India Nuclear News And Discussion

[Willy]

What everyone seems to be forgetting is that all the reactors will be operated by the DAE and not by the individual suppliers. In the end in case of an accident it will be the GOI who will be responsible for compensation and not Areva or any other foreigner supplier.

[amit]

Indian move on nuclear power could backfire

''This clause doesn't appear in any domestic legislation in any other country'' and runs counter to international convention, said Sudhinder Thakur, executive director at Nuclear Power Corporation of India, the nation's monopoly operator. ''If you supply $US2 million of equipment, how can you be held liable for up to $US300 million over 80-odd years? It's not practical.''

[amit]

Apologies if this has already been posted

Russia says no to supplier liability

Even as political acrimony over the Nuclear Liability Bill rages in and outside Parliament, India’s old-time friend Russia has clearly told the Indian establishment that it will not accept any liability for the supply of equipment and other material to help India build its nuclear power plants, either in the present or future.

My question is, if the US companies don't participate (that would also knock out the Japanese reactor makers and the Canadian companies as well) because of liability fears, then who are going to be our main suppliers? The Russians and French right?

And if Russia sticks to its guns (its position is strengthened by the duopoly situation in the market) then what happens in the case of, god forbid, a major nuclear accident caused due to, say, a faulty reactor design or manufacture?

[Sanku]

The above article's headline and tone of discussion is not borne out by data it has presented, which is grand one line

The Russian government source also said that like the US and France, Russia would have to “take another look” at its contract with India if the Bill incorporated foreign supplier liability. “Russia is united with the US and France on this score… India is creating an international precedent… nobody will accept this,” the Russian government source said.

Unnamed sources wondering about how the future will be is not the same as "Russia says no to blah..."

Paraphrasing continues to be interesting intellectual sport, even if predicated on economy of facts. Sigh....

[Muppalla]

Indian move on nuclear power could backfire

''This clause doesn't appear in any domestic legislation in any other country'' and runs counter to international convention, said Sudhinder Thakur, executive director at Nuclear Power Corporation of India, the nation's monopoly operator. ''If you supply $US2 million of equipment, how can you be held liable for up to $US300 million over 80-odd years? It's not practical.''

This is the reason for MMS not even shaking hands with BJP leaders in the Parl. The BJP leaders congratualted the Prithviraj Chauhan and Pranab Da thanked BJP but MMS is a very unhappy man. The bill did not fulfil his wishes and was not his expectations. Some extremists even say this liability bill actually killed the original 123.

Watch out for some ammendments to the liability bill in future

[Philip]

Shobha De in he Deccan Chronicle.

http://www.deccanchronicle.com/op-ed/nu ... degook-105

Candid question: How many Indian citizens understand the implications/ramifications of the Nuclear Liability Bill? Out of a billion-plus population, it would be hard to find more than 10,000 superbrains capable of figuring out the golmal… the gobbledegook. And yet, when Prime Minister Manmohan Singh sought unanimous support from the Lok Sabha, he pretty much got it (through a voice vote), with an impressive majority of 252 members. Amazing! First those members of Parliament pushed through a hefty pay hike for themselves in record time, now they’ve passed a bill that is maha-controversial to say the least. Simran Badal, who spoke right after the Prime Minister, was the only person to make some sense during a heated television debate the same night, when she asked the sort of practical, commonsensical questions that any Indian — dumb or otherwise — would want comprehensible responses to. The answers, such as they were, made very little sense. It was more an exercise in theatrics and the sort of intellectual masturbation most smarty pants on TV indulge in each time they have to defend their party bosses on slippery issues. What can these motor mouths do but resort to fancy language and that very obvious and intensely annoying “buying time” tactic — “Please repeat the question… kindly give me an uninterrupted chance to respond… may I answer that question?” Yes, you mutt. That’s why it has been asked! Once that silly pantomime is out of the way, the debate rages on pointlessly, with at least three people talking at the same time. The hapless anchor is reduced to playing an ineffective traffic havaldar, waving his or her arms, raising his or her own voice above the din, scolding panellists by wagging a finger and pretending to be in control even as mayhem rules. This is exactly what happened on Wednesday night, as bewildered viewers wondered what the hell was going on… and why was everybody so worked up.

Next came press reports of the Prime Minister’s stooge speech. Hello? Who called you a stooge, Sir? Sacrilege! Dr Singh whispered softly and sweetly: “To say that this (bill) has been brought to promote American interests and corporations, I think, is far from the truth”. Hear, hear! Good news, guys. Our Prime Minister “thinks” this is far from the truth. Maybe a few years down the line, we’ll “know” the truth. And if India’s karma is good, that truth won’t hurt, damage or kill us. As of now, we can only pray for the benevolence of Bhagwan that this bill is indeed in India’s interests. We have now committed ourselves to going along with US President Barack Obama. And no… we are not his stooges. When Dr Singh pleaded, “I beg of this House to pass the bill with unanimity”, members promptly obliged. Yup. Even those Bharatiya Janata Party blokes. Jaswant Singh’s muted “protest” was noted (Who are you calling a hustler, huh?), not that it mattered all that much. Demanding the safety of nuclear power plants is, apparently, not such a radical issue after all. It is amazing that it almost became a secondary one, given our recent tryst with the Bhopal bungling where again, safety was the first casualty. The beauteous Ms Badal pointed out several in-built hazards and asked tough questions about India’s preparedness to deal with a nuclear calamity. Of course, she received no replies from the official spokesperson who chose to be characteristically evasive and totally off the point.

