India could win some mega brownie points within the country in its nuclear liability insurance regime even as it negotiates to join the Nuclear Suppliers Group, the 48 country umbrella organisation that determines the rules for nuclear commerce.
GIC Re is planning to soon open a dialogue for a limited supplier’s contingency policy with some of the nuclear suppliers this summer. All suppliers of nuclear machinery have so far steadfastly refused to accept such a liability as they perceive it as an one that could rise to catastrophic heights of financial pay out if there is a nuclear accident. For instance the estimated liability for the Fukushima nuclear meltdown at Japan is estimated at $200 billion.
Yet a commitment by some of the suppliers to consider taking out an insurance cover will go a long way with the current NDA government to gather public support as it accedes to the rules of the NSG regime. The invite for the talks have gone out from GIC to coincide with the fresh round of insurance commitments that a consortium of state owned insurance companies will provide the Nuclear Power Corporation of India Limited (NPCIL) for the year 2016-17. It was slated to be held in April but has been rescheduled for a bit later.
Under the Indian insurance regime NPCIL as the operator runs a capped liability of Rs 1,500 crore for any nuclear incident. The insurance charge for is backstopped by the GIC led pool which largely includes the public sector insurance companies. The liability rules are capped as per India’s Civil Liability for Nuclear Damages Act or CLND.
While Section 17 of the CLND allowed the operator, in this case NPCIL, to have a right of recourse from the supplier, the ministry of external affairs has consistently held that it was “not a mandatory but (only) an enabling provision”. The meeting slated between the Indian insurance companies led by GIC and the suppliers is despite the limit whether there could be a limited right of recourse. India has a capacity of 5,780 MWe of nuclear power from its 21 such stations but has to depend on imported fuel for most of them. Those imports will become easier once India becomes a member of the NSG which controls the business of export of nuclear materials from the member countries. As of now India has had to seek country by country waivers like those it has signed with UK, Australia and South Korea.
“Last year the insurance companies had to stretch themselves to fill up the bucket for the Rs 1,500 crore pool and frankly there was no time to work out the supplier’s liability issues”, said a top industry official. An email with at two follow up mails from Business Standard to GIC to get its version of the developments was acknowledged by the company. But despite promising to revert for about a week, the company has not done so.
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Though there has been a long standing public demand for including suppliers’ liability within the CLND Act, both the UPA government and the NDA have stonewalled the same. In a set of FAQs issued last year, the ministry of external affairs has pointed out that all legal liability for nuclear damage under the CLND will be directed exclusively to the operator. In addition section 46 of the same act makes it clear that there will be no ground to raise claims for compensation for nuclear damage under any other Acts like that of torts too.
The escape route has been consistently criticised by a range of political parties. The BJP too, while in opposition too had supported the criticism. While it is early days but a limited supplier’s liability will be seen as a big victory for the government.
In February this year India has ratified one more step for its entry to the NSG club. It has signed the international Convention on supplementary compensation for nuclear liability or CSC. This one too effectively means that the supplier will not be liable, and even the operator will be liable only for a small fraction of what victims will need. However, under the CSC India will get access to an international fund set up for meeting some of the costs from a nuclear accident. India is keen to get going on the final approvals for a full membership of NSG even as China has sought to link her entry with that of Pakistan and other countries.
On Saturday, PTI reported that despite China and Pakistan having jointly opposed India’s bid for getting an NSG membership, the United States has re-emphasised that "India meets missile technology control regime requirements and is ready for entry into the exclusive club".