For international players in the civil nuclear space, the tantalising prospect of doing big business in India has for a while now been tempered by the downside risk in the absence of an agreement over nuclear liability contingencies.
GE’s Chairman and Chief Executive Officer Jeff Immelt had once said, “I would love to participate (in India)…ButI do not want to put my company at risk for anything. That has to get through people’s head so that we get a common language on this (nuclear liability).”
A similar sentiment has been voiced by other international players and some US political heavyweights.
Taking the cue from this and fulfilling a commitment made by Indian negotiators of the India-US Contact Group formed in September 2014, during Prime Minister Narendra Modi’s first visit to the US, New Delhi has notified the creation of the ₹2,000-crore Nuclear Liability Fund on December 8.
Nuclear liability fund While the fund puts some of the onus on the power producer in the event of a nuclear accident, it leaves the equipment supplier free from any financial burden in such an eventuality.
Officials in the Department of Atomic Energy told BusinessLine that with this, they are hopeful that commercial engagements with the US will start in the civil nuclear field.
The Fund will be used if the damages exceed the operator’s liability of ₹1,500 crore as stipulated under the Civil Liability for Nuclear Damages Act.
The Fund will be set up through a levy collected from operators of nuclear installations. According to an official notification, the operators will have to pay anywhere between 5 paise and 10 paise for each unit of electricity sold to customers.
In India, the Nuclear Power Corporation of India (NPCIL) will be the operator, so the onus falls on it. However, to cushion the impact on NPCIL, the Centre has created a ₹1,500-crore India Nuclear Insurance Pool with support from the General Insurance Corporation of India. “During US President Obama’s visit, India had agreed to create an insurance pool and a nuclear liability fund. Both have now been created. Nothing changes with regard to the Act. This is just to provide for an amount in case of an accident,” a senior official explained.
The Fund amount will be credited into the Consolidated Fund of India and the levy will be payable on a quarterly basis.
The commitments for a Fund and an insurance pool were a result of US concerns about Section 17 of the Act, which give the operator the Right to Recourse and allowed it to sue suppliers like GE and Westinghouse, in case of an accident.
India has maintained that Section 17 is an ‘enabling provision’ and not a mandatory one, and the Nuclear Liability Fund and the insurance pool will be enough to cover damages for accidents. It remains to be seen whether US firms will be satisfied with the measures.
Both GE and Westinghouse were a part of the India-US Contact Group.