It is obvious that deals within deals have been struck across the board. It is equally obvious India will never know what those are. The principal players may or may not be around when citizens live through the contentious bill, hoping all the while that there is no accident in the future. When we cannot even construct a safe stadium for the Commonwealth Games, when nearly every aspect of our everyday lives comes with a “Dangerous to your health” sign, whether it is crossing potholed, flooded roads or risking plane collisions on the ground and in the air, sab kuch routine ho gaya hai — what is a mere nuclear disaster? Another statistic?

God forbid, but if something horrific does take place — who pays? How much? A liability cap for the operator at $320 million, the International Monetary Fund special drawing rights at $450 million? In any other genuinely developed nation these sort of concerns would have been directly tabled before citizens. Especially in a democracy. It is obvious from the way the cookie has crumbled during the past week that the government is only concerned about protecting the interests of politicians and their influential allies. The height of insult to the people of India was Lalu Prasad Yadav justifying a pay hike when his own miserable record as a scamster who has done time is known to all.

It is this same level of brazenness and audacity that has pushed a potentially lethal bill through. But then, when Mr Obama does show up in India later this year, we shall be ready with not just the red carpet, but also our contracts for American companies. Oh… did Mr Obama really say all those rude things about desi techies? And has he also made it much tougher for Indians to get work in his country? Gee… that’s too bad. Let’s put all that behind us and show him the true meaning of Desi Chamchagiri… err… hospitality. It was a former US President (Richard Nixon) who once famously declared, “I am not a crook”. We know the rest. Now that our Prime Minister has said, “I am not a stooge”, shall we give the guy the benefit of the doubt? Sure. Why not? Do we have a choice?

— Readers can send feedback to
www.shobhaade.blogspot.com

[AjitK]

Govt offers a way out for private suppliers

As key world capitals scrutinise the Nuclear Liability Bill, passed by the Lok Sabha on Wednesday, for word on how the new legislation would affect potential civil nuclear agreements with India, a senior Union minister has said that private suppliers could still sign agreements with the Nuclear Power Corporation of India (NPCIL) clearly stating that their responsibility ended with the handover of equipment and other material to the operator.

As the government finds new ways to deal with international consternation, a first reading of the Bill – scheduled to be tabled in the Rajya Sabha on Monday – indicates that the inter-governmental agreement between India and Russia could become a model for other countries, notably France and the US, to enter into nuclear commerce with India.

Asked why India needed such a tough Bill if the supplier would, in effect, have immunity, the senior Union minister said the Bill was necessary to warn foreign suppliers that they would have to be “much, much more careful” with the products that they sold to India.

Asked why suppliers had immunity so far, the minister pointed out that until recently, it was India that was wooing the international community for nuclear plants. Now that the doors for large-scale nuclear commerce had been opened, it was important to have legislation enacted to suit India’s requirements, he said.

[Muppalla]

Asked why India needed such a tough Bill if the supplier would, in effect, have immunity, the senior Union minister said the Bill was necessary to warn foreign suppliers that they would have to be “much, much more careful” with the products that they sold to India.

Asked why suppliers had immunity so far, the minister pointed out that until recently, it was India that was wooing the international community for nuclear plants. Now that the doors for large-scale nuclear commerce had been opened, it was important to have legislation enacted to suit India’s requirements, he said.

What a silly way to spin the logic. Warning someone via bills ( made into law of the nation).

[D Roy]

http://www.deccanherald.com/content/919 ... -away.html

[Bharath.Subramanyam]

"The party with the difference" (baajaapaaa) supported after some changes as its Lawyer leader (Arun Ja...) wanted the party to support it. For some unknown reason he just raised the cap from 500 crores to 1500 crores even though it was pointed out to him that in US, just for a oil leak they are already taken 20 Billion from BP. Even CPM was looking at 10,000 crores for liability.

One leader from UP (supposed to be physics professor from Allahabad - Murali Man...) opposed a unimportant clause. He said he will resign if they party doesn't oppose private players. Of course, pure drama. The lawyer leader thinks he is the next Albert Einstein for the party. He bullzodes his way on many things. Even during 2008 nuclear deal, he worked to pass the bill even though the party opposed it. He takes many of his ideas from a Bengali journalist (Swa.... Dasg..).

[Bharath.Subramanyam]

Wow, within 3 hours of posting the above post, here comes the great spin for the lawyer leader from " " :

http://www.dailypioneer.com/279428/N-Bi ... r-BJP.html

Mr Swapan Dasgupta doesn't know a difference between a nuclear fusion & a fission, but he was wax eloquent on why India must sign the nuclear deal in 2008 and now in 2010 why BJP must support this.


