Liability bill hits roadblock in India

India Civil Nuclear Liability Bill faces parliamentary deadlock over compensation, liability caps, and supplier responsibility, amid Bhopal disaster fallout; impacting GE, Westinghouse, Areva, reactor projects, insurance premiums, and the U.S.-India nuclear energy agreement.

India's parliament is deadlocked over a bill that would limit how much foreign companies would pay to victims of a nuclear accident, as the U.S. and India move forward with a deal to help produce atomic energy in the subcontinent's growing economy.

The deadlock has pitted nuclear-power supporters in Asia's third-largest economy against lawmakers who are demanding more compensation for potential victims in the wake of this year's Bhopal-accident trial.

India's $150-billion-a-year civilian nuclear-power market hangs in the balance as lawmakers debate whether to pass the nuclear deal and liability bill. General Electric Co. and Westinghouse Electric Corp., as well as France's Areva Group, are among the foreign energy suppliers that stand to gain a share of India's nuclear business.

Parliament's science and technology panel was to have issued a report on the atomic bill, but that report was delayed due to protests by the Indian government's main opposition group, the Hindu-nationalist Bharatiya Janata Party BJP.

"We have not arrived at a consensus yet. It cannot be rushed. It should be guided by national priority. A number of issues have to be addressed," BJP leader Yashwant Singh said Wednesday after meeting with other party leaders and Indian Finance Minister Pranab Mukherjee on the legislation.

The BJP has said the bill, known as "The Civil Liability for Nuclear Damage Bill 2010," was hastily introduced by the ruling United Progressive Alliance under pressure from the U.S. government amid a reactor controversy and would provide scant compensation for victims of a nuclear accident.

Additional opposition to the bill comes from India's communists, who withdrew their support for the government in 2008 over its nuclear deal with the U.S.

If India's government rewrites the bill to appease opponents, foreign companies likely would pay higher insurance premiums against possible industrial disasters.

Under the current legislation, the liability of foreign companies helping provide nuclear power would be capped at $450 million in the event of an accident. In addition, the operator of a nuclear power plant, not its supplier, would be held liable for damages.

All nuclear-power plants in India are state-controlled and -operated, meaning that an Indian state government would have to compensate accident victims - not a multinational corporation.

"In the context of only the public sector being allowed in India to operate nuclear plants, there does not seem to be any relevance of the bill," said Ravi Shankar Prasad, another BJP leader.

"If [the bill] is designed to safeguard the interest of an American supplier of a nuclear power plant, then there has to be adequate provisions for proper compensation and criminal liability in case of any accident," he added.

India's hard-line communists, known for their historical opposition to U.S. corporations, said the bill would exempt energy suppliers from virtually any liability to accident victims.

"What Westinghouse and General Electric want is that even the limited liability which accrued to Union Carbide in the case of Bhopal gas leak should not fall on them," said Prakash Karat, chief of the Communist Party of India-Marxist CPI-M, the country's largest leftist group.

He was referring to the 1984 Bhopal accident in which 15,000 people were killed and 500,000 injured when a toxic cloud was released from a chemical plant operated by an Indian subsidiary of the Union Carbide Corp. - the world's most deadly industrial accident.

In 1989, Union Carbide paid the Indian government $470 million as a settlement in the case.

In June, more than two decades after the accident, an Indian court convicted seven former managers of the subsidiary of negligent homicide. They each were sentenced to two years in prison and fined the equivalent of $2,175. The subsidiary, Union Carbide India Ltd., was fined about $10,870.

"If there are lessons to be learned from the tragic episode of Bhopal, it is that there should be strict laws which will assign civil liability and ensure that criminal liability is also pinned down. There can be no compromise with the lives and safety of the Indian people," Mr. Karat said.

In 2008, President George W. Bush and Indian Prime Minister Manmohan Singh signed the U.S.-India Civil Nuclear Cooperation Initiative.

Under the agreement, the U.S. would end its nuclear trade ban on India, and India would open its commercial nuclear-power facilities to international IAEA inspectors. The U.S. imposed the ban in 1974 after India conducted a nuclear test and refused to sign the international nuclear Non-Proliferation Treaty.

For the agreement to become effective, India's Parliament must approve a liability bill to implement the nuclear deal that complies with the Convention on Supplementary Compensation for Nuclear Damage.

Late last month, the Obama administration, after U.S. nuclear deal approval moved forward, signed an agreement governing the reprocessing of nuclear fuel in India.

Related News

• Electricity Forum News

• Energy Policy News