Spotlight on N-liability law

Japan's nuclear crisis has sparked concerns within the atomic energy establishment in India that cautious foreign firms may now balk at inking nuclear pacts with India because of differing liability norms reinforced by Fukushima. Two sides

Japan's nuclear crisis has sparked concerns within the atomic energy establishment in India that cautious foreign firms may now balk at inking nuclear pacts with India because of differing liability norms reinforced by Fukushima.

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"Our concern is that the liability law will, after the Japan crisis, further drive away suppliers from tying up with us," a senior Nuclear Power Corporation of India Limited (NPCIL) official told HT.

The public-sector NPCIL alone can operate nuclear reactors at present in India under the atomic energy law.

Section 17(b) of the Civil Liability for Nuclear Damage Act allows the operator the "right of recourse" if a nuclear incident occurs as the result of faulty equipment and services delivered by a supplier.

The US has diplomatically raised concerns over this condition, pointing out that it may deter foreign suppliers, especially since many other countries have no such condition.

"Japan, one such country, is likely to only reinforce the relative risk of investing in India," a DAE official accepted.

General Electric (GE), the designer and manufacturer of the Fukushima reactors now spewing radiation, faces no risk of liability in Japan even if any design flaw is proved. Tokyo Electric Power Corporation (TEPCO) - the operator - will have to bear all liability.

On the other hand, the crisis has also triggered fresh worries that India's liability law - passed by Parliament last year after the government introduced supplier liabilities -is still too weak.

Detractors are questioning a key exemption awarded to operators - section 5 of the liability Act makes the government responsible for all damages caused by a "grave natural disaster of an exceptional nature".

"...This implies if a natural disaster led to a nuclear incident in India, the government and not the operator would be liable to pay compensation," Arghya Sengupta, a research student at Oxford who has studied the liability law extensively said.

If the atomic energy act is amended to allow private operators apart from the public NPCIL, the liability law will place the liability significantly on the government and not on operators. The law allows the government to impose a levy on operators and create a N-liability fund, but details are nebulous, Sengupta said.