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Hard bargain on N-liability clause

delhi Updated: Dec 04, 2012 02:06 IST
Jayanth Jacob
Jayanth Jacob
Hindustan Times
Highlight Story

Many hurdles have come up in the last lap of the historic India-US nuclear deal operationalisation with New Delhi facing hard bargain from the US government and American private companies.

The tough negotiations ensure that commercial agreements for the US companies to sell reactors to India are not likely any time soon.

India is not amenable to the suggestions by the US on changing its domestic nuclear liability law, the Civil Liability for Nuclear Damage Act, 2010.

The US has been pressuring India to get the liability law “interpreted” by the international atomic energy agency (IAEA) in order to know whether it is consistent with international liability regimes.

Washington says the Indian law with stringent supplier liability clauses is not consistent with the operator-driver international regimes on nuclear liability.

If the IAEA says it is not compliant with the international system — as the Americans believe — they want India to “rework the law,” passed by Parliament. The Americans argue since they have “reworked their domestic laws” to enter into a nuclear agreement with India, New Delhi could do the same, said sources familiar with the negotiations.

India is not willing to accept this position and says the nuclear liability law, passed by Parliament, will prevail. Both the BJP and Left parties came together in passing a stringent liability law though the government could make some mitigating changes in the rules of the act.

New Delhi also says the IAEA is not the authority to interpret such domestic laws.

The US firms GE and Westinghouse, which are in talks with the nuclear plant operator in the country -- nuclear power cooperation of India limited (NPCIL)-- proposed construction of AP1000 and ESBWR reactors in Gujarat and Andhra Pradesh. The combined investment will be more than US$10 bn .

The firms argue that such liability for suppliers will get reflected in their books, which in turn will affect their credit worthiness.

Companies like GE, which have other business wings too, don’t want their nuclear business to affect the entire balance of the company with long liability commitments. Other worries are pricing and sentiments.

Post-Fukushima nuclear disasters in Japan, there are concerns about nuclear safety.

With new discoveries and falling prices in North America, gas is emerging as a clean and a favoured fuel—which doesn’t augur well for nuclear power with high cost. More insurance cover will result in higher power tariffs for nuclear power.