Insuring nuclear power PDF Print E-mail
Monday, 12 January 2015 00:18
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A cess on all power offers one solution

Given the relatively low level of political capital it has in the Rajya Sabha, and the backdrop of the Bhopal gas tragedy and recent tragedies such as the Fukushima disaster in 2011, it seems unlikely the government is going to go out of its way to try and amend the Civil Liability of Nuclear Damage Act in a hurry—the Act has once again come to the forefront with US President Barack Obama coming to the Republic Day function. Since no US firm is going to build nuclear plants in India until Section 17(b) of the Act allows the Nuclear Power Corporation of India Limited (NPCIL) to take action against them in case of a nuclear accident, revoking this has been on the US agenda for a long time. Apart from the political sensitivity around such an action, as finance minister Arun Jaitley acknowledged at a seminar on the Act earlier this week, both the BJP and the Congress had passed the Act—so changing an integral part of the Act doesn’t look as if it is on the cards.

In which case, various other solutions need to be looked at. The previous government sought to fix matters through the Rules to the Act, and Rule 24 limits the liability to R1,500 crore or to the value of the contract, whichever is lower—the R1,500 crore comes from the fact that, under the Act, in case of a nuclear accident, NPCIL will make an initial ‘no faults’ payment of this amount. But, as the Vidhi Centre for Legal Policy, that arranged the seminar Jaitley spoke at, points out, this is ultra vires since the Rule cannot go beyond the Act. The Vidhi Centre points out that it is possible to strengthen the Act to ensure liability remains only under the Act and not the general law of torts—this is certainly a suggestion worth considering. Another possibility, though it is not clear if this will suffice, is to form a fund of the type contemplated under the Convention on Supplementary Compensation for Nuclear Damage (the CSC has not yet come into force)—the CSC’s architecture involves creating a fund with contributions from every country which can be used in case of an accident. While India has not yet ratified the CSC since its nuclear liability Act is not in conformity with the Convention, one solution is to start an Indian nuclear fund with an initial government contribution and create a cess on all electricity production to provide a continuous stream of funding towards it. This may still not be enough, but if India needs to produce nuclear power, and if Indian firms need to contribute in developing these plants, it needs to make a start at untangling the knots created by the nuclear liability Act.


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