India-US nuclear deal: big hype, big hoax

10 Feb 2015


Six years after a politically weak Indian government offered to reserve large chunks of land in two states – Andhra Pradesh and Gujarat – for nuclear reactor technology by American multinationals Toshiba-Westinghouse and GE-Hitachi, an even more subservient Narendra Modi government has now offered to do away with all liabilities for equipment suppliers, even in case of disasters.

Instead, Indian consumers will indemnify foreign suppliers for any disaster that may occur. The government has also bent its laws to bar victims from moving courts overseas to seek remedy or compensation in case of an accident.

 Yet the Indian government insists that there will be no extra burden on the consumer and that the additional charges would be minimal.

In return for the US offer to resume nuclear trade with India, ending its nuclear isolation, the then Manmohan Singh government had offered to reserve vast areas of prime land in Mithi Virdi in Gujarat, and Kovvada in Andhra Pradesh for setting up nuclear power plants by the two American multinationals.

Toshiba-Westinghouse was to have built six AP1000 reactors of 1,100 MW each at the Gujarat site, while GE-Hitachi was to set up six units of 1,594 MW each at the Kovvada site.

The technology for the 1,000MW and above reactors is new and perhaps only used in China.

An even more important fact is that the Indian government is doing away with any cost-benefit analysis of projects that are to be implemented by foreign companies – it is costs for India and benefits to foreign companies!

Or else, why should America push for a civil-nuclear deal with India when the US itself has not set up a single nuclear power project over the past 16 years? It is only to save its moribund nuclear manufacturing industry that the US is desperately trying to sell its technology that has not been sought elsewhere.

In the process the Indian government will undermine the country's own nuclear research and make the country a slave of MNCs that supply technology, fuel and spares for the reactors.

Now, as things stand, the two MNCs will be allowed to set up nuclear power stations using new (but unproven) technologies; and the government - through state-owned operator Nuclear Power Corporation of India - will bear the liability for any possible disaster.

Damage claims for accidents could run into billions and even trillions of dollars, considering the costs of relocation and rehabilitation, environmental remediation and lost trade due to contaminated agricultural and marine produce. But the Modi government has happily agreed to bear it for Toshiba-Westinghouse and GE-Hitachi.

The US, however, was 'magnanimous', and the Obama government has agreed to waive a specious US law that requires tracking by US authorities of nuclear supplies made to countries like India – an intrusive law that goes beyond International Atomic Energy Agency verification.

Under the Indo-US civil nuclear deal signed in 2008, India had even agreed to separate its civilian and military nuclear activity and open up the civilian part to inspection by the IAEA, as the US law demands.

However, India's move to fix liability for losses had held up operation of the Indo-US deal, for American equipment supplier companies will not accept even limited liability for any damages their technology or equipment could cause as the Indian law demands.

The Indian laws are, however, meek and in case of damage claims - the Nuclear Liability Act limits supplier liability to Rs1,500 crore or the value of the contract, whichever is less. While the Act provides for compensation of up to Rs2,610 crore, the additional amount of Rs1,110 crore has to come from the central government.

There is yet another catch. Under Section 17 of the Indian Civil Liability for Nuclear Damages Act, only the operator can sue, and that too only if such a provision is expressly made in the contract.

Reports say the government is contemplating a Rs1,500-crore kitty pooled by state-run General Insurance Corporation of India and some public sector companies. However, irrespective of whether the plant blows up or not the surcharge on the consumer will continue.

But American, and even Indian, private equipment suppliers see the Indian law as a threat and want even the limited liability clause abrogated. They have challenged the constitutional validity of the Act before the Supreme Court.

A study released in 2014 by researchers from Ritsumeikan University and Osaka City University had estimated the overall cost of Fukushima disaster at around $105 billion. Belarus, which was worst hit by the Chernobyl disaster, is estimated to have spent at least $235 billion over the last 30 years on relief, rehabilitation and clean-up.

Against this, gains that American companies hope to reap from the Indian nuclear market may be less than $100 billion.

The Indian Nuclear Liability Act provides for two-part recourse against nuclear equipment suppliers if the nuclear plant blows up. But the Act is not India's invention. Several countries, including Japan, Austria, Switzerland and Germany, have even tougher laws offering unlimited liability for nuclear damages.

While a true India-US partnership has the potential to be worth $1 trillion by 2030 through a mix of information technology, smart goods and infrastructure collaboration and even nuclear and other renewable energy cooperation, the US administration's fancy for markets and its excessive dependence on industry for trade policy formulation only hazards bilateral economic relations.

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