January 22, 2015

US Greenlights Insurance Pool Plan on N-liability

With the third and the last round of talks between officials of India and US on civil nuclear issues underway on Wednesday, high level sources indicated that there has been acceptance of India’s legal position on the liability issue on the ground that a facilitating mechanism in the form of insurance consortium would be put in place at the earliest. According to sources in the know, an understanding has been reached and the US side has climbed down from its earlier stand on contentious clauses in the Civil Liability for Nuclear Damage Act, 2010
Ahead of US President Barack Obama’s three-day visit to New Delhi, primarily as chief guest for the Republic Day parade, the Indo-US nuclear contact group’s meeting is underway in London. This is the third round.
US firm Westinghouse Electrical Co., which has an agreement to supply reactors to a proposed plant in Gujarat, has been keenly awaiting a resolution of the pending issue. And, sources here indicated that the US officials have come around to accept that the legal framework — which has the Indian Parliament’s stamp — cannot be changed; and details of the insurance pool contributions are being worked out.
It has been conveyed that “it is the maximum that the government is willing to go” to facilitate the civil nuclear power projects to take off with the creation of a $250 million insurance pool. It would mainly be Indian insurers forming a consortium.
The nuclear contact group was set up in 2014 after PM Narendra Modi’s US visit to precisely thrash out differences over clauses in the Civil Liability for Nuclear Damage Act, seen to be prohibitive by the US and France and even Russia. The suppliers have been particularly wary of the clause that makes them directly liable in case of a nuclear mishap while internationally, it has been cited, it rests not on the supplier but the operator.
In India’s case, it is the government-owned enterprise, the Nuclear Power Corporation of India. The other contentious Clause 46, pertains to open-ended liability, in other words it is unlimited liability that the supplier would have to face in the event of a mishap or glitch/fault in equipment. The liability is to be determined on the extent of the damage caused. Since the 2008, 123 Agreement, Indo-US civil nuclear agreement has virtually been in defreeze and according to the government a breakthrough therefore would be a major achievement.
“It is no mean feat that we have managed to impress’’ upon the US side that the liability law cannot be revisited and the insurance consortium proposal as a workable option “is being accepted”.
It was also clarified that for insurance pool will be created with contributions from all stakeholders, not the supplier alone, which in a way would mean that the unlimited liability to be borne by all concerned.
The nuclear contact group comprising of diplomats, officials, as well as trade representatives of NPCIL, Westinghouse and GE, however, discussed a range of issues pertaining to licensing, administration as also the technical aspects.This is apart from the liability clauses.


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