Leaking Liability Strategically

The issue of India's Civil Nuclear Liability has been a contentious one, with charged reactions from all sides. The principal points of the law, as it now stands, are a maximum liability cap of Rs. 2500 crores, in event of a disaster, to the operator, which in this case would be Nuclear Power Corporation of India Ltd(NPCIL) and GoI, plus a clause that allows NPCIL to subsequently sue the nuclear supplier for damages. It is this tiny clause that has deterred foreign commercial interests from venturing into nuclear trade with India - especially in a post Fukushima world.

The Indian state, with its nuclear establishment, under international and US pressure, is pushing for a dilution of India's liability clause to open up India's nuclear energy sector for commercialisation;  the foreign suppliers  are also keenly eyeing investment opportunities with India's ambitious goals of expanding its civil nuclear facilities, but can only afford to risk business ventures if the nuclear opportunity is offered risk-free - i.e. without the baggage of an eventual supplier liability - even if they were responsible by providing defective technology that caused a nuclear disaster.

Such a dilution was staunchly opposed by anti-nuclear activists, especially in pockets around the upcoming nuclear facilities, since this could potentially lead to a weakening of quality controls from a non-liable supplier and thus pose an increased risk of future calamity. Also, sections of India's civil society voiced their opposition based on the horrific human tragedy and fiasco, played out in the aftermath of the Bhopal chemical disaster; they were unwilling to let the Indian tax payers take full financial responsibility for any future and potentially a more dangerous nuclear disaster caused by a liability-shielded supplier's negligence and failure. The dilution issue also faced partisan reactions with nationalistic jingoism from right to expressed opposition from the left [See a recent mix of reactions here].

It is important to note that the recent unfolding of corruption charges against Zio Podolsk for supplying substandard equipment to nuclear facilities - both Russian and foreign - is part of the same larger concern of what can and will play out without a strictest liability clause that force adherence to quality control. Agreement for Units 1 and 2 of Kudankulam, between India and Russia, predated our Civil Nuclear Liability and was therefore exempt from it. One might argue that a better system of checks and monitoring, mandated if Russia were functioning within a tight nuclear liability clause, would have probably lead to a less compromised system with fewer substandard parts than were probably supplied to Kudankulam.

Now, this was the current state of affairs - or so I thought. Behind the scenes, however, a whole different drama had already played out. I chanced upon this script from WikiLeaks.

There are many serious and grave revelations:

1) It appears that Indian officials are willing to compromise the liability issue and facilitate free nuclear commerce with the US provided they receive strategic cooperation on the issues of reprocessing and enrichment. India would then ratify the Convention on Supplementary Compensation for Nuclear damage(CSC), despite this not being a recommended choice for the nation. India's signing the Safeguard Agreement with IAEA also was conditional to progress on nuclear reprocessing and enrichment.

2)The officials reiterated their commitment to the letter of intent, already been signed with the US, for two nuclear parks with a combined capacity of 10,000 MW. The site explorations were concluded although the sites not finalised.

3)There was a strong push to encourage participation of private sector in power generation and management and also for partnerships between Indian firms and  US suppliers - to keep the cost of nuclear energy competitive.

The need for concern is strong. The civil nuclear liability issue, that provides a safety net for Indian citizens, in case of a nuclear event, is being used as a bartering chip for so called 'more important' strategic goals. That this happens behind closed doors, and with far fetched ambitions for the nuclear energy sector - without media participation and far from public eye, is a cause for further worry. That private Indian vendors and public-private-partnerships are encouraged, takes the exercise even further away from the realm of safe-and-secure, with increased difficulty for any vigilant monitoring or supervision of quality control - necessary for the complex and risky nuclear industry. And thus to systematically derail national interest and safety of its citizens by weakening the issue of liability,  under such circumstances, is just sheer madness. Beware!