Who will be liable for an Indian Fukushima. Nobody it seems

QUICK PILL

Who do we sue?

• India to entirely exempt foreign nuclear suppliers from liability - AEC said last week

• Who will be responsible in case of an accident then?

What breakthrough!

• There was a Indo-US breakthrough on N-liability - Modi last week

• Can a complete exemption from liability be called a breakthrough?

Past and present

• The BJP had opposed Manmohan\'s N-policy on many counts

• Why then the U-turn by the Modi government now?

If the statement of the newly appointed chairman of India's Atomic Energy Commission last week is anything to go by, the Narendra Modi government has made up its mind to entirely exempt foreign nuclear suppliers of any liability in case of a nuclear accident.

Not only does this mark an unfortunate U-turn from the BJP's position on the issue so far, but also implies that the 'breakthrough' on the issue -- claimed by the Prime Minister himself earlier this year -- has evidently not gone far enough.

In January this year, when US President Barack Obama visited India, PM Modi declared a breakthrough between the two countries on nuclear liability. Re-asserting the BJP's earlier position that foreign companies will have to abide by the law of the land, he announced the formation of an insurance pool of Rs 1,500 crore, which the nuclear suppliers can access in case they have to pay liability for a nuclear accident.

While this 'breakthrough' was celebrated as addressing the concerns of both investors and potential victims, critics pointed out that this pool was ultimately a way to channel liability back to the Indian exchequer.

Even this failed to placate foreign suppliers, especially the American companies. Jeff Immelt, the chief executive of General Electric, made it clear in September that the nuclear giant will not invest in India until it is clearly exempted from liability.

Why do companies want to be liability-free?

Nuclear-supporters often lament that the sector is unduly pressured to commit liability whereas other industries do not have to deal with such laws.

N-supporters lament the sector is unduly pressured to commit liability. How true is that?

But what is the reality? Absence of liability laws in other hazardous industries simply means the normal 'polluter pays' principle would be applied. That places absolute and unlimited liability on entities running those industries.

It is actually to limit liability, and often to channel it to the public, that liability laws were introduced in the nuclear sector.

Consider these:

• India's nuclear liability law, enacted in 2010 to facilitate the entry of foreign and private players.
• The Price-Anderson Act in the United States.
• The Convention on Supplementary Compensation (CSC), which the big countries are trying to push as a global template for liability.

The push for such laws come from the industry.

India did not have a liability law for six decades before 2010 as the government was the sole player and it was assumed to have absolute and unlimited liability.

What is at stake

The insistence for a cap on liability is an admission of the insurmountable nature of serious nuclear accidents and economic costs so huge that the private sector just can't shoulder.

Even as a number of countries in the developed world have shunned nuclear power, the global nuclear lobby has been claiming a 'renaissance' in the newer regions, particularly in Asia. And it is here that they insist for a nuclear-free business opportunity.

The industry-promoted CSC requires an even playing field globally without liability for nuclear suppliers.

Countries such as the United States and France are ready to accept this absurd standard precisely because they don't have big plans to expand nuclear energy and have mostly domestic players for whom other mechanisms are in place.

But the newer countries lack experience, expertise and regulation to ensure safety - in case of nuclear accidents, the common people will be left disastrously hapless.

This includes India, which does not have any experience in designs like the European Pressurized Reactor (EPR) that French giant Areva seeks to build in Jaitapur. The design has been heavily criticised earlier this year by the French regulator itself. Yet Modi furthered the deal during his France visit.

Liability is about much more than compensation. Independent experts and civil society have repeatedly highlighted the 'moral hazard' that the presence of nuclear liability ensures by acting as an incentive for best safety practices.

The International Atomic Energy Agency (IAEA) has underlined three aspects of a nuclear liability mechanism:

• Protect the public
• Safeguard the environment
• Enhance nuclear safety

The liability question also serves as a lay person's guide to nuclear safety. If nuclear energy promoters do not have enough confidence in their own product to put their financial interests at stake, how can they expect others to stake their lives and health?

