Component and other input suppIiers to Nuclear Power Corporation (NPC), the government-owned generator of atomic energy, have indicated inability to enter into any new contract till they’re clear on the implications of the new rules on liability.
The new rules on civil nuclear liability were issued on Wednesday. The suppliers wish to be clear on the peiod of liabilitiy for the product and NPC’s right to recourse. The Indian suppliers include Larsen and Toubro, Bharat Heavy Electricals, Electronics Corporation of India, the Walchand Group and Godrej.
NPC chairman and managing director S K Jain told Business Standard: “Earlier, suppliers were indemnified by NPC. Now, they will be subject to recourse by NPC for any nuclear damages. The right to recourse will be for the duration of initial licence issued under the Atomic Energy (Radiation Protection) Rules, 2004, or the product liability period, whichever is longer.” The product liability means the period for which the supplier has undertaken liability for patent or latent defects or substandard services under a contract.
G R Srinivasan, advisor, nuclear power business, GMR Energy, said there were a number of issues needing clarification. Among these are the recourse if the period in question was long, the equipment is manufactured by many companies across countries and of making an accurate root-cause analysis to pin supplier responsibility. “With a probable life extension with 60 to 80 years, the coverage will have to be 100 years. There could be much equipment needing to be replaced due to mandatory periodic upgradation. To try to fit in a longer period, we may achieve more dilution of standards; a five-year period could be very advantageous, with chances of obtaining free design changes.”
Jain said the challenge for NPC was to convince Indian industries/suppliers regarding the liabilities they had to carry. “The sentiment that the supplier should not go scot-free is to be respected. However, how to fix the responsibility for recourse in nuclear damage when suppliers are not directly involved in the erection, maintenance or post-maintenance contract? During construction or after the commissioning of the plant, there could have been many adaptations or changes in the systems and in such a situation how would suppliers be held responsible? Besides, NPC may have changed spare parts or deviated from design parameters,” he said.
Srinivasan observed that in case a supplier had made a mistake, he should be made to take responsibility. “However, the Atomic Energy Regulatory Board mandates design coverage through the life of the nuclear power plant. Any design fault has to be with respect to the original and uprated design, as documented in the final safety assessment report.
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The periodic safety review mandated once in 10 years will enable interpretation of the AERB to support the operator’s view.” He cautioned that making the rules on right to recourse severe may affect the nuclear programme.
M V Kotwal, member of the L&T board of directors and president of its heavy engineering division, said he was studying the rules. He added “In any case a period (30 days I believe) has to be allowed before the rules become operational.” Sutharshan Balendra, director, India Business Development, Westinghouse, said: “Westinghouse’s legal team is assessing India’s Civil Nuclear Liability Rules, 2011. It is too early to comment.”