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

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.