The tragedy of the party is that LKA wants his chelas to run the party. He thinks it is his personal property. So the lawyer leader who takes advice from half baked Anglophile Bengali (whose knowledge of elections in India is the Student union elections of St Stephens) works with the "government" in pushing the bill.

[amit]

The above article's headline and tone of discussion is not borne out by data it has presented, which is grand one line

Sanku,

Maybe you didn't look carefully at the para which you highlighted. I've bolded the relevant portion. Perhaps you can have a look at that. I think you may find that it doesn't really differ from what the headline says.

The Russian government source also said that like the US and France, Russia would have to “take another look” at its contract with India if the Bill incorporated foreign supplier liability. “Russia is united with the US and France on this score… India is creating an international precedent… nobody will accept this,” the Russian government source said.

Unnamed sources wondering about how the future will be is not the same as "Russia says no to blah..."

^^^ Well we've had a lot of unknown sources quoted. One unnamed source cannot be kosher while another harram, can it?

Paraphrasing continues to be interesting intellectual sport, even if predicated on economy of facts. Sigh....

Exactly my point. Thanks you for also stating it.

[amit]

This is the reason for MMS not even shaking hands with BJP leaders in the Parl. The BJP leaders congratualted the Prithviraj Chauhan and Pranab Da thanked BJP but MMS is a very unhappy man. The bill did not fulfil his wishes and was not his expectations. Some extremists even say this liability bill actually killed the original 123.

Watch out for some ammendments to the liability bill in future

True to our tradition we may have again snatched defeat from the jaws of victory. Let's see how the dice roll.

But I'm curious, why do you call these folks extremists? Would like to know.

[svinayak]

Some extremists even say this liability bill actually killed the original 123.

If India is able to get a better deal than 123 then it is a good thing.

[amit]

http://www.deccanherald.com/content/919 ... -away.html

D Roy, I'm taking the liberty of posting some excerpts from this article, which could be useful to further the discussion going on in this thread.

However, all that is now in the past and a liability law that is broadly in consonance with the Paris Convention (1961), Vienna Convention (1963) and the Convention on Supplementary Compensation (1997) is now in place, which not only employs a broad definition of nuclear damages but seeks to incorporate cross-border effects.

The operator liability cap of Rs 1500 crore or roughly $ 322 million is fairly decent by international standards. France, a country which has a nuclear setup similar to India's, albeit much larger, calls for the operator to have a financial security amount of only 91 million Euros. The bad news for consumers, of course, is that the insurance premium will certainly be reflected in the cost of power.

Additionally, under clause 7(a), the Act enjoins upon the government to make good on losses over and above the limited liability of the operator, in the event of a nuclear incident. It also makes the government liable in the case of an accident at a nuclear installation owned by it. The Act also calls for the setting up of a Nuclear Damages Claims Commission which can become an example for regulatory methods in other industrial segments as well.

Unfortunately, in reality it is not so simple. After initially drafting what, by international standards, is a very sound piece of legislation, political pressure has forced the government to incorporate a rather debilitating poison pill in this Act as represented by Clauses 17(a), (b) and (c) that allow the operator a ‘right of recourse’ vis-a-vis a supplier. The new wording of clauses 17(b) and (c) in particular will certainly act as deterrent for many suppliers.

Earlier, 17(b) had the words ‘wilful act and gross negligence,’ but these were deemed as vague by the parliamentary standing committee on the bill, and have been dropped. As a result clause 17(b) now reads: “the nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services.” This means that ‘strict’ and ‘no fault’ liability has been extended to suppliers and this is at odds with standard international practice wherein liability is legally channelised only to the operator and the supplier is exonerated.

As a result, suppliers will now have to seek insurance for their supplied components in the country, which will naturally lead to an increase in the price of the same. This, in turn, would get reflected in the capital cost of nuclear power thereby putting it at further disadvantage vis-a-vis other sources of generation like coal that do not internalise the social cost of their pollution, which nuclear does.

Given that the bill has no provision for how the liability amount will be apportioned in the event that the right of recourse is exercised, industry will definitely be scared to participate in the nuclear sector, since not many may be willing pay $ 300 million for a fault in some minor piece of equipment! {This tallies with what Sudhinder Thakur, executive director at Nuclear Power Corporation of India said in article which I've quoted above}

Clause17(b) particularly disincentivises hundreds of small suppliers contributing to the existing three-stage nuclear programme, who are definitely not in a position to obtain insurance cover for potential liability that may be several hundred times their turnover. Small suppliers like Kaybouvet Satara now say that they are anxiously watching tender documents that will be issued by NPCIL in the coming months to see how these reflect clause 17(b) before they make a quotation.

The liability bill began as an exercise to bring nuclear governance structures in India to match with international standards and attract the global nuclear industry to participate in India. However, far from giving foreign suppliers what they seek, exoneration from liability, this bill has now managed to not only worry global majors, including the Russians, but also present a challenge to the domestic programme by scaring away existing suppliers. This will certainly have long term consequences for the pace of nuclear power development in India.

[amit]

Some extremists even say this liability bill actually killed the original 123.

