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'Govt open to raising nuclear liability cap'

Q&A: Prithviraj Chavan, Atomic Energy Minister

Aditi Phadnis & Saubhadro Chatterji  |  New Delhi 

Prithviraj Chavan

Atomic Energy Minister Prithviraj Chavan tells Aditi Phadnis & Saubhadro Chatterji the Nuclear Liability Bill will put in place an architecture to compensate victims of nuclear accidents

A lot of doubts and fears have been expressed about the Nuclear Liability Bill? Are these justified?
The chronology of events leading to the Bill is very important. In 1999, just after the second Pokharan tests, the Atal Bihari Vajpayee government initiated the process of India joining the Convention on Supplementary Compensation (CSC) for Nuclear Damage , which is the international regime for compensation payment in case of nuclear accidents.

Simultaneously, as India did not have any domestic law on the matter, the Board of Research in Nuclear Energy was asked to set up a committee to study the nuclear liability regime. The two-member committee — comprising Prof Coutinho of Government Law College, Bangalore, and Prof Rajagopal of National Institute of Advanced Law Studies, Bangalore — produced a report, which said the Atomic Energy Act was silent about liability and compensation in case of nuclear accidents.

This coincided with the beginning of construction of the Koodankulam nuclear power reactor, not far from Sri Lanka. Koodankulam was the first nuclear reactor India was building after Tarapore in the 1960s. It was close to an international border. In November 2001, the committee gave its report saying it was time to have a legal mechanism to clarify liabilities in case of nuclear accidents and join the international treaty regime for nuclear liability.

So, two things: The current Bill, which is coming up for debate on Monday, has nothing to do with the Indo-US civil nuclear agreement; and, it was the National Democratic Alliance government which first mooted the proposal, recognising how important it was.

What are the features of the Bill?
It channels liability solely to the operator of the nuclear power plant. It is a strict liability and the operator can’t say that the accident was not its fault. There are caps on the amount the operator is required to pay in case of an accident and the time period during which claims can be made.

The Bill says there has to be one court or legal body that will adjudicate so that the case does not go on forever. So, the Civil Liability for Nuclear Damages Bill, 2010, to give it its correct name, is a result of consultations that began in 2000.

The operator of the nuclear power plant will be liable for all accidents, including those that occur during the transport of the material. Of course, force majeure occurrences such as armed conflicts, natural calamities, terrorist attacks, etc, are excluded.

The Bill envisages a maximum national liability equivalent to Rs 2,133 crore and an operator cap of Rs 500 crore.

The government can increase or decrease the liability, but there is still a cap of Rs 100 crore.

What about insurance?

This is the problem. Every operator will take insurance, and, obviously, the cost of insurance against accidents will be passed on to the consumer. The higher the liability, the higher the insurance premium. Therefore, the cost of power generated from the plant will be higher and will have to be paid by the consumer.

The operator will have to maintain an escrow account in which he will keep enough money to meet his liabilities so that if there is an accident, he can’t say he is bankrupt and cannot pay damages. So, if the liability falls on him, the insurance amount will come down.

But please remember this. If the cap on liability is so high that insurance companies refuse to insure the operator, no one will want to invest in India. So, all the effort that went into securing the Indo-US Civil Nuclear Agreement will go waste if we do not follow up with this legislation.

What is the extent of the foreign investment?
How does a nuclear reactor work? You have a nuclear core, which heats the water surrounding it, which in turn produces steam to drive turbines. The nuclear core and a part of the pressurised chamber and heat-generating rods are probably going to be supplied by foreign companies. The dome that houses the core, the concrete and cement work, brickwork, cladding, etc, will be by our own companies.

An accident outside the dome, that is, say, a girder falling on steam-producing machinery or turbines, will not classify as a nuclear accident. The operator’s liability will be limited to what happens inside the dome.

A commission will be set up to classify the severity of the accident — the International Atomic Energy Agency has a clear criterion on a scale of 1 to 10.

So, if only such a small part of the whole process is involved in liability coverage, can’t the operator simply take insurance?
No, because according to the US atomic energy law, no US nuclear equipment manufacturer is allowed to sell equipment to any country unless it has a liability law in place. The French demand either a law or a bilateral law fixing liability. So do the Russians. So, unless we pass this law, no one will give us equipment.

Why not a higher cap?
I have an open mind on this. Parliament can pass a law raising the cap. But remember, the higher the cap, the higher the cost of getting insurance. We looked at all the caps worldwide and came up with the Rs 500 crore figure because it was somewhere in the middle. China has a cap of Rs 200 crore. The US cap has been raised recently and is now higher than us.

Only Japan, Korea, Germany and Switzerland place unlimited liability on the operator. If we don’t keep the caps reasonable, nobody will invest in India.

Right now, we have nothing, no law to punish operators — which is currently only the government — who allow hazardous substances to leak, except the Public Liability Insurance Act, 1991, which does not spell out nuclear accidents. This is one reason why of Bhopal had to run from pillar to post for compensation and finally took recourse to the Law of Torts. Now, we will have a legal framework within which to proceed.

First Published: Sun, March 14 2010. 00:53 IST