Dr. E A S Sarma

Former Union Power Secretary, Govt of India

Know more about Dr. Sarma HERE.

While pushing through the Indo-US Nuclear Deal through the Parliament on July 22, 2008, the present UPA government survived a fragile confidence vote by 275-256 votes. There were rumours of UPA adopting a Machiavellian maneuver that led to defections in the Parliament, which finally won the day for the government. Apparently under intense pressure from the USA, Dr. Manmohan Singh had gone to the extent of staking his premiership on getting the deal somehow endorsed by the Parliament. It was ironic that, in a country where every third person lived in sub-human conditions and had no food to eat, the Indo-US nuclear deal should constitute the top-of-the agenda item for its leader!

On October 10, 2008, when India and USA finally inked the nuclear agreement, the UPA government triumphantly claimed credit for providing “energy security” for the country, though, for the first time since Independence, India became captive to imported nuclear reactors and imported fuel, that too, to be purchased through highly non-transparent procedures. Ensuring the profitability of the nuclear MNCs became the primary objective, while the national interest took the back seat. “Externalise the profits; internalise the losses” seemed to be the arch objective of India’s nuclear diplomacy!

As it was to be expected, the western companies who would supply the reactors, soon mounted pressure on the government to insulate them from any liability that might arise in the event of a nuclear accident, if such a liability could be attributed to a deficiency in the design of the reactor or the failure of a sub-standard component in it. After all, if the MNCs were to bear such a liability, it would cut into their profits. The UPA government was quick to appease the MNCs. It was in that context that the government took the next dubious step of pushing through the Civil Liability for Nuclear Damage legislation which received the Parliament’s assent in 2010.

The most crucial part of that Act was Section 6(1) which stipulated a “cap” of 300 million SDR on the liability, which at that time worked out to a ridiculously low figure of Rs.1700 crores. Compare it with the latest estimated liability for Fukushima already exceeding a mind boggling Rs.3,00,000 crores and still going up day after day! The government’s intention could not be anything other than indirectly subsidising the reactor suppliers at the cost of the Indian tax payers. In one go, the UPA government gave a go by to the well established “polluter pays” principle in environment jurisprudence and also set aside all other norms applicable to recovering the cost of liability that imposed huge social and economic costs. Simultaneously, the government also chose to ignore the serious moral hazard element that such a liability cap would introduce to the detriment of the safety of the reactors.

The reactor suppliers were far too shrewd to give up on their maneuvers to extract additional concessions on liability. They knew that they could circumvent the Indian laws whenever and in whatever way they wished. After all, it was they who had successfully created the illusion over the years that India would face a serious energy crisis if it failed to open the floodgates to reactor imports. To displease the nuclear MNCs would be sacrilegious as it would rob India of an excellent opportunity to grow and eliminate poverty! Imported reactors would offer panacea for each and every ailment that India had faced. The Department of Atomic Energy (DAE), while framing the rules under the Civil Liability for Nuclear Damage Act, cleverly introduced clauses that would gladden the hearts of the MNCs. The Rules openly diluted the liability and the period of cover as stipulated in the Act. Anyone with a rudimentary sense of rule making would know that the rules could never transgress the ambit of the Act itself. In the case of the nuclear MNCs, such niceties would be unpalatable.

The reactor suppliers should remind us of an old Arabian proverb, “If the camel once gets his nose in the tent, his body will soon follow.” This is what has now happened to the 6,000 Mwe Mithi Virdi nuclear power project in Gujarat for which the US Secretary of State had recently “stipulated” an agreement deadline of September, 2013. This implied that the Indian Prime Minister should quickly make a firm commitment to his counterpart in the US that NPCIL would purchase nuclear reactors from the US-based Westinghouse Electric and, at the same time, ensure that the company would not have to be bother itself with the irritating requirements of the already diluted provisions of the Rules framed under the Civil Liability for Nuclear Damage Act.

Ever ready to bow down to these external pressures, the UPA government went through the facade of obtaining a “legal opinion” from the Attorney General (AG) on whether it would be permissible for NPCIL (the “operator”) not to exercise the “right of recourse” (as provided under Section 17 of the Act) to the reactor supplier for the liability arising from the compensation paid in the event of a nuclear accident. Having obtained the answers to the leading questions it had posed to the AG, the government thought it could bypass in one go both the Atomic Energy Commission (AEC) and the Atomic Energy Regulatory Board (AERB) and secretly rush through a proposal through the CCEA to direct NPCIL to forego the right conferred on it by the Parliament. There could not be anything more bizarre than this. The objective of this highly contrived maneuver was to insulate the nuclear MNCs from even the tiny fig leaf of a liability that the Act and the Rules provided.

