Higher liability in N-Bill will make nuclear power costly

A report by Parliament’s Standing Committee on Science and Technology has noted that the higher the liability limit in the civil nuclear liability Bill, the higher would be the cost of producing nuclear-generated electricity. The report was tabled in Parliament yesterday.

The department of financial services argued before the committee that the higher the liability limit, the higher would be the insurance premium and subsequently higher would be the cost of producing nuclear-generated electricity.

A nuclear expert, who did not want to be quoted, told Business Standard that: “If a policy is taken for 300 million SDR (Special Drawing Rights), then at the premium rate of 1.8 per cent to 2.7 per cent suggested by the department of financial services, the premium comes to Rs 51.75 crore per month, Rs 621 crore in a year and if one takes 40 years as life time of a plant, then it is Rs 24,840 crore. Of course, it is assumed that the premium will remain static for 40 years.”

Regarding the capability of Indian insurance companies, the department said India could build up expertise over a period of time.

The finance secretary before the committee argued that conceptually, there did not seem to be a symmetrical apportionment of responsibilities between the nuclear operator and the government, while fixing the cap of Rs 500 crore as the amount of liability under clause 6 (2) of the nuclear liability Bill.

He also said the finance ministry would be more happy, if there was no specific cut-off of Rs 500 crore or Rs 600 crore. It would be better if it was possible to quantify the risk of nuclear installations and in any case, the operator should have bulk of the responsibility, he added.

He also argued that the government’s liability should be quantified in the Bill, so that there was clarity on who had to bear what part of the responsibility in the event of an accident. In case of liability, the point of burden-sharing between the government and the operator should be based on an exact formula.

The finance ministry had suggested a formula-based limitation be considered, which matched the regime for the operator to the types of accidents that might occur so as to incentivise adherence to the higher safety standards, limit negligence and encourage practice of highest international standards, while providing reasonable and scientifically determined cover by the government.