Nuclear Power Corporation of India Ltd (NPCIL) has proposed to insure its nuclear assets, including the ‘nuclear island’ that holds core reactors.
It has said so to the government. The idea has been prompted by the belief that reactor use would be more and more of a commercial nature, with the increasing demand for energy. Currently, reactors are insured only till the time they are not operational. As soon as the fission material is fired into the reactors, the insurance cover ends. NPCIL bears the responsibility of any damages.
One issue that prevented insurance was existing government guidelines that bar inspection or survey of nuclear facilities. Since India is not a signatory to the non-proliferation treaty, it did not permit any inspection of its facilities. "The government would have to modify rules if it wants to insure assets," said an official. When asked, officials of the department of atomic energy would not comment.
There also have been efforts by NPCIL to insure assets without the required survey for operational risks but insurance companies have not responded to this call, said an official.
Analysts also say, due to the very high liability in case of an accident, that insurance companies do not want to insure nuclear assets without due diligence. Also, due to the high risk involved, nuclear insurance pools have evolved internationally that collectively reinsure the nuclear assets. The concept of insuring nuclear assets is prevalent among countries where dependence on nuclear energy is considerable. Highly specialised nuclear risk underwriters inspect the facilities to ascertain the risks.
“Given the experiences from the tragedies at Bhopal, Chernobyl and Fukushima, it is very clear that the exposure to liabilities is very high. To cover those and ensure proper and timely compensation, taking a protective cover is essential,” said Anuraag Sunder, principal consultant, PricewaterhouseCoopers.
In America, there is a law enacted in 1957, known as the Price-Anderson Act. It was designed to ensure adequate funds would be available to satisfy the liability claims of members of the public for personal injury and property damage in the event of a nuclear accident. "The legislation helped encourage private investment in commercial nuclear power by putting a cap on the total amount of liability each holder of nuclear plant faced in the event of an accident. Today, the limit of liability for nuclear accident has increased the insurance pool to $12 billion,” he added.
Though NPCIL is the only nuclear operator in the country, India has a target of 63,000 Mw of energy from nuclear sources by 2032, of which 4,000 Mw has been achieved. While only 2.5 per cent of the installed power capacity in the country is through nuclear sources, nuclear energy constitutes just one per cent of the country’s primary energy mix.