Nuke liability bill: It is about $150 bn and more

In just an hour-long interaction with media persons in New Delhi on Friday, Science and Technology Minister Prithviraj Chavan mentioned over seven times that if and when the Civil Liability for Nuclear Damage Bill, 2010, is passed it will open the opportunity for $150 billion business in India's civil nuclear power sector.

That signifies the importance of the bill that was cleared to by Cabinet on Friday after incorporating 18 amendments that include the suggestions forwarded by main Opposition Bharatiya Janata Party.

It is a political and diplomatic victory for Prime Minister Manmohan Singh at a time when he is seen as getting weaker and his government is drifting on all major national challenges like price rise, Kashmir and Naxalism.

This bill will expedite and ensure immediate compensation to victims if a Bhopal-type tragedy occurs again. At the same time, it keeps open the operators of nuclear power plant to claim civil and criminal liability against suppliers.

The speedy compensation will be provided through a mechanism provided under the bill.

It says that the government should appoint a Claims Commissioner and a Nuclear Damage Claims Commission to dispose off claims within three months. There will not be a possibility for an appeal against the commission's verdict.

According to Chavan, the act is needed considering the "necessity of joining an international liability regime." However, he avoided the contentious issue of the Convention on Supplementary Compensation (CSC) regime, which United States wants India to join.

"There is no compulsion for India to join the CSC and we will see later if it is required," he said.

This was one of the hurdles in getting consensus over the bill.

If the bill is passed in Parliament next week, with the BJP's support and votes, the Indo-US nuclear co-operation on peaceful uses of civil nuclear energy will achieve another milestone.

Dr Singh's pet project of nuclear energy will succeed in getting international investment and technological co-operation in nuclear power generation programme like never before.

While briefing media persons on the silent features of the 31-member Parliamentary Standing Committee report and its recommendations, Chavan said that once the liability of the nuclear power plant operators and suppliers is fixed through this bill it will bring upon a revolution in India's energy sector.

In fact, the new bill is not only applicable to nuclear power plants but also to ships and aircrafts registered in India.

The 'And' controversy

The bill created a controversy on August 19 because one word -- "and" -- was added in such a manner in 17th clause that it gave great leverage to the suppliers vis-a-vis operators.

The word "and" was inserted between clauses 17(a) and 17(b) in its original text that amounted to diluting the suppliers' liability in case of nuclear accident.

The government has now corrected the "fudging" and removed the "and".

Chavan said, "We got a note of strong opposition from the BJP over clauses 17(a) and 17(b) and we have accepted their position. We are getting very large support across party lines and I hope we will be able to pass the legislation."

The Congress has been assured that the Samajwadi party and Lalu Yadav's Rashtriya Janata Dal will vote along with United Progressive Alliance allies in favour of the bill.

The resolve with which the government has managed to bring BJP on board through some smart back-channel negotiations outside and inside the Standing Committee that discussed the bill threadbare, has pushed the Left parties in corner.

They cannot support the bill because of their ideological issue with US and also because of their decades-old stand against nuclear energy.

Chavan said that so far India was buying only uranium from the international market. Now the country will buy equipments to run the power plants.

Since last many months, it has constantly been reported that keeping in mind the forthcoming visit of US President Barack Obama, the government was hurrying up the process of making the law regarding liability of operators and suppliers of nuclear power plant.

'There is no pressure from US on the bill'

But, without naming the US, Chavan said that he wanted to "emphatically" say that a "particular" country's pressure was not behind the bill being tabled in this session of Parliament.

When asked specifically about the US pressure behind the bill, Chavan told rediff.com, "What pressure? And, who is the beneficiary? Do you mean to say that there is US pressure on India to buy French reactors? Is their American pressure to buy Russian reactors? Where is the pressure? 70 per cent suppliers of nuclear power plant equipments will be Indian. Tata, Walchandnagar, L&T are Indian companies who manufacture equipments for power plants."

In fact, he said that at four places in India, where advance talks are on to set up nuclear power plants, no US-owned/managed company is directly involved.

Chavan told the media that no US corporate is directly involved in the nuclear power business at this point of time.