If India is able to get a better deal than 123 then it is a good thing.

And how would that be possible, could you enlighten us please?

[svinayak]

And how would that be possible, could you enlighten us please?

Sorry I dont know. I was expecting somebody would explain

[amit]

Govt offers a way out for private suppliers

As the government finds new ways to deal with international consternation, a first reading of the Bill – scheduled to be tabled in the Rajya Sabha on Monday – indicates that the inter-governmental agreement between India and Russia could become a model for other countries, notably France and the US, to enter into nuclear commerce with India.

The question remains, what happens in case of an accident in one of the plants built through this inter-governmental route? What's to prevent the equipment suppliers from being negligent in quality because they know that the governments would take care of all liabilities?

[amit]

And how would that be possible, could you enlighten us please?

Sorry I dont know. I was expecting somebody would explain

123 is a framework agreement which allows India to import and set up nuclear plants. Here we are talking about agreements about equipment supplies to nuclear power plants that would be set up be the Nuclear Power Corporation.

[amit]

G Balachandran: A sub-optimal outcome

In what follows, references to foreign suppliers and governments exclude Russia, since, through an inter-governmental agreement (IGA), Russia has been assured of freedom from any liability whatsoever in the event of a nuclear accident arising out of any Russian supplies. Russia is indifferent to the nature and scope of the Indian liability bill, indeed even to the presence or absence of such a bill. Recent Indian efforts to reopen the IGA to include Russian liability have been rebuffed by Russia. India can, of course, renounce the IGA but with heavy long-term consequences, as Russia has often been the sole supporter of the Indian nuclear programme in international fora.

What about other governments and suppliers? The first issue is: Does the Indian bill fall in line with the international conventions — the Paris Convention or the Vienna Convention? Normally, it would not matter, since India does not intend to join either. However, the India-France nuclear cooperation agreement enjoins both governments to enact a nuclear liability bill in line with international conventions. France is already a signatory to the Paris Convention. So, it does matter, for India-France nuclear cooperation, whether or not the Indian bill is in line with international conventions. If the French government feels that the Indian bill is out of line, what happens to the bilateral nuclear cooperation agreement? India can demand renegotiation of the agreement. But France has been, after Russia, the most consistent supporter of the Indian nuclear programme. It is for India to decide if it wants to abrogate the French agreement as well, with potentially serious consequences to the long-term Indian nuclear programme.

If the Indian bill is not in line with international conventions, foreign suppliers have three courses of action open to them.

First, they can refuse nuclear commerce with India. It is for India to determine whether or not this would have consequences for the long-term nuclear programme. Second, suppliers can enter into a contract with the operator which specifically exempts suppliers from any recourse action by the operator, as in the case of the Russian supplier. Such an action would in effect nullify the adverse results of the Indian bill. Of course, Parliament, being supreme in India, can pass another legislation prohibiting any Indian operator from entering into such a contract. Third, the foreign supplier may be willing to supply the Indian operator under the current bill after analysing the text of the bill and concluding that after a gap of many years, it will be difficult, in the event of an accident, for the operator to establish that ‘an employee’ of that supplier was responsible for the supply of equipment with a latent defect. It would be useful, for a prospective analyst studying the subject, to ask the French and other suppliers their reaction to the Indian bill before coming to any definitive conclusion about the impact of the bill on foreign suppliers.

What about Indian suppliers? So far, except for Tarapur, Rajasthan I and II and Koodankulum, all other nuclear power stations were supplied by Indian industry. The Indian nuclear industry is also expected to play a major role in the future expansion of civil nuclear power in India. If it too decides to stay away from the Indian market, there will be no future for any expansion of civil nuclear energy in India. Indeed, the share of nuclear power will continue to decline steadily in the absence of any new plants. {It's important to remember that for a $2 million piece of equipment the liability is $300 million for 80 years, according the NCP Ex Dir - and he's the end-user not the equipment supplier} The only option for the government to increase the share of nuclear power would be to establish a whole nuclear power infrastructure industry solely to service the Indian market — a very expensive and cost-ineffective alternative. Of course, Parliament can pass legislation mandating that the government should do so. If it did so, it would not be out of place, considering the types of legislation it has chosen to enact so far.

Would the public gain from this bill? Parliament has already made sure it is the public that will end up paying for all the liability claims, by making sure that there are no private operators in the field of nuclear energy generation. So, the public does not stand to gain from this bill.

Here's something to chew on:

So, who gets to benefit from this bill? First, the motley crowd of left parties. {Something I've been saying for a long time} Since they have no chance of ever coming to power and making India’s future secure, they would rather act as surrogate parties in the attempts of those rising powers, supposedly Marxist, who would rather see India forever tied down as a rising power, rather than become one. The second group is a motley crowd of anti-nuclear activists who, both at home and abroad, have been consistent opponents of the Indian nuclear programme and the Indian nuclear science establishment, and would like nothing better than to see the internationally competitive Indian nuclear establishment reduced to a shell of its former self. This in turn would immensely satisfy the non-proliferation ayatollahs who have been critical of the Indian strategic nuclear programme, who were in the forefront of the campaign against the India-US nuclear deal, and would wish to see the Indian nuclear establishment emasculated.

