All the 21 operating plants in India owned and operated by the Nuclear Power Corporation of India Ltd (NPCIL) are expected to come under public liability insurance cover from next month, a senior official of the New India Assurance Company Ltd said
The insurance cover would also extend to the 1,000 MW nuclear power plant at Kudankulam in Tamil Nadu built with Russian equipment.
"We are planning to issue a single policy covering all the 21 nuclear power units of NPCIL including the one in Kudankulam. The premium will be paid by NPCIL and the policy will be issued in its name," the senior official told IANS over phone from Mumbai, preferring anonymity.
According to him the final premium has not been arrived at but it will be between Rs.100-Rs.150 crore.
He said the proposed policy would cover the liability towards public fromany nuclear accident in the plants covered under the policy and also the right of recourse of NPCIL against the equipment suppliers.
"Insurance coverage against damage to the power plant and other equipment has to be taken separately," he added.
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According to him, as and when a new unit comes into operation, it would be included under the policy at an additional premium.
The central government recently announced the setting up of the Rs.1,500 crore India Nuclear Insurance Pool to be managed by national reinsurer GIC Re.
The GIC Re, four government owned general insurers and also some private general insurers have provided the capacity to insure the risks to the tune of around Rs.1,000 crore and the balance Rs.500 crore capacity has been obtained from the British Nuclear Insurance Pool.
Queried about whether it would be a blind underwriting - accepting the risks without any inspection, he said the insurer can inspect the units coming under the International Atomic Energy Agency (IAEA) safeguards.
Indian nuclear power plants are regularly inspected by the Atomic Energy Regulatory Board (AERB).
In the case of a new unit, AERB officials inspect the plant at several stages and permission to start power generation is given after only satisfactory results on various test parameters.
"If at all there is going to be a pre-inspection of the units then it will be done only by Indians and no foreign national would be involved," the New India Assurance official remarked.
Former member of Insurance Regulatory and Development Authority (IRDA) K.K. Srinivasan said claims in excess of Rs.100,000 can be paid only after a survey.
"It has to be seen whether IRDA or the government would provide a specific exemption to the nuclear power plants," he said.
The India Nuclear Insurance Pool will be managed by GIC Re. The losses or profits in the pool would be shared by the insurers in the ratio of their agreed risk capacity.
Foreign nuclear plant suppliers were reluctant to sell their plant to India citing the provisions of Civil Liability for Nuclear Damage Act (CLND) 2010 that provides the right of recourse to NPCIL to the vendors under certain circumstances for compensation in case of an accident.
The insurance pool was formed as a risk transfer mode for the suppliers and also NPCIL.
According to the Department of Atomic Energy, there will be no extra burden on the tax payer or the government.
"The CLND Act already requires NPCIL (Operator) to maintain a financial security to cover its maximum liability for civil nuclear damage (Rs 1500 crores). Currently, NPCIL takes out a bank guarantee for this amount against which it pays an annual fee," DAE said.
"With the India Nuclear Insurance Pool (INIP), a market-based international best practice will be followed. The NPCIL will take out insurance under the Pool for the same amount and just as it pays an annual fee now it will pay an annual insurance premium to the Pool," DAE said.
According to DAE, the impact on the cost of power plants of the premium payments by operator and suppliers is expected to be minimal. The international experience of 26 insurance pools is that the operators pay only a very small fraction of the total cost of the plants.
The setting up of the insurance pool is expected to hasten the growth of the nuclear power units - locally made and imported - in the country.
Meanwhile the upcoming 500 MW prototype fast breeder reactor (PFBR) expected to go on stream this year would come under the insurance cover once it starts the nuclear fission process.
The government-owned Bharatiya Nabhikiya Vidyut Nigam Ltd (BHAVINI) is setting up the country's first indigenously designed 500 MW PFBR at Kalpakkam, around 80 km from Chennai.
A breeder reactor is one that breeds more material for a nuclear fission reaction than it consumes. The PFBR will be fuelled by a blend of plutonium and uranium oxide, called MOX fuel.
(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)