Regional Reactor Sales in India – Prospects and Problems -MOHIT ABRAHAM, -PARTNER, PXV LAW...
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Transcript of Regional Reactor Sales in India – Prospects and Problems -MOHIT ABRAHAM, -PARTNER, PXV LAW...
Regional Reactor Sales in India – Prospects and
Problems
- M O H I T A B R A H A M ,
- P A R T N E R , P X V L A W P A R T N E R S ,
- C H A I R , L I A B I L I T Y W O R K I N G G R O U P , N U C L E A R L A W A S S O C I A T I O N O F I N D I A
- E M A I L : M O H I T . A B R A H A M @ P X V L A W . C O M
ST
RIC
TLY
PR
IVA
TE
– N
OT
FO
R C
IRC
UL
AT
ION
POWER ALLOCATION IN INDIA
68%
8%
15%
3%
6%
Coal Gas Hydro
Nuclear Others
ELECTRICITY DEMANDS
• India is the 4th largest economy in the world.
• India has the 2nd largest GDP amongst developing countries based on purchasing power parity.
• Buoyant economy – growth still expected to be in the region of 7-8%.
• Availability of electricity a key factor in sustaining growth.
• 5th largest electricity generation capacity in the world – over 1,90,592 MW.
• Worlds 3rd largest transmission and distribution network.
• Country continues to suffer from massive demand-supply gap particularly during peak hours.
• 8-10 hours of “load shedding” even in industrialised states. July ‘12 power grid failure – affected over 600 million people.
• Great scope for nuclear power – potential value of sector in India at USD 150 Billion.
NSG – EXEMPTIONS TO INDIA• As a nuclear weapons country, India was excluded from the Nuclear Non-
Proliferation Treaty – hence excluded from the nuclear trade by the Nuclear Suppliers Group (NSG).
• India could join NPT only if it disarmed and joined as a Non-Nuclear Weapons State – politically impossible.
• Owing to an impeccable record of nuclear non-proliferation and strategic economic considerations, India was afforded a clean waiver.
• IGAs with France (Sept. 2008), Russia (Dec. 2008) and the US (Oct. 2008)
• India – Specific Safeguards Agreement signed in Feb. 2009. Additional protocol signed in May 2009.
• Agreements also signed with Canada, Kazakhastan, UK, South Korea, Mongolia, Australia, Argentina. Negotiations on with Japan and EU.
• Recognition that India has no obligation from treaties and arrangements to which it is not party (NPT, CTBT, etc.) and the importance of India having assured fuel supplies.
• All agreements for peaceful purposes, but do not affect India’s unsafeguarded nuclear activities.
NUCLEAR ENERGY IN INDIA
• As of today• About 3-4% of the total electricity produced (approx. 4800 MWe)• Fully indigenous PHWRs• Active collaboration with Russia on Kudankulam NPP (2*1000 MWe)
– possible to upscale to another 2*1000 MWe).
• The Future• NSG exemptions resulted in about 17% increased outputs in
existing plants. Uranium already imported and used in existing PHWRs.
• High capacity reactors for imports being negotiated with France, US, Russia, Germany and others.
• JV with AREVA and NPCIL for 6*1000 MWe in implementation phase.
• DAE projects – 30000 MWe by 2020 and 60,000 MWe by 2032.
CIVIL NUCLEAR LIABILITY LAW• The Civil Liability for Nuclear Damages Act, 2010 and the Rules, 2011.
• Background – Bhopal Gas Tragedy (Union Carbide), 1984.
• Many features of the Act similar to the Convention on Supplementary Compensation for Nuclear Damage, 1997 (CSD) – India has signed but not ratified.
• Liability Caps• NPPs equal to or > than 10 MWe – about USD 330 Million.• Spent fuel reprocessing plants – about USD 66 Million.• NPPs < than 10 MWe, fuel cycle facilties, transportaion of nuclear material, etc. –
About USD 22 Million.• Anything over the above caps would be paid by the Government subject to a limit of
300 Million SDR (about USD 450 Million)
• Sufficient ? Union Carbide paid over USD 1 billion for the Bhopal Disaster.
• Some significant departures from the CSD• While primary liability is on the operators (NPCIL, BHAVINI – both state owned
entities), operators may claim a right of recourse in some situations against the supplier.
• Section 46 – Act is supplemental – other laws to also apply. Therefore, opening suppliers to actions in Tort, other environmental laws and even criminal liability.
SUPPLIER LIABILITY – CHANGING INTERNATIONAL NUCLEAR LIABILITY
JURISPRUDENCESection 17:
“ The operator of the nuclear installation, after paying the compensation for
nuclear damage..shall have a right of recourse where –
(a) Such right is expressly provided for in a contract in writing;
(b) The nuclear incident has resulted as a consequence of an act of supplier or
his employee, which includes supply of equipment or material with patent or
latent defects or sub-standard services;
(c) The nuclear incident has resulted from the act of commission or omission of
an individual done with the intent to cause nuclear damage”.
• Exact reproduction of Article 10 of CSC except sub clause (b).
SUPPLIER LIABILITIES - AMBIGUITIES
• To mollify international community, the government introduced Rule 24
“ (1) A contract referred to in clause (a) of section 17 of the Act shall include a provision
for right of recourse not less than the extent of the operator’s liability or the value of
the contract itself, whichever is less;
(2) The provision for the right of recourse referred to in sub-rule (1) shall be for the
duration of initial license issued under the Atomic Energy (Radiation Protection)
Rules, 2004 or the product liability period, whichever is longer.”
• Does not refer to situations in Section 17(b).
• Serious ambiguity – no supplier, Indian or foreign happy.
• Price escalation – Russian Government and Kudankulam 1,2,3 and 4.
• Other countries opposed to supplier liability. GE-H, Westinghouse, Areva, sought changes to the law.
• Westinghouse says it will await India’s ratification of the CSC before offering to supply equipment to India.
• Activist Indian Judiciary.
A PRO-PEOPLE LEGISLATION?
(Pic: Courtesy, the Hindu, A. Shaikhmohideen
PUBLIC PERCEPTIONS• Major protests at Kudankulam and Jaitapur (site of Areva project).
Some NGOs believe that apparent limits on liability of supplier unacceptable.
• Hunger strikes, storming of NPP, police strong handedness in combating protests. Pending PIL against Act and Rules in Supreme Court.
• Significant change in India’s civilian nuclear power policies post 2008. Earlier NPPs set up in the 80s and 90s near major cities like New Delhi and Chennai witnessed no protests – Why?
• Lack of public awareness and engagement with the people on the issue of nuclear power.
• Sudden engagement compounds fears – an example of Kudankulam.
• Many fears arising out of misinformation – Indian government alleges NGOs of certain countries intentionally spreading misinformation.
THE WAY FORWARD• Ambiguities regarding supplier liability have to go – Government must bite the
bullet one way or the other.
• Politically, very difficult to remove supplier liability altogether, but clarity would help. Suppliers can then determine the extent of liability, have price negotiations and take out insurance.
• Insurance pools – needs to be created. Presently no nuclear insurance pool in India due to restrictions on inspection of facilities by international pools.
• Contractual negotiations on supplier liability must be encouraged. Can the Indian government contractually waive its right of recourse against a supplier?
• Generation of positive public opinion and detailed engagement with the public.
• Tremendous potential for exploiting Nuclear energy in India. India can be an exporter of reactors. Massive potential yet to be tapped.
• The future – Regional SAARC based cooperation? Proposal by M.P. Ram Mohan, Chairman, Nuclear Law Association, India.
Thank You