Private sector also liable under N-Bill

The proposed civil nuclear liability law would also be applicable to private companies, which supply equipment or have equity participation in power generation projects. Nuclear power generation in the country under the Atomic Energy Act allows 49 per cent equity participation by private firms.

The redrafted Civil Nuclear Liability Bill, cleared by the Lok Sabha today, defines the operator in relation to a nuclear installation “as the central government or any authority or corporation established by it or a government company who has been granted a licence pursuant to the Atomic Energy Act, 1962, for the operation of the installation”. The Act as amended in 1987 defines a government company as one in which not less than 51 per cent of the paid-up share capital is held by the Centre. The liability of the operator would, therefore, be equivalent to the shareholding of the equity holder which could be a private company.

A senior executive in one of the private companies has welcomed the inclusion of suppliers in the liability Bill, stating that “anybody in the chain who makes a mistake should be held responsible and as a matter of principle should be accountable”. So far as limiting the liability was concerned, the government and Parliament had to take a decision, said the executive who did not wish to be named.

Industry chambers had yesterday expressed reservations on clause 17 of the Bill that gave the operator the right of recourse against a supplier on the grounds that suppliers would be wary of executing contracts even for the current nuclear units. Gokul Chaudhuri, partner (energy and infrastructure practice), BMR Advisors, however, rejected the argument, stating that without the liability Bill it would have been impossible to get new technology suppliers. “There was a need to fix liability and cap it to make companies comfortable.”

The joint venture between state-run Nuclear Power Corporation of India (NPCIL) and NTPC Ltd that aims at setting up 2,000 Mw nuclear power capacity is the first corporate move towards tapping the potential of the Indo-US civil nuclear deal. Though the private sector has currently not firmed up any concrete plans for nuclear power generation, companies like GMR Energy and Reliance Power (RPower) are keen to pick up even a minority stake in power plants put up by government companies. While the Anil Dhirubhai Ambani (ADA) Group, the promoter of RPower, had a few years ago approached NPCIL to set up a joint venture for nuclear power generation, GMR Energy is currently evaluating the opportunities thrown open in the sector.

“Most of us in the private sector have to climb a steep learning curve, so even a minority shareholding is good before full privatisation,” GMR Energy CEO Raaj Kumar told Business Standard.

Kumar said his company was keen to put up nuclear power plants in the country but he did not give any target investment and capacity figures. “We will play only a minority participatory role in the sector and would be driven by the senior partner from the government,” he added.

Reliance Industries Ltd (RIL), the biggest private sector company in the country, is also keen on the nuclear sector. “We are drawing up specific plans for mega-investment in this (power) sector with clean coal-based power generation projects, hydel projects and nuclear power as and when it is opened up,” RIL Chairman and Managing Director Mukesh Ambani had said at his company’s annual general meeting in June.

Experts believe that the private sector involvement, both as power generator and as a supplier, will not be constrained under the current rules and also once the liability law is in place. “Minority private equity investment will come in power generation but given the scale of investment and liabilities only large companies with presence in power sector will have the confidence to walk down the path of forming special purpose vehicles (companies) with the government companies,” said Chaudhuri.