[amit]

A Bloomberg report

“Suppliers and service providers would be liable beyond their terms of supply,” Chandrajit Banerjee, director general of the Confederation of Indian Industry, said in a statement yesterday. “Such kind of long-term insurance coverage for suppliers is not available globally and hence would stall the growth of the nuclear manufacturing industry in India.”

"If it leads to contracts where, as a supplier, you face undefined liabilities connected to the main nuclear liability of the plant, it will really not be possible for major suppliers to participate,” said M.V. Kotwal, senior executive vice president of Larsen & Toubro Ltd.’s heavy industries division. “The liability has to be limited to a certain amount and a certain time.”

[Tanaji]

"The party with the difference" (baajaapaaa) supported after some changes as its Lawyer leader (Arun Ja...) wanted the party to support it. For some unknown reason he just raised the cap from 500 crores to 1500 crores even though it was pointed out to him that in US, just for a oil leak they are already taken 20 Billion from BP. Even CPM was looking at 10,000 crores for liability.

And who do you think will pay for the insurance premium of 10000 crores? CPI? Or the consumer?

Seems to be a deliberate ploy by the CPI to scupper the nuke industry and hence Indian development on advice of their Chinese masters. The global oil cartel may be lending a helping hand in this for their own needs. Regrettably people seem to be falling for this...

[chetak]

Vajpayee made an even bigger blunder by accepting Tibet as an integral part of Pakistan for Chinese accepting tiny Sikkim as part of India. Read today's news? The Chinese have denied a senior Indian General a visa because he commanded forces in "DISPUTED" J&K.

Willy ji,

What stops from reversing our position given the fact that china has always dealt to us from a stacked deck?

Geopolitics has changed and so has the ground situation.

The meek will never inherit the earth.

[Amber G.]

Nuclear Liability Act: Will it scare away the suppliers?
Edited Later: Sorry this has already been posted here.

[Sanatanan]

We’re ceding sovereignty over N-programme step-by-step
By P.K. Iyengar in Deccan Chronicle, August 29th, 2010

[Sanku]

This, in turn, would get reflected in the capital cost of nuclear power thereby putting it at further disadvantage vis-a-vis other sources of generation like coal that do not internalise the social cost of their pollution, which nuclear does..

Nuclear liability bill will result in higher insurance premiums because Nuclear plants internalize the cost of pollution?

Admittedly CO2 is a issue but comparing accident at a nuclear plant to pollution?

[krisna]

Obama could kill fossil fuels overnight with a nuclear dash for thorium /

The International Energy Agency says the world must invest $26 trillion (£16.7 trillion) over the next 20 years to avert an energy shock. The scramble for scarce fuel is already leading to friction between China, India, and the West.

There is no certain bet in nuclear physics but work by Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research) on the use of thorium as a cheap, clean and safe alternative to uranium in reactors may be the magic bullet we have all been hoping for, though we have barely begun to crack the potential of solar power.

Thorium is so common that miners treat it as a nuisance, a radioactive by-product if they try to dig up rare earth metals. The US and Australia are full of the stuff. So are the granite rocks of Cornwall. You do not need much: all is potentially usable as fuel, compared to just 0.7pc for uranium.

"They were really going after the weapons," said Professor Egil Lillestol, a world authority on the thorium fuel-cycle at CERN. "It is almost impossible make nuclear weapons out of thorium because it is too difficult to handle. It wouldn’t be worth trying." It emits too many high gamma rays.

The Norwegian group Aker Solutions has bought Dr Rubbia’s patent for the thorium fuel-cycle, and is working on his design for a proton accelerator at its UK operation.

So Aker is looking for tie-ups with the US, Russia, or China. The Indians have their own projects - none yet built - dating from days when they switched to thorium because their weapons programme prompted a uranium ban.

Even better, team up with China and do it together, for all our sakes.

Thought this was the right dhaaga to post this.

What is India's position in it wrt thorium reactors. I do know India has a large amounts of thorium and does not have to worry about importing it. the article says India does not have thorium based reactors built but rediff article mentions it.

The higher construction expense of the FBR-India Fast Breeder Reactor in comparison with the Pressurised Heavy Water Reactors (PHWR) in use is one of the main reasons why India is looking at the cheaper option - uranium fuel.

progress on Indian thorium reactor
India unveils 'world's safest nuclear reactor'
Thermal breeder reactor

[Sanku]

Maybe you didn't look carefully at the para which you highlighted. I've bolded the relevant portion. Perhaps you can have a look at that. I think you may find that it doesn't really differ from what the headline says.

Let me just stop at saying that some interpretations of English are so massively different from what I normally understand of the language that it is impossible for me to make the int restring interpretations from one throw away line of unnamed source.

In any case now that the legislation is in place, everyone will fall in line soon enough, even the free pass given by the exact agreement can be challenged under this law, which does not NEED the agreement to specify liabilities, if the suppliers goof up this law says they are liable, period.

