'Indian firms to be hit hard by N-liability law provisions'

Mumbai, Dec 5 (PTI) Former Atomic Energy Commission
Chairman Anil Kakodkar on Sunday said the domestic nuclear
industry will be hit hard in the longer run due to certain
provisions of the nuclear liability law, which also has
French, Russian and US companies worried.
However, Kakodkar feels that the Civil Liability for
Nuclear Damage law, passed after much debate in Parliament in
August, is soft on foreign prime vendors.
"Now that Act has been passed in our Parliament, every
one has to accept it and move forward but at the same time the
language in clause 17(b) is likely to be hard on Indian
entities and soft on foreign prime vendors," he told PTI.
Three key suppliers of nuclear equipment -- France,
Russia and the US -- have already voiced their concerns over
the liability law in its current form and have said that they
are awaiting notification of rules for implementing the key
legislation.
"The language used creates more problems for suppliers of
equipment or materials most of whom are likely to be Indian
companies at least eventually," Kakodkar said.
"As far as prime vendors are concerned, they operate at
the system level where comprehensive mutual discussions take
place between the vendor and the utility (including detailed
reviews by the regulatory body) over months/years," he said.
"At the system level, once the two sides decide to work
together (which they have to), it would be difficult to
isolate 'act of supplier or his employee' for purpose of
exercising the right of recourse except when there is a case
of 'wilful act or gross negligence'," Kakodkar said.
M V Kotwal, Senior Vice-President of Larsen and Toubro,
an active domestic player in the nuclear sector, said the
concerns of the industry remain the same as a week before the
bill was passed in the Parliament.
"Indian industry do not know how the Government of India
will help regarding the language of clause 17(b) so that they
can confidently move to towards an ambitious nuclear power
programme in the country with the foreign collaboration,"
Kotwal said on the sidelines of conference on Advances in
Nuclear Technology which concluded on Friday.
On the issue of insurance, Kakodkar said it was unlikely
that an Indian insurance company will be able to insure for Rs
1500 crores, as stated in the law, without involving foreign
entities who insist on inspection.
"The alternative is to lock up the necessary funds which
would not be available for investment into new power
projects," he said.

Kakodkar said since in any case the entire funds for
liability coverage would eventually be recovered from
electricity consumers, blocking such funds from investment
into the power projects could have been avoided.
"A method of post event recovery could have been a better
option. In any case one needs to avoid foreign inspection," he
stressed.
Kakodkar was optimistic about Indian industry finding a
solution for this.
"Having said all this, I think, the industry would be
creative enough to find a way forward. I only hope that in the
process, consumer does not end up being penalised in an
unjustifiable manner," he added.
The Indian law includes language that makes suppliers of
equipment, raw materials, and services liable—beyond the
recourse already available through the courts—for 80 years
after the construction of a plant in the unlikely event of a
nuclear accident.
Earlier, the Director General of the Confederation of
Indian Industries (CII), Chandrajit Banerjee, had said the
clause went against the global practice of placing civil
liability exclusively on the operators.
The Nuclear Power Corporation of India, the state-owned
operator of India's existing reactors and suppliers' only
prospective customer, had been scathing in its remarks.
Just a few days before it was passed by Parliament, the
NPCIL had warned that "no manufacturer, Indian or foreign,
would be able to serve the nuclear power industry" under the
provisions of the new law.
"In the process of setting up nuclear power plants, there
are large numbers of suppliers who are contributing in varying
degree and suppliers in turn have many sub-suppliers. They
supply material according to the specifications of the
operator and their obligations in terms of latent or patent
defects, are incorporated in the respective contracts," the
NPCIL, which runs 20 nuclear power plants, had said.
"No supplier, Indian or foreign would be willing to take
the liability on account of recourse of the operator for the
period of some 80 odd years after the contract is executed.
Under the circumstances, the provisions of 17b are neither
practical nor implementable," NPCIL official S Thakur had said
in August. PTI LV
AVT