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Where’s the fallout?

Far from being a sellout to the US, the N-liability Bill provides for compensation and allows operators to sue foreign suppliers for damages beyond those given in the law, reports Pramit Pal Chaudhuri.

delhi Updated: Mar 18, 2010 00:47 IST
Pramit Pal Chaudhuri

Imagine years from now that an imported reactor built on behalf of the Nuclear Power Corporation (NPC) of India melts and spews radioactivity across the countryside. Several thousand farmers and their fields are contaminated.

Would the present Civil Liability for Nuclear Damage Bill help them?

The answer: yes; quite a bit.

The Bill enforces strict liability. It wouldn’t matter who was at fault; the victims would get paid pronto.

Under international norms, the operator has to pay. NPC would have to cough up Rs 500 crore and, under Clause 6, even more if the government decides it should.

If the operator (NPC) runs out of funds, then the government would have to hand over up to another Rs 1,600crore. If more is needed, the victims would be paid from a third tier of liability – the international fund under the Convention of Supplementary Compensation, of about $500 million (Rs 2,350 crore).

The beauty of standard nuclear liability conventions is that they seek to give victims a huge dollop of money quickly and without fuss.

“The psychological backdrop for us was Bhopal,” says an Indian official, noting that victims spent years running circles as the legal system laboriously tried to fix blame. When nukes go bad, bucks, not blame, is what matters.

Mind you, the Bill doesn’t take away the right of victims or their next of kin from separately taking reactor builders or operators to court.

Then, it doesn’t stop the operator from suing the builder or vice versa. The Indian operator’s right to go after, say, a US or French reactor supplier is specified in the Bill. The operator has the “right to recourse” if “the nuclear incident has resulted from the willful act or gross negligence on the part of the supplier of the material, equipment or services”.

All this is separate from the liability compensation. And what a victim gets under these is limited only by the generosity of the judge.

Nuclear liability laws everywhere are about fast tracking compensation. The Indian Bill is no exception: It specifies that compensation applications should be dealt with in three months.

This reflects the unusual nature of nuclear power. Like neighbourhood dogs, when reactors are good they are very very good. But when they are bad, they are horrid.

But liability has a second purpose. A fear of the so-called “China Syndrome” – a serious accident in a nuclear power plant – shouldn’t throttle the goose that can lay golden eggs. While nuclear power plants across the world have maintained a good safety record since Chernobyl nearly 25 years ago, they still scare insurance firms.

If a liability cap is too high, premiums on reactors go through the ceiling. The operator has to jack up power tariffs. Customers flee and no reactors get built since there is not market for the power they will generate.

Looking at other countries, the government chose a cap between those of the wealthiest countries and those of other emerging countries. The Indian law doesn’t give as much as France, but gives more than China.

Officials are frustrated at the present complaints that the first tier cap is too small.

The team that drafted the Nuclear Liability Bill feels it crafted a law that conforms to international norms and Indian realities.

“There is nothing country-specific about this Bill,” officials say, responding to the Left’s standard American obsession. In fact, Washington lobbied unsuccessfully to rid the Bill of Clause 17, which says operators can go after errant suppliers – and does not provide any liability cap.

In any case, the need to introduce a nuclear liability system in India was driven by Russian demands for the Kudankulam 3 and 4 reactors. It was further raised by the French. “The Americans, as is their style, were only the most vocal about the issue,” says an official.

Ultimately, the real story goes much further. Prime Minister Manmohan Singh’s vision was that eventually Indian corporations would learn to become reactor operators, components makers and players in every facet of civilian nuclear power.

None of this will be possible if India does not have a liability system aligned to that existing in the rest of the world.

And as the economy matures and the country becomes wealthier, liability caps can be raised. As more and more Indian operators enter the fray, the US industry’s multi-billion dollar compensation kitty can be replicated. And as India becomes a provider and exporter of nuclear technology in its own right, it will demand that potential clients overseas introduce similar legislation.

But all this can come to fruition only if India passes its own Bill first.