Sure the matters will go to court and all the resultant ugliness, but hey who ever parted with money out of their own free will

[amit]

We’re ceding sovereignty over N-programme step-by-step
By P.K. Iyengar in Deccan Chronicle, August 29th, 2010

PKI's article has an interesting headline but look what it contains:

Having said that, let me also say that there has been no major nuclear accident anywhere, except for Chernobyl, that has caused as much damage as nuclear bomb testing or the attack on Hiroshima and Nagasaki have. Chernobyl happened because it had no containment system. That situation has changed as the containment concept has since been adopted worldwide. I don’t see the possibility of a nuclear accident occurring.

Now, the question is, in case of an accident, how much responsibility can be placed on suppliers of nuclear equipment. You have to always test what you buy. It is the buyer’s responsibility. In India, the Atomic Energy Regulatory Board has been doing this job and has blown the whistle on many occasions.

Private suppliers are needed if we are to expand the nuclear power programme. But the liability bill could hit Indian suppliers, because our companies cannot give out Rs.1500 crore in compensation, they cannot afford to pay insurance premiums on such amounts. In the US, damages can be claimed up to $12 billion. But American companies are multi-billion dollar entities and they have a pooling system, they can afford to pay up such amounts. We cannot blindly copy such high compensation limits in India.

Keep in mind two things. One, a major nuclear accident is unlikely to happen given technology and the way we go about building nuclear reactors. In 50-plus years, there has not been a single major incident in India. Two, no upper limit on liability can work. Should a nuclear accident occur, the government will have to treat it like a natural disaster, and use public funds to compensate and rebuild. Equipment suppliers can’t do that.

[Pratyush]

Guys, A noobe question, Where can one find the draft of the nuke liabilities bill. alos the limit of liability of 1500 crs is it for any one accident. Or does each and every supplier a Nuke power plant has the take a liability cover of 1500 crs each for every component supplied.

I ask because, the news reports posted in this thread is stating, that, it will put domestic nuke suppliers out of business as the liability limit is too high. So some one who is suppling a 20 cr item will have to take a liability insurance for 1500 crs. If he is to be able to compensate the victimes of an accident. (I i am understanding PKI correctly)

Numbers quoted are purly from musharraf. Assuming that a nuke power plant has 10000 components. Then for each and ever component will need a liability insurance of 1500 crs. Then the total nuke liability for a nuke plant in case of an accident will be 10000*1500 crs. Or have I lost it completely.

Or is it just a case of acute incurable DDMits.

Will appreciate some gyan.

[Sanku]

My noob understanding is that 1500 Cr is the Cap of liability on the operator in case of a accident, further the liability will also be on supplier in case it is their equipment which causes the accident, thus all suppliers are capped to liability to this extent mentioned.

Considering that no private operators exist, and the nuclear accident fallout will anyway HAVE to be tackled by govt, I look at the bill essentially as saying that a private supplier will be liable up to 1500 cr in case of a accident.

However 1500 Cr is maximum possible liability, it is not clear how the liability will actually be distributed between supplier(s), I suppose the nitty gritties will have to go under the specific agreements they sign and to courts which will sit in judgment of the actual and claimed liabilities.

Possibly a 20 Cr supplier would not need to take a 1500 Cr insurance as a 20 Cr supplier is possibly supplying some very low end non critical (in context of issue of being in dangerous path), they will probably happily take the risk that they can go in with lower insurance cover and GoI will not send a company supplying footmats to a nuclear plant (say) to pay 1500 Cr for a reactor issue and if it does the Courts will constrain it.

But yes a large company supplying critical equipments will have to worry, as they should, and more over if there is something critical that you are buying as a operator which can result in accident worth a 1500 liability you probably DO NOT want to purchase it from small fry but have a large turn key supplier which in turns ensures that all the components sourced are Kosher.

Do we want NPICL signing 100 20 Cr deals for valves in the pipelines carrying heavy water from 25 Cr net market cap companies? That would be sucicide.

Nuclear energy is not a "give money away by digging a ditch" NERGA scheme, if you dont have the wherewithal to be a big boy, dont line up for the GoI gravy train.

[amit]

Possibly a 20 Cr supplier would not need to take a 1500 Cr insurance as a 20 Cr supplier is possibly supplying some very low end non critical (in context of issue of being in dangerous path), they will probably happily take the risk that they can go in with lower insurance cover and GoI will not send a company supplying footmats to a nuclear plant (say) to pay 1500 Cr for a reactor issue and if it does the Courts will constrain it.

This is what Sudhinder Thakur, executive director at Nuclear Power Corporation of India has to say:

''This clause doesn't appear in any domestic legislation in any other country'' and runs counter to international convention, said Sudhinder Thakur, executive director at Nuclear Power Corporation of India, the nation's monopoly operator. ''If you supply $US2 million of equipment, how can you be held liable for up to $US300 million over 80-odd years? It's not practical.''

This has already been posted on this page. But for convenience it can be found here.

