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US may press India to amend nuclear legislation

BS Reporter  |  New Delhi 

Friendly, but blunt. That will be the tone of the message from the United States Nuclear Regulatory Commission (NRC) to India.

When NRC chairman Gregory Jaczko comes here later this month to meet with his counterparts in the Atomic Energy Commission and the Nuclear Power Corporation of India, he would say that this country’s civil nuclear liability law would not pass muster in the US. For, as sources note, it would require to be substantially amended if New Delhi hopes to get business from the US.

The US has discussed the law — The Civil Liability for Nuclear Damage Bill 2010 — with France and Russia. These are the other two countries with whom India wants to do business in nuclear power.

Both of them share the US’s concerns on the infirmities in the liability regime spelt out in the Bill. Worse, the Bill, according to informed US sources, is not in conformity with the International Atomic Energy Agency (IAEA) Convention on Supplementary Compensation (CSC).

These sources note that India had repeatedly assured the US to patiently await the enabling executive orders, while Washington has sought legal opinion both in India and back in America. It is certain that executive orders cannot contradict a legislation passed by the Indian Parliament.

The crux of the issue is: Who will be held responsible in case there is an accident at a plant that is set up by foreign investors?

While the Bill fixes liability for nuclear damage, specifies procedures for compensating victims and fixes no-fault liability on operators by giving them a right of recourse against certain persons, it also contains the right of recourse against the supplier (Clause 17). This is neither compliant with the CSC, nor acceptable to foreign companies.

American investors are wary of coming to India, faced with a law that permits open-ended liability of suppliers. Further, they are fearful of the court cases that might result as a consequence of an accident. The Indian government has promised to ‘fix’ the problem through enabling executive orders. The US is not convinced this can be done. It is now looking to find a statutory protection for suppliers of civil nuclear energy as well as operators.

France, for instance, is not raising the issue actively and publicly with India, but its domestic law protects suppliers from liability in case of an accident.

The liability of suppliers was introduced at the insistence of the Opposition BJP, which made it a condition for their support to the Bill when it was passed in 2010.

The US has asked India to go to the IAEA to get its opinion on the law. But it knows the answer: The law is not in compliance with the CSC that is yet to be ratified. “The question is,” according to a source, “if India ratifies CSC, what exactly (of it) is being ratified?”

To tide over the problem temporarily, Russia and France have suggested Early Works Agreements: Investments made before work on the actual plant starts.

But directors on the boards of US companies engaged in civil nuclear power business will be wary of committing millions of dollars in projects that might not be sustainable for lack of an enabling legal set up, these sources warned.

If nothing works out, they say, India should reconcile itself to amending the Act itself to provide protection to both operators and suppliers “after the 2014 general elections”.

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First Published: Wed, November 02 2011. 00:23 IST