A cursory look at the questions posed by the Ministry of External Affairs (MEA) to the AG (as reported in the Hindu of September 22, 2013) points to the real intentions of that Ministry.

MEA’s questions are extracted below.

Question No.1:

“In the light of the Inter-Governmental Agreement between the governments of India and Russia, will it be legally sustainable to authorise Nuclear Power Corporation of India Ltd. (NPCIL) not to exercise right to recourse under section 17?”

Question No.2:

Whether a decision not to exercise right to recourse u/s 17 can be taken at the stage of signing of Techno Commercial Agreement with Russia?

Question No.3:

Whether it will be prudent to waive the right to recourse in regard to Russia only when section 17 is applicable to all nuclear installations, keeping in view the provisions of Inter-Governmental Agreement with Russia? No such provision exists in the existing pact with other countries,”

Apparently, MEA was trying to link the liability issue for Mithi Virdi and the other nuclear power projects with the Kudankulam case in a brazen attempt to exempt all reactor suppliers from the liability that they would have to bear under the Civil Liability for Nuclear Damage Act.

The AG is a Constitutional authority. When the government chooses to seek his/her opinion, it should invariably be to uphold the public interest, not for promoting private gains. In the instant case, the questions posed by the government fail to fulfill this test. Instead of asking the AG to render opinion on how NPCIL could refrain from exercising its right of recourse, a responsible government would instead have asked the AG to advise it on how best NPCIL could enlarge that right to promote the public interest. It was a typical case of the Parliament empowering the NPCIL and the government trying to disempowering it!

There are a few important considerations that assume importance in this connection.

1. Any attempt on the part of the government to dilute the Civil Liability for Nuclear Damage Act would amount to committing contempt of the Parliament. It should be strongly resisted

2. If NPCIL were to agree to forego its right of recourse in one case, it could not then legitimately resist a similar waiver in the case of the other projects. This would sound the death knell of the Civil Liability for Nuclear Damage Act of 2010.

3. There are two writ petitions pending before Hon’ble Supreme Court on the legality of the Civil Liability for Nuclear Damage Act itself and its applicability to the various nuclear power projects being set up in different parts of the country. It will be highly imprudent and perhaps inappropriate for the government to do anything at this stage to go beyond the existing law and further dilute its application from the point of view of the polluter-pays principle.

4. The nuclear liability Rules transgress the Act itself. The government should be prudent enough to revisit both the Act and the rules and bring them in line with the polluter-pays principle, rather than weakening them further.

5. In its present form, the Act is not strong enough to deter the reactor manufacturers from compromising the safety aspects in the design of the reactors. Considering the continuing impact of the disaster at Fukushima, the government can ill afford anything that will compromise the safety of the reactors. Post-Fukushima, the safety of nuclear power reactors has assumed great importance. India should be wary of this and not cave in to pressures from the MNCs. There cannot be any compromise on safety.

6. The civil nuclear liability regimes in USA (The Price-Anderson Nuclear Industries Indemnity Act), Canada and in other countries have more stringent provisions in regard to the liability to be borne by the reactor suppliers. There is no reason why India should yield to MNCs’ overtures and exempt them from the full liability of a disastrous accident. The government should know that Fukushima has already cost Japan a mind boggling liability exceeding Rs. 3,00,000 crores with the final figure further going up every day. Such accidents have impacts which are not only extensive but also inter-generational. To take the issue of liability lightly would be a costly mistake for India.

7. It will be imprudent on the part of the government to mock at its own laws and regulations just to appease the countries which supply nuclear reactors. The government should know that the regulators in USA and other countries have become extra-cautious in enforcing safety restrictions in their own countries. There is no reason why we should go soft in enforcing our own laws. It will diminish India’s stature as a law abiding democratic state.

8. To circumvent the polluter-pays principle in the case of nuclear power has long-term policy implications and decisions on such issues should be taken in consultation with the people at large.

9. In addition to these questions on liability, while rushing into signing an agreement with the Americans, the government has not bothered to subject the Mithi Virdi project proposal to an economic viability appraisal especially at a time when the Indian rupee has depreciated vis a vis the US dollar and the escalation in the unit cost of nuclear MWes throughout the world. Apparently, the government has been in a hurry to address the wish list of the MNCs without looking at the concerns of the domestic electricity consumers.

There has been a public uproar against the manner in which the government has tried to dilute the liability of the supplier of the reactors for Mithi Virdi. Even at this belated hour, the government will hopefully realise that its decisions on nuclear power should be guided more by public interest than MNC pressures.