Indo-US Nuclear Deal - Some Thoughts

The much touted Indo-US Nuclear Deal signed by the Manmohan Singh government  in 2005, was stuck because while India gave the operator the right to make supplier liable in the case of nuclear disaster, Washington raised the demand for tracking the US nuclear material in the Indian programme which amounted to bilateral safeguards that were not envisaged in the India-US agreement. Japan raised the same demand which stalled the possibility of stitching up an agreement ahead of PM Modi’s visit to Tokyo last year.

It is in this backdrop that PM Modi and President Obama set up a contact group consisting of – representatives of two American companies GE and Westinghouse, and from the Indian side the officials from the law ministry, Nuclear Power Corporation of India Ltd (NPCIL), Department of Atomic Energy (DAE), and Foreign Ministry were represented.

The key fallout of the agreement reached by this group was that - while the Indian side dropped its insistence that the supplier of a reactor would not be held liable in the case of a nuclear disaster, the US administration let off its insistence on the issue of tracking nuclear material and agreeing to obtain data from the IAEA.

The resolution of the nuclear liability issue had its impact across the board with the US agreeing to speed up the process of securing India membership of the four technology control regimes – Nuclear Suppliers Group, Missile Technology Control Regime, Wassenaar arrangement, and the Australia Group.

Undoubtedly, besides the US, India can now look forward to cooperation and bilateral arrangements on atomic energy with other important nations such as Japan, Australia, and Russia etc. Not to ignore the fact that by securing the above coveted technology control regimes, India would be able to access the latest technology on these areas which would be in our long term strategic interests.

Considered in isolation, this deal is indeed a boon for India, as not only do we get access to the technology for meeting the demands of clean energy which is environmentally friendly, but it also ends our technological isolation which dates back to 1974 ever since we conducted the Pokhran explosion and declared ourselves to be a nuclear state. And all this despite we not being a signatory to the Non-Proliferation Treaty, which has been a major stumbling block to  our official entry in the Global Nuclear Club.

                              

But sadly enough, we have been the tragic victims of the world’s biggest industrial disaster in Bhopal some three decades ago, and to compound our worries, the tragedies of Chernobyl and more recently Fukushima which revived the memories of the nuclear holocaust in Japan during the second world war, have only strengthened the voices of the anti-nuclear lobby in our country.

While industrial accidents though best wished away, are indeed grim realities, which cannot be ignored. Thus, some aspects of this arrangement reached with the US recently, deserve attention:

• The major responsibility and liability in the case of nuclear disaster rests with the operator which is NPCIL, a PSU that is owned by the Government of India or indirectly by we the taxpayers of India. Not surprisingly, the annual premium payable by NPCIL for all its 21 reactors has been pegged at Rest 90 crores or more than Rs 4 crores per reactor. In contrast the suppliers such as GE and Westinghouse have to shell out Rs 1 to Rs 3 crores per reactor. Thus major liability has been shifted to NPCIL
• The Rs 1500 crores worth insurance pool has been created in which the insurance PSUs contribute Rs 750 crores and Government of India the rest. Thus, indirectly again, we taxpayers are financing this entire insurance pool,
• The liability provisions will kick in only if the damage spreads beyond 1.6 km of the reactor. Thus, who shall be liable in case the damage is well contained within 1.6 km? Of course no one else other than NPCIL,
• It was agreed by the contact group that a distinction would be drawn between a supplier and a fabricator. When an operator places an order specifying the design, material to be used, and all relevant technical specifications, the firm executing the order will not be considered a supplier but a fabricator. By definition, therefore, fabricators will not be liable under the law. Experts say most NPCIL contracts would fall under this category. Given zero liability for such fabricators, what would be the compelling reasons for them to ensure zero defect reactors built with the state of art technology? Our government should mandate the elimination of fabricators and instead insist upon direct business deals with the suppliers. Furthermore, before placing orders for reactors, a joint team of NPCIL and DAE officials should insist upon foolproof safeguards in those reactors taking note of the Chernobyl and Fukushima disasters besides enlightening themselves of all the possible loopholes which can be hazardous/dangerous.
• From a commercial perspective, it would be well within the business interests of suppliers like GE and Westinghouse to handhold NPCIL where the operations of its reactors are concerned. Particularly, they could place their experts at the NPCIL sites where their reactors are deployed.
• And above all, a detailed and meticulous preventive maintenance and monitoring plan needs to be worked out jointly by the suppliers  of the reactors as well as NPCIL and DAE in consultation with the IAEA to prevent even a minor incident which can raise eyebrows out here, as well as in the rest of the world, with regard to the desirability of the nuclear energy.

As a footnote, it cannot be overlooked that despite the convincing arguments put up by the opponents of nuclear energy, we just can’t wish away nuclear energy as a major source of clean energy, besides the desirability of us being an official member of latest technology regime, something which has been denied to us for four decades.