Time to untangle the nuclear knot

Considerable excitement has been generated by the Budget announcement that the government is launching the Nuclear Energy Mission, with the ambitious target of generating 100 gigawatts (GW) of nuclear power by 2047 as against the current capacity of 8,180 megawatts (MW). There will be a special focus on research and development of Small Modular Reactors (SMRs) with capacities ranging from 30 to 300 MW.

The Budget states that to facilitate implementation, amendments to the Atomic Energy Act, 1962, and the Civil Liability for Nuclear Damage (CLND) Act, 2010, will be taken up by Parliament. One such amendment may open the nuclear energy domain to private sector investment and operation. This will be important for the promotion of SMRs. This may have led to the recent decision by the US Department of Energy to permit Holtec, a power equipment company, to pursue nuclear business in India. Holtec is a leading promoter of SMRs and may undertake their establishment in India in collaboration with Indian public and private entities.

More problematic will be amending the CLND Act, which discourages both foreign and private investment in India’s nuclear power sector. It is a sorry saga of partisan politics tying up a simple enabling domestic legislation into knots. It was deliberately misinterpreted to frustrate the implementation of the Indo-US civil nuclear cooperation initiative, which had been successfully concluded in 2008. The CNLD had nothing to do with the nuclear deal. Its origins lie in the aftermath of the 1986 Chernobyl nuclear disaster in Ukraine, then part of the Soviet Union, which resulted in large-scale damage to life and property beyond the territory of the state concerned. There was a delay in the distribution of relief and assistance to victims, even as responsibility for the accident was being established.

During several rounds of discussions at the International Atomic Energy Agency (IAEA) subsequently, it was agreed that there should be an International Supplementary Civil Nuclear Liability Convention, which would maintain a funding pool, with contributions by member countries, which would supplement the relief that would be distributed by the state in which the nuclear accident had occurred. To join this Convention and access this supplementary fund, member states had to pass enabling domestic legislation which would have two key provisions. One, it would channel all liability for the distribution of relief to the operator of the nuclear facility. The operator alone would bear legal liability, but without imputation of any blame for the incident. Two, the relief would have to be a minimum of Special Drawing Rights (SDR) of 300 million.

Having such domestic legislation in place would entitle the state where the accident would have occurred to draw SDR 300 million additionally from the international pool. The operator would be expected to take out an insurance policy to cover its financial liability for this amount, with the premium added to the tariff it would charge on the supply of power. This consensus was reached in 1997, much before the Indo-US nuclear deal was even envisaged in any form. There was no link with this deal, though the US and other nations with significant nuclear capabilities wanted partner countries to become signatories to the Convention, making it a universal norm. Confusion was created by interpreting the clause relating to the financial liability of the operator as exempting suppliers or designers from responsibility for any accident due to equipment failure or design defects. But such liability is invariably covered in commercial contracts, as has been the practice, for example, in deals signed by National Power Corporation of India Limited with Soviet and later Russian entities.

When the controversy over the liability issue erupted in Parliament in 2009-10, I was in the Prime Minister’s Office as Special Envoy for Nuclear Affairs. I tried repeatedly to explain the correct position and suggested a statement in Parliament setting this out. But this did not happen. Worse, a completely erroneous parallel was drawn with the Bhopal gas tragedy of 1984 where assistance to victims affected by a toxic gas leak from a Union Carbide chemical plant had been delayed and was grossly inadequate. The CLND, as originally conceived, would have precisely mitigated a Bhopal-like tragedy by making relief available to victims immediately, even while the incident was being investigated to fix responsibility.

The CNLD legislation, as finally passed, tied us in a Gordian knot that has dissuaded Indian and foreign partners, private and public, from participating in the ambitious plans for expansion of nuclear power which were anticipated in the wake of the nuclear deal.

The Russians declined to be governed by the provisions of the CNLD for the Kudankulam reactors they are installing currently. In the India-Russia agreement on Kudankulam, the Government of India has, in effect, explicitly indemnified the Russian side against any liability arising out of a nuclear accident during construction, operation or transit of nuclear material.

The exception made for Russia is sought to be generalised for other foreign entities, such as those from the US and France, which signed MoUs with India for the setting up of several high-capacity reactors after the conclusion of the Indo-US nuclear deal in 2008 and which have not been implemented so far. Rather than concede to this demand, it would be better if the current CNLD Act is replaced by a simple legislative instrument, as originally envisaged in the consensus reached at the IAEA in 1997. This will cut the Gordian knot once for all and open the door to much expanded civil nuclear energy cooperation with partner countries, including in the new domain of SMRs. One cannot see how the target of 100 GW of nuclear power by 2047 could be pursued unless a bold and decisive action is taken in this regard.

The current government has a parliamentary majority and a decisive leadership that make such an initiative achievable.