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Govt releases N-deal FAQs; no proposal to amend Civil Liability Act

india Updated: Feb 08, 2015 14:35 IST
Shishir Gupta
Shishir Gupta
Hindustan Times
India-US nuclear deal

The government on Sunday released a set of FAQs (frequently asked questions) on the nuclear breakthrough with the US. These capture the essence of the memorandum that has been exchanged with the Americans and also detail several aspects of interest to other players both domestic and international.

The FAQs state categorically that there is no proposal to amend the CLND Act (Civil Liability Act) or the CLND Rules and there is no deviation from India's signature and proposed ratification of the 1997 International Convention on Supplementary Compensation. This mirrors what Prime Minister Narendra Modi said on 25 January in his press conference with US President Barack Obama.

Importantly, the FAQs state that even though there is no mandatory legal requirement under the CLND Act to provide for a right of recourse in a contract, there would be policy reasons for the Indian operator to do so. Thus there is no waiver of the right of recourse contained in Section 17 of the Act. However, how Section 17 will operate has been clarified in considerable detail. This should be valuable not just for foreign suppliers but also for the Indian operator and the Indian suppliers, who have been hesitating to come forward with bids for the indigenous 1400 MW Haryana plant.

The FAQs also address concerns of domestic and foreign suppliers with regard to the broad scope of Section 46 by giving examples of how such language is provided routinely in other comparable special laws to underline that other relevant laws continue to operate in their respective domains. The FAQs underline that when specific amendments to add the word 'supplier' to Section 46 were voted out in Rajya Sabha, a court cannot read them in by interpretation. Similarly, if an amendment to add foreign courts' jurisdiction to Section 46 was dropped in the Rajya Sabha, domestic jurisdiction cannot be read out of the Section.

The FAQs detail how the proposed India Nuclear Insurance Pool led by five Indian public sector insurance companies would operate. The government's contribution of Rs 750 crores is only in the form of a contingent liability against which the government will actually earn a part of the premium revenue. This contribution will not be required in 4-5 years much before any foreign built reactor comes on stream. The ministry of finance is expected to seek approvals shortly for the government's contribution.

The pool will have three types of policies to cover operators, turn-key suppliers and independent suppliers. Pricing of premiums is being worked out taking into account risk probabilities using a scientific study done by DAE. The impact on costs of the premium payments will be minimum. This is borne out by the experience of 26 such pools around the world.

Significantly, the FAQs bring out how much the debate on nuclear liability has evolved since 2010. From being an operator versus supplier debate the discussion post-Fukushima has moved to the interests of victims. The Indian law had anticipated that. The FAQs point out that the outright compensation payable at current prices would be Rs 2,610 Crores beyond which funds under the international convention will be accessible. The FAQs state that a Nuclear Liability Fund is to be created by charging a small levy from nuclear power. This will be built up over 10 years without affecting consumer interests. The whole mechanism would bring certainty and clarity to victim compensation.

With the policy hurdles out of the way the next steps are now up to the companies. This will help Govt meet its target of 63,000 MW of nuclear power by 2032 while creating a new manufacturing sector in Light Water Reactors in India. All the international reactors are to come with life-time guarantee of fuel supplies, which will also ease the Uranium supply situation while providing spent fuel for reprocessing to kick start the second stage of the three-stage indigenous programme

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