Regional Reactor Sales in India – Prospects and Problems

1. Regional Reactor Sales in India – Prospects and Problems MohIT ABRAHAM, PARTNER, PXV LAW PARTNERS, Chair, liability working group, Nuclear law Association of India EMAIL: MOHIT.ABRAHAM@PXVLAW.COM STRICTLY PRIVATE – NOT FOR CIRCULATION

2. Power allocation in India

3. Electricity demands • India is the 4th largest economy in the world. • India has the 2nd largest GDP amongst developing countries based on purchasing power parity. • Buoyant economy – growth still expected to be in the region of 7-8%. • Availability of electricity a key factor in sustaining growth. • 5th largest electricity generation capacity in the world – over 1,90,592 MW. • Worlds 3rd largest transmission and distribution network. • Country continues to suffer from massive demand-supply gap particularly during peak hours. • 8-10 hours of “load shedding” even in industrialised states. July ‘12 power grid failure – affected over 600 million people. • Great scope for nuclear power – potential value of sector in India at USD 150 Billion.

4. NSG – Exemptions to india • As a nuclear weapons country, India was excluded from the Nuclear Non-Proliferation Treaty – hence excluded from the nuclear trade by the Nuclear Suppliers Group (NSG). • India could join NPT only if it disarmed and joined as a Non-Nuclear Weapons State – politically impossible. • Owing to an impeccable record of nuclear non-proliferation and strategic economic considerations, India was afforded a clean waiver. • IGAs with France (Sept. 2008), Russia (Dec. 2008) and the US (Oct. 2008) • India – Specific Safeguards Agreement signed in Feb. 2009. Additional protocol signed in May 2009. • Agreements also signed with Canada, Kazakhastan, UK, South Korea, Mongolia, Australia, Argentina. Negotiations on with Japan and EU. • Recognition that India has no obligation from treaties and arrangements to which it is not party (NPT, CTBT, etc.) and the importance of India having assured fuel supplies. • All agreements for peaceful purposes, but do not affect India’s unsafeguarded nuclear activities.

5. Nuclear energy in india • As of today • About 3-4% of the total electricity produced (approx. 4800 MWe) • Fully indigenous PHWRs • Active collaboration with Russia on Kudankulam NPP (2*1000 MWe) – possible to upscale to another 2*1000 MWe). • The Future • NSG exemptions resulted in about 17% increased outputs in existing plants. Uranium already imported and used in existing PHWRs. • High capacity reactors for imports being negotiated with France, US, Russia, Germany and others. • JV with AREVA and NPCIL for 6*1000 MWe in implementation phase. • DAE projects – 30000 MWe by 2020 and 60,000 MWe by 2032.

6. CIVIL Nuclear Liability law • The Civil Liability for Nuclear Damages Act, 2010 and the Rules, 2011. • Background – Bhopal Gas Tragedy (Union Carbide), 1984. • Many features of the Act similar to the Convention on Supplementary Compensation for Nuclear Damage, 1997 (CSD) – India has signed but not ratified. • Liability Caps • NPPs equal to or > than 10 MWe – about USD 330 Million. • Spent fuel reprocessing plants – about USD 66 Million. • NPPs < than 10 MWe, fuel cycle facilties, transportaion of nuclear material, etc. – About USD 22 Million. • Anything over the above caps would be paid by the Government subject to a limit of 300 Million SDR (about USD 450 Million) • Sufficient ? Union Carbide paid over USD 1 billion for the Bhopal Disaster. • Some significant departures from the CSD • While primary liability is on the operators (NPCIL, BHAVINI – both state owned entities), operators may claim a right of recourse in some situations against the supplier. • Section 46 – Act is supplemental – other laws to also apply. Therefore, opening suppliers to actions in Tort, other environmental laws and even criminal liability.

7. Supplier liability – Changing international nuclear liability jurisprudence • Section 17: • “ The operator of the nuclear installation, after paying the compensation for nuclear damage..shall have a right of recourse where – • (a) Such right is expressly provided for in a contract in writing; • (b) The nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services; • (c) The nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage”. • Exact reproduction of Article 10 of CSC except sub clause (b).

8. Supplier liabilities - ambiguities • To mollify international community, the government introduced Rule 24 • “ (1) A contract referred to in clause (a) of section 17 of the Act shall include a provision for right of recourse not less than the extent of the operator’s liability or the value of the contract itself, whichever is less; • (2) The provision for the right of recourse referred to in sub-rule (1) shall be for the duration of initial license issued under the Atomic Energy (Radiation Protection) Rules, 2004 or the product liability period, whichever is longer.” • Does not refer to situations in Section 17(b). • Serious ambiguity – no supplier, Indian or foreign happy. • Price escalation – Russian Government and Kudankulam 1,2,3 and 4. • Other countries opposed to supplier liability. GE-H, Westinghouse, Areva, sought changes to the law. • Westinghouse says it will await India’s ratification of the CSC before offering to supply equipment to India. • Activist Indian Judiciary.

9. A pro-people legislation? (Pic: Courtesy, the Hindu, A. Shaikhmohideen

10. PUBLIC Perceptions • Major protests at Kudankulam and Jaitapur (site of Areva project). Some NGOs believe that apparent limits on liability of supplier unacceptable. • Hunger strikes, storming of NPP, police strong handedness in combating protests. Pending PIL against Act and Rules in Supreme Court. • Significant change in India’s civilian nuclear power policies post 2008. Earlier NPPs set up in the 80s and 90s near major cities like New Delhi and Chennai witnessed no protests – Why? • Lack of public awareness and engagement with the people on the issue of nuclear power. • Sudden engagement compounds fears – an example of Kudankulam. • Many fears arising out of misinformation – Indian government alleges NGOs of certain countries intentionally spreading misinformation.

11. The way forward • Ambiguities regarding supplier liability have to go – Government must bite the bullet one way or the other. • Politically, very difficult to remove supplier liability altogether, but clarity would help. Suppliers can then determine the extent of liability, have price negotiations and take out insurance. • Insurance pools – needs to be created. Presently no nuclear insurance pool in India due to restrictions on inspection of facilities by international pools. • Contractual negotiations on supplier liability must be encouraged. Can the Indian government contractually waive its right of recourse against a supplier? • Generation of positive public opinion and detailed engagement with the public. • Tremendous potential for exploiting Nuclear energy in India. India can be an exporter of reactors. Massive potential yet to be tapped. • The future – Regional SAARC based cooperation? Proposal by M.P. Ram Mohan, Chairman, Nuclear Law Association, India.

12. Thank You