From: Sanjeev
India's nuclear-accident liability law: An anti-market bill that weakens safety
Kill the nuclear liability Bill
Low accident liability and legal immunity mean reactor builders will have perverse incentives for malpractices
Brahma Chellaney Mint March 11, 2010
The Civil Liability for Nuclear Damage Bill is an unparalleled piece of legislation: It aims to make foreign builders of nuclear reactors in India immune from legal action, however culpable they may be for a catastrophic accident. And it caps their liability at a ridiculously low Rs500 crore ($109 million) despite the billions of dollars in profit they are set to make. Yet, the government set the parliamentary process for the Bill's consideration in motion under unusual circumstances—it circulated it to members on 8 March when Parliament was in turmoil over the women's reservation issue.
Two issues stand out about the liability Bill. For one, it is an anti-market measure: It constitutes a generous Indian state subsidy to foreign firms. By seeking to shield foreign reactor builders from the weight of the financial consequences of severe accidents, the Bill shifts the main burden for accident liability from the foreign supplier to the Indian taxpayer.
For another, it weakens nuclear safety. After all, to grant foreign reactor builders legal immunity upfront and to turn their legal liability for an accident into mere compensation pegged at a pittance is hardly a way to advance nuclear safety.
Broadly, the anti-market features of the government's proposed import of nuclear power reactors are manifold. First, the Bill seeks to help foreign firms cut their costs of doing business in India by requiring them to take accident liability insurance for a mere $109 million. Second, the government is merrily procuring land for foreign reactor builders. It has designated nuclear parks for foreign-origin reactors, reserving separate sites exclusively for US, French and Russian firms.
Three, reactor deals will be signed government-to-government without open bidding and transparency, just the way India has entered into contracts for US arms worth billions of dollars in recent years. Four, foreign firms are being freed from the task of producing electricity at marketable rates. The government will run the reactors through the state operator, subsidizing the high-priced electricity generated. And five, foreign suppliers will bask under legal immunity.
The liability Bill essentially is intended to help out the two US reactor exporting firms, Westinghouse and General Electric (GE) which, unlike their state-owned French and Russian competitors, are in the private sector. With India committed to importing at least 10,000MW of nuclear power generating capacity from the US, Washington has been zealously prodding New Delhi to enact the liability law. But in bending backwards to create a friendly business environment for US firms, the government is making the Indian taxpayer assume the principal financial burden in the event of a major accident.
Actually, the Bill symbolizes the latest in a string of conditions thrust on India under the much-trumpeted nuclear deal, which was approved by the US Congress in 2008 but whose nuclear energy benefits are unlikely to start flowing until nearly a decade from now, as the average global lead time for reactor construction has stretched to eight years. Under the deal, India got no legally binding fuel supply guarantee to avert a Tarapur-style cut-off, and no right to withdraw from its obligations under any circumstance, though the US has reserved the right for itself to suspend or terminate the arrangements if it holds India not to be in compliance with stipulated terms.
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