Russia’s refusal to sign on the dotted line for supplying the two additional Kudankulam nuclear reactors is further evidence of the pernicious damage the flawed civil nuclear liability law is doing to India’s nuclear future.
Contrary to the propaganda of the left, the liability issue has stalled the sale of reactors not only from the United States but from every foreign supplier.
More telling is that the liability law has also put a spanner in the works of Indian nuclear component manufacturers, many of whom have stopped or are going slow on signing new contracts for domestic nuclear work.
The civil nuclear liability law is flawed because it is so poorly drafted and not in keeping with international liability norms that the nature and extent of the various forms of liability are unclear. This makes it impossible to quantify, making it impossible for a reactor provider or component manufacturer to get insurance — which means they legally cannot sell to India.
This is particularly acute for component makers for whom selling four or five widgets for the Indian market is hardly worth getting a potentially limitless liability on their account books. Reactors are made of thousands of components provided by a global chain of suppliers.
A Russian or French reactor will have hundreds of bits and pieces sourced from around the world. If these widget makers are uncertain about their legal liability then they will give a thumbs down — making the reactor sale economically unviable.
The graver problem is that the same uncertainty has infected over 200 Indian firms that make reactor components. Prime Minister Manmohan Singh’s government has sought to overcome this by issuing various rules and regulations to interpret the law in a way that gives the reactor operator the right to exempt a component supplier from some kinds of liability. But this bureaucratic patch on defective legislation is not working.
The obvious reason is that the final decision on legal interpretation doesn’t lie with the executive; it lies with judiciary who will not speak until an accident actually takes place. What is needed, therefore, is new legislation that carefully and clearly spells out the liability involved in building and running a nuclear reactor in India.
That can only come about if the liability law is amended by Parliament. This will be declared politically impossible, but India is heading for a stark choice of either changing its law or abandoning nuclear power as a major element of its energy profile. Mr Singh freed the nuclear sector from sanctions only to strangle it with legal binds — a fault he needs to admit so the repair work can begin.