India accedes to nuclear suppliers' demand on liability clause

05 February 2016

India has ratified an international convention on nuclear energy accident liability, with the foreign ministry submitting documents ratifying the 'convention of supplementary compensation for nuclear damage', which seeks to establish a uniform global legal regime for the compensation of victims in the event of a nuclear accident.

The move that will drastically curtail supplier's responsibility in addressing risks associated with nuclear projects is expected to lure foreign nuclear suppliers and facilitate foreign invest in a market with immense growth potential.

"This marks a conclusive step in the addressing of issues related to civil nuclear liability in India," the foreign ministry said after the document was handed to the International Atomic Energy Agency in Vienna.

The ratification of the convention on nuclear damage will supplement an insurance pool launched last year with a liability cap of Rs1,500 crore ($225 million) to cover the suppliers' risk of potential liability.

The ratification comes a week after French utility EDF signed a preliminary agreement with Nuclear Power Corp of India Ltd (NPCIL) to build six nuclear reactors at Jaitapur, in Maharashtra.

EDF is taking over the long-delayed project, which could become the world's biggest nuclear contract, from fellow French state-controlled group Areva, which will sell its reactor arm to EDF later this year.

The Jaitapur project is at the preliminary technical studies stage after getting initial environmental clearance in 2010, EDF said in a statement. A contract for pre-engineering studies was signed by Areva and NPCIL last April.

Major nuclear reactor suppliers such as General Electric have been reluctant to set up plants in India because of a 2010 liability law that made equipment suppliers potentially accountable for accidents.

However, since India wanted to ramp up nuclear power capacity to reduce dependence on polluting fossil fuels and because of pressure from major nuclear supplier nations like the US, the Indian government decided to do away with the original liability clause and  instead opt for a softer one.

The government has proposed a ramp-up in the share of nuclear power from a mere 3 per cent at present to 25 per cent by 2050.

The government proposes to construct about 60 nuclear reactors across the country and has been in talks with Westinghouse Electric Co LLC, GE as well as France's Areva for setting them up at select sites.

Separately, Russia is building six reactors in southern India and is in talks for another six.

Nuclear suppliers are looking eagerly at the Indian market, which is estimated at $150 billion, making it the second biggest after China's.

EDF, meanwhile, has also agreed to a partnership between its EDF Energies Nouvelles unit and India's SITAC to build four onshore wind farms with a total capacity of 142 MW in Gujarat by the end of 2016.

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