India clarifies nuclear deal with US

No change in liability law

The government on Sunday clarified the nature of the understanding reached with the US government on the civil nuclear cooperation deal. It has maintained that the country’s liability law in this regard will not be amended, being on a par with global norms.

The issue was discussed when Prime Minister Narendra Modi met US President Barack Obama here last month and they jointly announced reaching a “breakthrough” on the ‘123 Agreement' of September 2008.

“India and the United States have reached an understanding on issues related to civil nuclear liability and finalised the text of the administrative arrangement to implement the September 2008 bilateral 123 Agreement,” said ministry of external affairs (MEA) on Sunday.  

It stated the India-US Contact Group on advancing the implementation of civil nuclear energy cooperation met thrice after Modi’s visit to the US in September last year. The contact group first met here, followed by Vienna and London.

During these meetings, an understanding was reached that India’s Civil Liability for Nuclear Damage (CLND) Act is in “compatibility” with the Convention on Supplementary Compensation for Nuclear Damage (CSC).

In the statement issued on Sunday, the government also said it had proposed the creation of a ‘India Nuclear Insurance Pool’ as part of the overall risk management scheme for liability. This pool will be a consortium of five Indian public sector insurance companies, in which the government will contribute Rs 750 crore in the form of a contingent liability, against which the government will actually earn a part of the premium revenue.

This contribution will not be required for four to five years, much before any foreign-built reactor comes on stream. The ministry of finance is expected to seek approvals shortly for the government's contribution.

Apparently, General Electric and Westinghouse, which are also part of the contact group from the US side, have not agreed to the proposal of insurance pool. This is because this will entail a significant change in their business strategy, officials told Business Standard.

“Based on the presentations by the Indian side, and the discussion thereon, there is a general understanding that India’s CLND law is compatible with the CSC, which India has signed and intends to ratify,” the statement said.  

The main bone of contention in the CLND has been section 17, which stipulates the right to recourse after paying the compensation for nuclear damage. However, the government has clarified that while section 17 gives substantial right to the operators, which in this case is Nuclear Power Corporation of India Ltd (NPCIL), it will not be a “mandatory” but an “enabling” provision.  Additionally, the government has sought to address the concerns raised by both international and domestic suppliers under Section 46 of the CLND, which covers the remedies available against the operator. It does not allow the victims of a nuclear disaster to move foreign courts to seek compensation.

The government has also proposed the creation of a Nuclear Liability Fund. The fund will be built up over 10 years by levying a small charge on the operators, based on the power generated from existing and new nuclear plants.