase insurance premium for private reactor suppliers like General Electric as also for Indian nuclear power generators such as Nuclear Power Corporation (NPCIL), resulting in an increase in cost of nuclear power generation.
However, it may not make much difference for reactor suppliers from Russia and France as their liabilities are underwritten by their respective governments.
The report of the panel was tabled in both Houses of Parliament on Wednesday?a day after the government agreed to accommodate concerns of the main opposition, BJP.
With the BJP on board, the government is expected to table an amended Bill in the current Session of Parliament for approval. Passage of the Bill will pave the way for the realisation of wider economic benefits of the Indo-US nuclear deal.
India has about 4,560 mw nuclear-based power generation capacity in operation, which it plans to increase to 63,000 mw by 2032. That offers huge business opportunities for foreign reactor supplier such as General Electric, Westinghouse and Areva as also domestic power equipment manufacturers and EPC contractors like Bhel, Bharat Forge and L&T.
As of now, only NPCIL is engaged in nuclear power generation business as the sector is off-the-limits to private players. But the Centre has signaled its intention to amend the Atomic Energy Act to allow entry to private players into the sector.
Public sector players like NTPC, Indian Oil Corporation and ONGC and private companies such as Reliance Power and Tata Power are keen to enter nuclear power generation business through the route of joint venture (JV) with NPCIL.
NTPC and IOC have already signed JV agreements with the state-owned nuclear power generator.
The panel has suggested increasing the liability cap from $110 million to $320 million while also allowing the plant operator option to claim compensation from equipment supplier in case accident is caused be defects in equipment.
In addition, the Centre will bear liability burden equivalent to $300 million special drawing rights.
The government set up the panel to look into the Bill following protests by the opposition who said that the liability cap envisaged at $110 million in the original draft bill was too low?nearly 23 times less than that of an operator in the US.