He said the government-owned Nuclear Power Corporation of India is talking to Japan-based GE-Hitachi for setting up reactors at Kovvada (Andhra Pradesh), while for Mithi Virdi in (Gujarat) Westinghouse is in the fray.

Westignhouse is registered in the US but the Japanese company Toshiba owns its majority share. Areva, which is a French government-owned company, is being offered the nuclear park at Jaitapur (Maharashtra) while Russia's Atomstroyexport is already present at Kudankulam (Tamil Nadu) and is likely to build additional reactors at the same site and also at Hirapur in West Bengal.

Chavan said, "Suppliers will not be deterred by this bill because there is business worth billions. We are in the market now. We have option to choose from. Our law will be a reality and suppliers will eventually accept it to get the business. Even South Korea is a good option to India who has nuclear energy technology."

In fact, it is said that Dr Singh's schedule in the coming months is partly responsible for the haste in pushing the bill. US President Barack Obama, French President Nicolas Sarkozy and Russian President Dmitry Medvedev are expected in New Delhi in remaining four months of 2010.

Also, it is worth noting that out of four reserved nuclear park, two are going to Japanese business interests. Dr Singh is going to be in Tokyo in October. So, his anxiety in getting Parliament's approval for the Civil Liability for Nuclear Damage Bill is understandable.

'Why talk only about foreign suppliers?'

Chavan also argued that since the last few years, the NPCI and National Thermal Power Corporation has formed a joint venture and have a range of Indian suppliers.

He asked, "Why talk only about foreign suppliers? We have many Indian suppliers of nuclear power plants, who will be interested in nuclear liability law."

He said that many Indian private companies are already supplying major and minor components of power plants worth millions of rupees.

Chavan clarified that as of now India is not allowing any private Indian companies to operate nuclear power plants, but they can be minority partners with the government-owned companies.

To allow private companies to start and operate nuclear power plants India will have to change the Atomic energy act. He also said that the bill is not at all touching the issue of relief and rehabilitation in case of nuclear accident.

He also said that media's coverage of Bhopal judgment, recently, also impacted the Standing Committee's deliberations of the proposed bill.

Chavan repeated the government's often-repeated argument that in the era when emission of carbons is considered crime and all the countries are compelled to curb it, nuclear energy is an increasingly preferred option.

He also said that in a decade or so emission of carbon is likely to be taxed by many countries. So it is prudent for a developing country like India to shift to clean technologies like nuclear power.

What the nuclear liability bill proposes

The proposed bill clearly defines the legal terminology of the power sector and for nuclear damage and specifies procedures for compensating victims.

According to the analysis done by the PRS Legislative research, the bill fixes no-fault liability on operators and gives them a right of recourse against certain persons. It is likely to cap the liability of the operator at Rs 1500 crore. 

For damage exceeding this amount, and up to 300 million SDR (about Rs 2000 crore), the central government will be liable. All operators (except the central government) need to take insurance or provide financial security to cover their liability.

The bill specifies who can claim compensation and the authorities that will assess and award compensation for nuclear damage. Those not complying with the provisions of the bill can be penalised.

PRS Legislative Research's M R Madhavan says, 'The bill gives operators a right to recourse under three conditions: (a) if there is a clear contract; (b) if the damage is caused by someone with intent to cause damage; (c) against suppliers if damage is caused by their wilful act or negligence."

Chavan however, said that in the final draft this provision is further strengthened.

Not yet the time to celebrate

However, all is not over. It is not yet time for businessmen, looking for a pie in India's multi-billion nuclear energy sector, to celebrate.

The issue is too serious and all political parties would read the fine prints carefully before giving their approval on floor of the Lok sabha, probably, next week.

Because, even the Standing Committee has written to government that the right of recourse against the suppliers of power plants is vague in the draft that had come for discussion.  It's good that government has agreed that time limit for seeking compensation will be 20 years from the day of accident.

The most sought after answer since the last two days is what made BJP to change its mind and agree to support the liability bill. One explanation offered by a senior Congressman was, "BJP saw that opposing the Indo-US nuclear co-operation bill didn't give it any political dividend in the last Lok Sabha eleciton. They know well that the middle class in India doesn't like stiff opposition to America." 

PM Singh will have the last laugh when next week in parliament BJP will go along with his vision for the future of energy sector of India.