Nuclear logjam: India, U.S. to work on new proposals

SUHASINI HAIDAR

January 3

Revised insurance scheme to reduce suppliers’ risk

Indian and U.S. officials are expected to meet in Delhi next week to discuss two proposals made by India to clear the nuclear logjam, with an added push coming from U.S. President Obama’s impending visit on January 24.

The Hindu has learnt that the proposals were put forward during the first contact group meeting on civil nuclear issues held on December 16-17 that had been tasked by President Obama and Prime Minister Modi with finding a way around U.S. objections to India’s supplier liability law.

According to one official present at the meeting, India put up a revised proposal of an “insurance pool” using General Insurance Company (GIC) to alleviate the risk to U.S. suppliers. An earlier proposal had been made during the UPA government’s tenure in March 2014, but had been rejected. Officials say the new offer would include a pool of GIC, New India Assurance, Oriental Insurance, National Insurance and United India, that would generate a risk cover of about $242 million.

A second proposal, that U.S. officials have taken back to discuss with lawyers and representatives of American companies GE-Hitachi and Westinghouse, would entail a “clarification of Section 46” of the law that has been described as “vague” . At present, Section 46 says that nothing in the law will “exempt the operator from any proceeding which might, apart from the act, be instituted against the operator.” This has been read to mean that U.S. suppliers could face tort claims, that is, be sued by victims of an accident where the nuclear parts are deemed faulty. U.S. officials will bring both proposals back to Delhi next week.

India’s proposals to U.S. face resistance

U.S. officials have said they were “hopeful” of some movement in the nuclear deal that has been hanging fire since it was signed in 2008. Although India has allotted project sites for two 1000 mw nuclear reactors each by U.S. companies Westinghouse and GE-Hitachi in Gujarat and Andhra Pradesh respectively, no work has started on either.

Indian and U.S. officials are expected to meet in Delhi next week to discuss two proposals made by India to clear the nuclear logjam. India put up a revised proposal of an “insurance pool” to reduce the risk to U.S. suppliers. A second proposal would entail a “clarification of Section 46” of the law on supplier liability that has been described as “vague.”

R.K. Sinha, Chairman of India's Atomic Energy Commission, told Reuters agency last month that India was working fast to address the concerns of suppliers.

“We are working on a solution with the insurance companies.” A similar pool is available to nuclear operators in the U.S., under the ‘Price-Anderson’ act. But India’s liability law includes suppliers as well.

While the insurance pool proposal would help Indian nuclear parts suppliers like L&T, Gammon and BHEL, officials said U.S. company representatives present at the contact group meeting in December found the insurance pool proposal “inadequate” as it would accept supplier liability that the U.S. says is in contravention of the International Convention on Supplementary Compensation.

Former nuclear officials, who have vocally protested any “dilution” of the supplier liability law, say the second proposal may run into trouble in India. “There can be no side arrangement with the U.S.,” former Atomic Energy Regulatory Board Chairman A. Gopalakrishnan told The Hindu. “If any clarification on Section 46 is to the U.S.’s satisfaction, it will certainly be violation of India’s act.”

Mr. Gopalakrishnan also questioned why Indian officials were proposing solutions to the logjam at all. “Why all the eagerness to procure American reactors, some of which like GE’s 1000 MW reactor haven’t been used anywhere else? Indian reactors already developed, like the 700 MWe heavy water reactors, could easily be scaled up to similar capacities.”