India's nuclear liability law

The Indian law, the Civil Liability for Nuclear Damage Act, 2010, provides for a 'right of recourse' against the nuclear suppliers in case of an accident to state-owned operator Nuclear Power Corporation of India (NPCIL) under Clause 17(b).

The clause was introduced under pressure from Parliament and civil society by a reluctant Manmohan Singh government. At that time there was a public outcry on liability, following the June 2010 Bhopal judgment that let the accused go almost scot-free. This led to a sensitive debate.

Although the Act capped the total liability at a ridiculously low amount and was criticised for its complicated procedural stipulations, it provided for a very limited hook on private suppliers -- both foreign and home-grown.

Attempts to dilute and circumvent the liability norm started soon. These included making supplier culpability dependent on an explicit mention of the liability provision in the bilateral contract between the supplier and the operator.

In addition, the Indian government limited the product liability period to just five years under the Nuclear Liability Rules, 2011, designed to guide the implementation of the 2010 Act. Eminent jurist Soli Sorabjee termed the Rules "ultra vires" of the Act and going against its spirit.

In his last foreign trip as PM, when Singh went to the United States, he offered "as a gift" a reinterpretation of the liability law. According to that, the operator has an option of not exercising its right of recourse against the supplier. He assured Obama that the public-owned Indian operator will not sue suppliers.

Evidently, even this failed to assuage companies such as GE and Westinghouse. They were uncertain about future Indian governments abiding by such a promise, especially in the wake of public pressure that would follow any big nuclear accident.

The foreign corporations have also been opposed to the Indian law as it is a departure from the CSC, which they want the world to adopt as an international template. Ironically, India rushed to sign the CSC in October 2010, soon after it enacted the domestic law. It then started citing that as a reason to amend the Parliament-mandated law.

At that time there were fewer CSC signatories. Only in April this year the Convention has entered into force. India had an opportunity, as an attractive investment destination for the nuclear sector, to actually lobby for amendments to the CSC to ensure adequate liability for people in developing countries.

Modi government's nuclear U-turns

The current PM has been showcasing nuclear deals as a measure of his foreign-policy success. However, he has merely renewed the intent and deals agreed to by the previous regime.

A U-turn on BJP's stand on nuclear liability may just be Modi's most dangerous mistake

Although not opposed to nuclear energy in principle, the BJP made certain pro-people demands when in opposition:

• A higher cap on liability and non-dilution of the suppliers' liability
• Fresh environmental assessments in case of projects like Jaitapur (where the Congress government rushed to provide green clearances on the eve of the French President's visit)
• A more democratic dialogue with local people before initiating the construction of a new project
• An overall fresh and transparent safety audit of the nuclear sector after the Fukushima accident in Japan.

In its 10-year stint in the Opposition, the BJP criticised the Singh government's nuclear policy. It strongly objected to the Government of India's attempts to exempt foreign suppliers from nuclear liability, calling it a blatant capitulation.

The party said it believed and sided with the people's objections and fears over Koodankulam project until 2011. But now Modi has invited Russian President Vladimir Putin to Koodankulam for jointly announcing construction of more reactors.

The BJP also strongly opposed India signing the IAEA's Additional Protocol, based on its own nationalist logic that such an intrusive inspection will deny the country of the required flexibility in maintaining a credible deterrence.

After taking charge, the Modi government ratified the same agreement.

The BJP was opposed to the Act itself in 2010 as the suppliers' liability is meagre. It opposed limiting the liability as well as channelling it to the Indian taxpayer.

At that time it had alleged that "the bill was being brought under US pressure mainly to keep the two American multinationals - Westinghouse and General Electric - from paying any liability and making the Indian government liable to pay in case of an accident."

"Clearly, the life of an Indian is only worth a dime compared to the life of an American," former finance minister Yashwant Sinha had said.

But liability for foreign suppliers may now be entirely removed, not just diluted.

In his one and a half year in office, Modi hasn't demonstrated any particular penchant for consistency, but this would be his most dangerous U-turn, imperilling millions of innocent Indian lives.