India makes concessions on liability

5 November 2015


Suppliers of component to India's nuclear energy sector will not be subject to India's Liability Law, Sekhar Basu, Secretary, Department of Atomic Energy, said on 3 November.

The decision comes as a major relief to small suppliers, mostly Indian companies, which had been complaining about the stringent provisions of the Civil Liability Nuclear Damage (CLND) Act 2010, which held suppliers responsible in case of any accident.

However, major suppliers, such as companies building the reactors, will still be liable. Basu, who is also the Chairman of Atomic Energy Commission (AEC) said it will be specified in their contracts that suppliers will have no obligation (in case of any liability) as ultimate responsibility will rest with those designing, fabricating, constructing, commissioning the plants.

Indian reactors are designed, fabricated, quality assured, erected, and commissioned under AEC supervision and equipment is made according to AEC requirements. "So we are responsible for that, and this must be stated in the document under which we will doing the purchase or getting the item fabricated," he said. As to foreign suppliers, they have to take out insurance of INR15bn ($230m). "It's a small fraction in comparison to the cost of the reactors and if you are taking multiple reactors, the cost remains the same," he added.

As to financing nuclear power plants, Basu said the DAE is also looking for cheaper loan options outside India. "The loan component is a bigger problem because whatever amount we are looking for, particularly from the banks, they will not be able to provide all of it, and Indian lenders will not be able to cover this. We are looking for big loans from the foreign markets. This is possible more for the foreign reactors. The Russians are already giving us a loan at interest of 4%, and still cheaper loans are available in the market," he said.

However, apart from Russia, foreign suppliers, especially the USA and France, remain hesitant to enter the Indian market. Areva said in late October that it is seeking further clarity from India on its nuclear liability law before it can move ahead with its plan to build India's biggest nuclear plant.

Areva signed an accord in 2009 to build six 1650MWe EPR reactors at Jaitapur, a coastal town in Maharashtra. However, the liability law, a legacy of the 1984 Union Carbide chemical accident at Bhopal that killed more than 10,000 people, has proved a barrier. Aerva's plans have also been opposed by local farmers and fishermen. The Indian government has "taken some measures to address concerns of suppliers," Manju Gupta, president of Areva India said. "However, details are yet to come out. We don't have clarity on how these concerns will be addressed and how it will translate into economic and legal impact."

As part of an agreement with the USA in January, India agreed to establish an insurance pool to shield plant operators as well as the equipment suppliers against damages during an accident. That will form the basis for any detailed commercial contract between reactor suppliers and the nation's nuclear power producer, Nuclear Power Corp of India Ltd.



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