The government is working on a way around the nuclear liability impasse with a specific insurance product tentatively named India Nuclear Insurance Fund. Both Indian industry and the US officials have been sounded out on the provisions which are still being formulated. While there remains a great deal of skepticism about whether this new insurance fund will pass muster, it's the only option the government has right now.
On Monday , finance minister Arun Jaitley acknowledging that there was a problem with the liability law, said the act passed in 2010 was worked on equally by both opposition (BJP) and ruling coalition (UPA), therefore all sides were equally responsible for the provisions.
Releasing a new report by a legal thinktank, Vidhi Centre for Legal Policy, on the changes necessary to operationalize India's nuclear agreements, Jaitley refused to commit himself to taking a stand on the liability law which has become controversial.
Sources said despite its best intentions, the government is not likely to move towards amending the act right away . Firstly, the NDA doesn't have a majority in the Rajya Sabha and if they have to expend political capital, the government would rather do it for more important economic legislation. Second, the government is not yet fully convinced that amending the act is at all necessary , because at every political level there is a sense that some amount of supplier liability should be retained.
The report recommends that the offending section of the act, section 17(b), (which gives a right of recourse against suppliers) should be better defined by clarifying limitations on liability, and section 46 (which states that victims can also sue suppliers under other laws as well, such as the law of tort) should be limited to criminal liability provisions only . This means that the law should clarify that compensation should be sought by victims of a nuclear incident only under the nuclear liability act and not any other law.
Under the new fund contemplated by the Centre, the government would advance a soft loan to General Insurance, which will operate the insurance fund. The rest of the amount (the operator, in this case, NPCIL has to make an initial no-fault payout of 300 million SDRs or Rs.1500 crore) would come from premiums that suppliers would pay and a small insurance cess from sale of electricity etc. Slowly , the fund would build up with every new reactor and equipment bought as well as every unit of power sold. The government envisages a fund pool running into millions of dollars like in the US, which also functions on a similar system.While the government is hoping the new way out would be acceptable to all concerned, it is also pushing the US to complete the administrative arrangements of the nuclear deal.
Jaitley also kicked off the first discussion on the contentious liability law, beginning a debate on the subject. Justice A P Shah said while he was personally opposed to nuclear energy per se, in his opinion the liability act was flawed on many counts and needed to be amended.However, AEC former chairman Srikumar Banerjee and AEC member R B Grover stressed there was nothing fundamentally wrong with the liability act. The only issue that needed to be worked on was the issue of insurance.
The criticism against the act on behalf of Indian suppliers was made by Y S Trivedi of L&T, one of the Indian firms supplying components for nuclear programme. He said the law imposes disproportionate liability and risk on the supplier, affecting its creditworthiness. The UPA government had recognized the problems created by the act, it tried to cap the liability.
Here a strong division has cropped up between the technical experts and legal and diplomatic experts. Former ambassador to the US, Ronen Sen said the Indian situation could not be compared to other non nuclear nations.Instead, while developing the Indian nuclear sector, it was important to keep in mind the fact that ultimately all legal provisions should go towards enabling Indian manufacture rather than focusing on foreign suppliers.
On Monday , finance minister Arun Jaitley acknowledging that there was a problem with the liability law, said the act passed in 2010 was worked on equally by both opposition (BJP) and ruling coalition (UPA), therefore all sides were equally responsible for the provisions.
Releasing a new report by a legal thinktank, Vidhi Centre for Legal Policy, on the changes necessary to operationalize India's nuclear agreements, Jaitley refused to commit himself to taking a stand on the liability law which has become controversial.
Sources said despite its best intentions, the government is not likely to move towards amending the act right away . Firstly, the NDA doesn't have a majority in the Rajya Sabha and if they have to expend political capital, the government would rather do it for more important economic legislation. Second, the government is not yet fully convinced that amending the act is at all necessary , because at every political level there is a sense that some amount of supplier liability should be retained.
The report recommends that the offending section of the act, section 17(b), (which gives a right of recourse against suppliers) should be better defined by clarifying limitations on liability, and section 46 (which states that victims can also sue suppliers under other laws as well, such as the law of tort) should be limited to criminal liability provisions only . This means that the law should clarify that compensation should be sought by victims of a nuclear incident only under the nuclear liability act and not any other law.
Under the new fund contemplated by the Centre, the government would advance a soft loan to General Insurance, which will operate the insurance fund. The rest of the amount (the operator, in this case, NPCIL has to make an initial no-fault payout of 300 million SDRs or Rs.1500 crore) would come from premiums that suppliers would pay and a small insurance cess from sale of electricity etc. Slowly , the fund would build up with every new reactor and equipment bought as well as every unit of power sold. The government envisages a fund pool running into millions of dollars like in the US, which also functions on a similar system.While the government is hoping the new way out would be acceptable to all concerned, it is also pushing the US to complete the administrative arrangements of the nuclear deal.
Jaitley also kicked off the first discussion on the contentious liability law, beginning a debate on the subject. Justice A P Shah said while he was personally opposed to nuclear energy per se, in his opinion the liability act was flawed on many counts and needed to be amended.However, AEC former chairman Srikumar Banerjee and AEC member R B Grover stressed there was nothing fundamentally wrong with the liability act. The only issue that needed to be worked on was the issue of insurance.
The criticism against the act on behalf of Indian suppliers was made by Y S Trivedi of L&T, one of the Indian firms supplying components for nuclear programme. He said the law imposes disproportionate liability and risk on the supplier, affecting its creditworthiness. The UPA government had recognized the problems created by the act, it tried to cap the liability.
Here a strong division has cropped up between the technical experts and legal and diplomatic experts. Former ambassador to the US, Ronen Sen said the Indian situation could not be compared to other non nuclear nations.Instead, while developing the Indian nuclear sector, it was important to keep in mind the fact that ultimately all legal provisions should go towards enabling Indian manufacture rather than focusing on foreign suppliers.
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