Jan 31, 2015
It would have been ideal if the Opposition and public had been taken into greater confidence over the ‘insurance pool’ solution crafted by the government. The government must develop a consensus on such public-sensitive issues.
US President Barack Obama’s visit to India may be over, but controversies swirl ranging from the cost of the pinstripe button-up suit of Prime Minister Narendra Modi to what exactly has been the solution found to the civil nuclear cooperation conundrum over India’s Civil Liability for Nuclear Damage Act of 2010, which US suppliers found excessively onerous. During his and Mr Obama’s joint press conference after delegation-level talks at Hyderabad House, Mr Modi cryptically said that a solution has been found consistent with “our law, our international obligations and tactical and commercial viability”.
In a press conference that foreign secretary Sujatha Singh (since then ejected from office) had, details were shared grudgingly by a panoply of aides on her two flanks. Considering that the Bharatiya Janata Party in the Opposition had led the charge to tighten liability, particularly by extending constructive blame to the suppliers, the reticence can only be read as embarrassment at executing what Mr Modi termed as “tactical” manoeuvre. It needs to be recalled that Arun Jaitley, the current finance minister and brains-trust of the BJP, in a signed article in Outlook magazine, as the Leader of the Opposition in the Rajya Sabha, had argued for the “principle of strict liability”, adding that the suppliers were in any case subject to the Law of Torts. He also explained logically that while the government could assume liability for damages to be paid by a public sector company, were the same done for private operators, “the compensation would be paid by the Indian taxpayers”.
Essentially, the government’s negotiators were told to settle the issue well before Mr Obama arrived in India so that it did not become a distraction. While the US was concerned about the “liability” burden, India was unwilling to accept any “tracking” of US material by them outside the International Atomic Energy Agency (IAEA) safeguards, including the additional protocol. The US backpaddled on its demand, thus clearing the path for finalisation of the 123 Agreement and operationalisation of the civil nuclear deal. This is what Mr Modi meant by India conforming to its international obligations.
The onus then shifted to India to present a solution to the liability issue, ironically embedded into the act at the insistence of the BJP while in the Opposition. The lead Indian negotiators in the ministry of external affairs decided to get all Indian stakeholders in one room and on the same page i.e., the department of atomic energy (DAE), ministry of finance, ministry of law and justice, etc. They looked at process innovation and international best practices. They studied 26 international insurance pools and made DAE do a probability safety assessment of a nuclear accident. They examined all current reactor designs and how probable was a nuclear radiation spillage beyond the containment shields.
Then came bargaining with the insurance companies to cover the risk and match it with premiums payable. It was also noted that the extant act only talks of “operator” in Sec. 46, which talks of the act as addition to and not in derogation of any other law i.e., Torts, and an attempt to add “supplier” in the Rajya Sabha was rejected. The insurance pool thus crafted is provided for in the act, but capped at Rs 1,500 crore. There is in addition, now that India is ratifying its membership of the Convention on Supplementary Compensation (CSC), an additional cushion of 300 million Special Drawing Rights (SDRs) available, which roughly equals another Rs 3,000 crore. But it is worth noting that neither the US nor China, Russia nor France are signatories to the CSC.
Another issue arising is the safety of some of the designs, which are brand new and untested commercially, for instance the General Electric one. Part of the reason is the role of shale gas in the US energy mix and public concern in the West about nuclear power after the Fukushima disaster. It is argued that the Westinghouse design is an updated version of the Advanced Heavy Water Reactors, which are the standard DAE design for Indian indigenous reactors. This may allow many of its parts to be produced in India, particularly as Westinghouse has already tied up with Larsen & Toubro. This feeds into Prime Minister Modi’s “Make in India”.
It can hardly be contested that India needs to boost energy production urgently if it has to maintain a higher trajectory of growth. The mix of energy also has to begin shifting away from polluting thermal/coal units to renewable and nuclear power generation. But the solution is not for political parties to play politics with this sensitive issue. After all, the nuclear liability law in India only got stricter because, as the bill was being discussed in Parliament, the Bhopal gas tragedy case resurfaced judicially, followed a year later by the Fukushima disaster in Japan. Germany, in fact, foreswore nuclear reactors after that. The BJP is now learning the hard way the perils of populism while in Opposition.
Nuclear power is not an issue that can quietly be settled at officer-level meetings. Safety concerns spill into public space and arouse interest and worry. It would have been ideal if the Opposition and public had been taken into greater confidence about the “insurance pool” solution crafted by the government. The government must use both Parliament and media to develop, if possible, a consensus, or at least widest public approval, on such public-sensitive issues. While it is yet unclear if the US corporate sector is satisfied with the compromise solution, whether Indian political and public opinion are on board remains to be determined.
The writer is a former secretary in the external affairs ministry. He tweets at @ambkcsingh
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