From what experts, including PKI, are saying this will be a killer blow on small Indian equipment suppliers. The large multinational players like Westinghouse have the financial and political muscle to either wriggle out of this or just simply ignore the Indian market and go for the European market (where due to zero carbon norms N-power is looking up) and the Chinese market. Where will the small Indian players go?

[arnab]

Possibly a 20 Cr supplier would not need to take a 1500 Cr insurance as a 20 Cr supplier is possibly supplying some very low end non critical (in context of issue of being in dangerous path), they will probably happily take the risk that they can go in with lower insurance cover and GoI will not send a company supplying footmats to a nuclear plant (say) to pay 1500 Cr for a reactor issue and if it does the Courts will constrain it.

Hmm - have you read that poetry which goes: 'For want of a nail a kingdom was lost'? How do small suppliers determine with confidence that the post disaster 'investigation' will not conclude that it was the faulty 'nail' produced by them which set off a rather nasty chain of events? So why would they under-insure?

[amit]

Only one solution seems to be apparent at this point. Buy everything from the Russians! They don't have to worry about insurance and liability and so can supply cheap. That should gladen the hearts of a few folks here.

PS: Of course nobody has explained how the principles of justice and making the guilty pay would apply in their case in the case of - god forbid - a major accident.

[Pratyush]

Sanku / Amit, Appreciate your reply,

I will try and answer my own question using my own background

In the event of an accident the plant operator will compensate the effected population. Upon receiving the award from the courts. Having done so the liability will shift to the supplier of the component that has failed. That component supplier will become liable to indemnify the plant operator with the amount of the damages awarded by the court of law. (This is the principle of the ordinary contract law as I understand. ) However, the Indian nuke bill is different in regard that the supplier can directly be sued in case of an accident. So each and every supplier will have to take a liability cover of 1500 crs if they wish to participate in the Nuke industry in India. (Again my understanding of the the news reports referring to the bill.).

The financial burden created on small vendors will be huge as a result of this bill.

Alternatively, it also creates an opportunity for smaller Indian suppliers to band together and create larger entities to develop the financial muscle for participate in the nuke program.

Only if the smaller players see the opportunity

Truly Chanikyan by the GOI if you ask me.

[Sanku]

Pratyush; I do not think that there is any compulsion on a private player to necessary take a insurance for 1500 cr. And 1500 Cr essentially protects them and not the consumer, this means that in ANY case their liability WILL NOT be greater than 1500 Cr.

After an accident, a suppliers guilt would have to be established and the amount also established this would be done by the operator and of course the courts will be involved one way or the other.

Post this process if the supplier is actually held liable for damages -- they can plan for the money from their own coffers, if they are big boys (like other PSU suppliers, of backed by govt of nations), through insurance or simply by going bust and shutting shop or selling out (in case of a American companies this would be attractive option like in case of UCC)

So at best, this bill restricts the 100% "make money without worry" type of scenario for the supplier to 90% no worry case, at the same time it also lifts the worry off their head by *limiting* their exposure. Now an operator cant ask for a greater amount than 1500 Cr.

So for suppliers its still a pretty good deal, if it takes away some, it also gives some and in any case has a lot of rope for them.

For end consumers things are marginally better -- since I do not expect that GoI would not in any case take care of people in equal measure than before (either equally well or equally badly) the bill. The bill is not likely the change the fundamentals of response.

However this gives some structure and needed legalese to do nuclear commerce (since others want to see our framework)

So essentially this is some paper work to enable India to do nuclear commerce -- the reason this whole issue became so big had nothing to do with the actual content of the bill (which are by now harmless) the reason that this issue gained prominence was because the first version of the bill (thankfully shot down) was bordering on treason with constitutional issues like not involving Judiciary, explicitly leaving out suppliers and insisting that all problem was with operator and so on....

If THIS bill, the current version was the one introduced in the first place, the whole things would be like, *yawn*

Of course in India, the minimum correct thing for Indian interest causes Khujli to Hazar people and has to be rammed through and does not happen automatically like it should.

[Sanku]

Possibly a 20 Cr supplier would not need to take a 1500 Cr insurance as a 20 Cr supplier is possibly supplying some very low end non critical (in context of issue of being in dangerous path), they will probably happily take the risk that they can go in with lower insurance cover and GoI will not send a company supplying footmats to a nuclear plant (say) to pay 1500 Cr for a reactor issue and if it does the Courts will constrain it.

Hmm - have you read that poetry which goes: 'For want of a nail a kingdom was lost'? How do small suppliers determine with confidence that the post disaster 'investigation' will not conclude that it was the faulty 'nail' produced by them which set off a rather nasty chain of events? So why would they under-insure?

There are courts to stop a faulty award, and secondly they can in any case like UCC sell themselves off and disapper. In any case that is what they will probably do after dragging the matter through court.

But at least their run away act would happen at less than 100 miles per hour with GoI not facilitating their getaway -- the case which was attempted to be legislated.

Probably Congress wanted to legislate what their Govt in Center and Madhya Pradesh did with UCC in a ad hoc manner and give it legal blanket so if and when they pulled a similar stunt they could just point at the law and smile, "hey look its formal"

Alas they will still have to do things the way they did for Bhopal.

