Power-hungry India suggests liability pool for nuclear damage: report

India has offered to set up an insurance pool to indemnify global nuclear suppliers against liability in case of a nuclear accident in a bid to unblock billions of dollars held up by US investors over concerns of exposure to risk.

Nuclear Power PlantAccording to a Reuters report, the Narendra Modi-led government is hoping the plan will convince major US companies such as General Electric to enter the Indian market ahead of President Barack Obama's visit at the end of next month.

Under a 2010 nuclear liability law, nuclear equipment suppliers are liable for damages from an accident, which companies say is a sharp deviation from international norms that put the onus on the operator to maintain safety.

From the 1950s, when the United States was the only exporter of nuclear reactors, liability has been channeled to plant operators across the world.

GE-Hitachi, an alliance between US and Japanese firms, Toshiba's Westinghouse Electric Company and France's Areva have received a green light to build two reactors each. They have yet to begin construction several years later, according to India's Department of Atomic Energy.

"We are working fast to address the concerns of suppliers. We are working on a solution with the insurance companies," Reuters quoted R K Sinha, chairman of India's Atomic Energy Commission, as saying.

State-run reinsurer GIC Re is preparing a proposal to build a "nuclear insurance pool" that would indemnify the third-party suppliers against liabilities they would face in the case of an accident.

Under the plan, insurance would be bought by the companies contracted to build the nuclear reactors who would then recoup the cost by charging more for their services. Alternatively, state-run operator Nuclear Power Corporation of India (NPCIL) would take out insurance on behalf of these companies.

Sinha said New Delhi believed the insurance plan was the best option given how tricky changing the law would prove, and that the proposal should be ready within the next two months.

Details of the plan have yet to be thrashed out, and Sinha said the government was considering how it would better capitalise NPCIL.

Areva said in a statement that the creation of an insurance pool was an "encouraging signal", and that the government appeared committed to working out a comprehensive solution soon.

However, India's nuclear liability regime remained open to interpretation and an Areva spokeswoman said the company needed more clarification to make the legal framework acceptable.

Earlier this month, during President Vladimir Putin's visit, Russia's state-owned Rosatom said it would supply 12 nuclear energy reactors for India over 20 years, following two it has already built in the south of the country.

G Balachandran, one of India's foremost nuclear affairs experts, said Russia appears to believe it can operate with the existing nuclear liabilities law without suffering a loss.

This week US and Indian nuclear affairs officials, as well as representatives from the NPCIL Ltd, Westinghouse and GE-Hitachi met to advance implementation of the nuclear deal, an Indian foreign ministry official said.