KOLKATA - Pleasing neither supporters nor its critics, India this week passed a
Nuclear Liability Bill, opening up the country’s US$150 billion nuclear power
market to global equipment suppliers. The first to benefit may be American
companies like General Electric and Westinghouse Electric, followed by French
and Russian nuclear power equipment suppliers.
Although the new bill paves the way for bringing India out of what Prime
Minister Manmohan Singh describes as "nuclear apartheid", critics said it
didn't do enough to address the safety concerns of its people.
For the time being, the bill may be a personal triumph for the prime minister.
After signing the landmark 123 Agreement with
then United States President Gorge Bush in October 2008 to lift a three-decade
long global embargo on the transfer of nuclear fuel and technology to India,
Manmohan has fought many battles to bring the opposition over to letting
foreign investors and suppliers enter the country's civilian nuclear programs.
"This bill is a completion of a journey to end the nuclear apartheid, which the
world had imposed on India in the year 1974," Manmohan said on August 25 while
announcing the legislation in parliament. With it, Manmohan has also managed to
score a geopolitical brownie point by demonstrating his resolve to push through
a controversial deal ahead of President Barack Obama's visit in November.
By opening up the power sector to nuclear power plants, energy deficits that
have been a drag on the country’s economic growth for years could be narrow
significantly. The bill also allows the India-US 123 Agreement to bear its
first fruits as it paves the way for GE and Westinghouse to start work on
building reactors in at least two sites identified for them. The two deals
could be worth around $10 billion, according to reports.
Still, the price the country may end up paying for not being a nuclear outcast
may be too high. "For one, there are enough loopholes in the bill that can
entrap the operator [the power generator] into unlimited liabilities," said
Lydia Powell, senior fellow at the New Delhi-based Observer Research
Foundation, a think tank on public policy formulation. "Besides, the bill has
identified the operator as the only source of liability, while others like
equipment suppliers were not made responsible. And most importantly, the bill
has failed to address the interests of the victims of a nuclear accident."
Others say the rules for liability claims and payments set down by the bill in
the event of a nuclear accident are skewed heavily in favor of equipment
suppliers who are liable only if ''the nuclear incident has resulted as a
consequence of an act of supplier or his employee which includes supply of
equipment or material with patent or latent defects or substandard services.''
Experts like Powell say that this clause essentially channels liability for
accidents to door of the operators, giving them extremely limited rights of
recourse against suppliers should an accident occur. It also sets aside
ordinary tort law by disallowing fault-based claims by victims against
operators or suppliers.
“By merely directing legal channeling of liability rather than to reflect
economic channeling of liability, the bill has clearly focused the interests of
the nuclear industry instead of the victims,” Powell said.
The bill has set a total liability for the operator at $320 million, while the
government has taken another $220 million upon itself.
The new legislation ''leaves ample scope to channel liabilities to the
suppliers,'' the Confederation of Indian Industry (CII) lobby group said,
adding that the bill therefore adequately strengthens safety norms for the
operation of nuclear plants.
India’s new nuclear liability laws are more comprehensive than most other
nuclear powers, according to the CII. China, Canada, France, Germany, Japan,
Russia, the UK and even the US all have similar laws that channel liability
exclusively to operators and do not provide a right to recourse against
suppliers, the confederation said. India and South Korea are the only countries
that provide right to recourse against the supplier, although in South Korea
the right to recourse can be excluded through a carefully crafted contract, the
There are 19 nuclear power plants already operational in India and the sector
is set to benefit from the 123 Agreement. With total capacity of 4.5 Giga Watts
(4,500 MW), the plants have been hit by dwindling domestic uranium reserves and
sanctions on fuel supplies. Nuclear power generation capacity is consequently
down to 3% of total installed power generation capacity of the country. On the
back of the agreement, India signed a $700 million deal with Russia in February
last year for the supply of 2,000 tons of nuclear fuel.
Four more reactors under construction are expected to get cracking, providing
hopes for India to eventually boost nuclear power generation to about 35 GW by
The a greater role for nuclear energy would help India achieve 9% GDP growth in
the coming years, according to Citigroup analysts Rohini Malkani and Anushka
Shah. The economy grew 8.8% from April to the end of June fiscal first, its
best performance in two-and-a-half years, data released by the government's
Central Statistical Organization showed yesterday.
According to Malkani and Shah, passage of the liability bill also heralds
greater private sector participation. This will provide scope for several
countries like France, United Kingdom, Canada, Namibia, Mongolia, Argentina and
Kazakhstan to participate in India's still-nascent nuclear energy sector, they
wrote in a note to clients. "Current targets allow sufficient space for both
international and domestic companies to expand," they said.
The bill, passed by parliament on August 30, is a ''welcome development for not
only the country but also the global nuclear community as a whole,'' according
to the Observer Research Foundation's Powell.
Powell argues that the bill would have been ''flawless'' had it paid enough
attention to the interests of the victims of nuclear accidents. ''The fear is,
given the weak legal provision for the victims, the suppliers, who are usually
a powerful group of people, could get away with next to nothing in India.''
Indrajit Basu is a Kolkata-based correspondent for Asia Times Online.
(All quotes above are exclusive to Asia Times Online).