[amit]

Sanku,

Your last two posts were interesting in as much that they go contrary to what many experts (I've quoted four: PKI, the Nuclear Power Corp official, CII official and L&T official on the previous page, apart from some comments by industry experts) are saying which in effect is that this liability bill, in its present form, is a killer blow to small Indian equipment suppliers.

In your scenario would care to elaborate what would happen if an accident happens in a N-power plant built with Russian equipment, supplied by Russian equipment makers? I would be interested to know your thoughts on that.

And by the way, if you think the Russians would happily sign on to the liability clause, please quote/cite some source for the same, because, again several sources have been cited on this thread stating that the Russians are not interested.

PS: Its relatively easy to talk about small (Indian) companies going bust and such but I don't think the entrepreneurs/shareholders who setup the companies would view such a scenario with equanimity. Also logic would suggest that, if the bill is in place, the Atomic Energy Corporation would, apart from rigorously checking the equipment would also check if the supplier has the ability (read insurance) to pay for damages.

[Sanku]

Amit;

I dont care of what is written by the experts since
1) it is now moot,
2) Your and my interpretation of the same sentence throws up startlingly two different meanings
3) Their statements are forward looking statements, and as far as forward looking statements go I have learned to trust my own judgment based on the % of correct turnouts.

However, I will take a very interesting statement from the list (one which tickled me pink)

This is what Sudhinder Thakur, executive director at Nuclear Power Corporation of India has to say:

''If you supply $US2 million of equipment, how can you be held liable for up to $US300 million over 80-odd years? It's not practical.''

So based on the undoubtedly stellar logic of this "expert" --

1) Toyota in case of a break failure on one of its cars, should pay no more than the price of the car (depreciated) in case break failure leads to death?
2) A car repairer who does a faulty break, should be liable for no more than the price of service of break repair?
3) A nuclear operator, who supplies electricity, should return the money taken in terms of electricity rentals paid after the accident?

I am duly impressed.

I can go on about the other statements too, but for once, the right thing has happened and I am in the mood for savoring this and thanking god for small mercies.

[Pratyush]

Sanku Ji, My responce in blue.

Pratyush; I do not think that there is any compulsion on a private player to necessary take a insurance for 1500 cr. And 1500 Cr essentially protects them and not the consumer, this means that in ANY case their liability WILL NOT be greater than 1500 Cr.

I am not sure, (Unless I read the act it self, I havent) this does seem to create a barrier to entry for most small suppliers. I will try and explain using Worksman compensation example. In India the Workesman is protected from work place accidents under the ambit of WC act 1923. The result of this is that every contractor applying for civil works contract with a public corporation must have a WC liability insurance. This has the following consequences.

1) If this insurance is not present then he will not be eligible to bid for the contract.
2) If the WC insurance is not in place then the Payment upon completion of the project will not be done.

(The quantum of compensation is defined by the act and is fixed in case of death of injury or disability. The award is made by the WC comissioner)

The net effect is that every contracter must have this insurance. Those that don't or are unable to acquire this insurance are left out of the contact. The rate of insurance is defined by the Workmans compensation tarrif of the Tariff advisiory comette. In many cases the Insurance is out the price range of small contractors.

The nuke liability bill will create similar conditions for the suppliers and contractors.

After an accident, a suppliers guilt would have to be established and the amount also established this would be done by the operator and of course the courts will be involved one way or the other.

Post this process if the supplier is actually held liable for damages -- they can plan for the money from their own coffers, if they are big boys (like other PSU suppliers, of backed by govt of nations), through insurance or simply by going bust and shutting shop or selling out (in case of a American companies this would be attractive option like in case of UCC)

True a process and procedure will be difined by the GOI. After its passage in the RS, and approval by the President.

So at best, this bill restricts the 100% "make money without worry" type of scenario for the supplier to 90% no worry case, at the same time it also lifts the worry off their head by *limiting* their exposure. Now an operator cant ask for a greater amount than 1500 Cr.

So for suppliers its still a pretty good deal, if it takes away some, it also gives some and in any case has a lot of rope for them.

For end consumers things are marginally better -- since I do not expect that GoI would not in any case take care of people in equal measure than before (either equally well or equally badly) the bill. The bill is not likely the change the fundamentals of response.

The bill may not change the response but it will place a minimum quantum of compensation to be paid in case of an accident. That may in it self be a deterrent. Against negligence from the suppliers and the plant operators.

However this gives some structure and needed legalese to do nuclear commerce (since others want to see our framework)

So essentially this is some paper work to enable India to do nuclear commerce -- the reason this whole issue became so big had nothing to do with the actual content of the bill (which are by now harmless) the reason that this issue gained prominence was because the first version of the bill (thankfully shot down) was bordering on treason with constitutional issues like not involving Judiciary, explicitly leaving out suppliers and insisting that all problem was with operator and so on....

If THIS bill, the current version was the one introduced in the first place, the whole things would be like, *yawn*

Of course in India, the minimum correct thing for Indian interest causes Khujli to Hazar people and has to be rammed through and does not happen automatically like it should.

What to do we are like this only