Thursday, June 9, 2016

Nuclear Energy is a Racket and India's Nuclear Liability Limits are a Joke

Having given nuclear firms limited liability for their designs, India pushes ahead the nuclear agenda.

In 2015 the US helped India develop a plan for a $122 million insurance pool to "shield affected operators and suppliers":
Obama, Modi Move Closer With Nuclear Liability Breakthrough

[excerpted] We think we came to an understanding of the liability” issue, U.S. Ambassador Richard Verma said. The deal “now opens the door for U.S. and other companies to come forward and help India develop its nuclear, non-carbon-based energy production.”

Insurance Pool

India plans to establish a 7.5 billion ($122 million) insurance pool to shield affected operators and suppliers, according to Amandeep Singh Gill, joint secretary of disarmament in the foreign ministry. The government would provide more at a later date “on a tapering basis,” he added.

It remains unclear what would happen if unlimited claims come in the wake of a disaster, according to Debasish Mishra, Mumbai-based partner at Deloitte Touche Tohmatsu... [end] 

Majia here: the Financial Times reported recently that Japan's taxpayers have already assumed $100 billion in costs associated with the Fukushima disaster:
Robin Harding. March 6, 2016. Japan taxpayers foot $100bn bill for Fukushima disaster. The Financial Times,

The Fukushima nuclear disaster has cost Japanese taxpayers almost $100bn despite government claims Tokyo Electric is footing the bill, according to calculations by the Financial Times. ... the public have shouldered most of the disaster’s cost.

It highlights the difficulty of holding a private company to account for the immense expense of nuclear accidents — a concern for countries such as the UK that are building new nuclear power stations. The Financial Times used Ritsumeikan University professor Kenichi Oshima’s estimate that the disaster has cost Y13.3tn ($118bn) to date relative to the loss of equity value for Tepco shareholders.“The underlying cost is mainly being paid by the public, either through electricity bills or as tax,” said Mr Oshima.
India's $122 million insurance pool is a drop in that $118 billion bucket.  But freed from direct liability, US and Japanese nuclear companies are ready for business in the country.

According to the Wall Street Journal, the Nuclear Power Corporation of India and Westinghouse Electric (a US unit of Toshiba corporation) will start engineering and site-design work on reactors, although the final details of the contract won't be completed until June 2017.
Carol E. Lee and William Mauldin (June 8 2016). Obama, Modi Advance Nuclear Project. The Wall Street Journal, A9. 

The apparent sticking point in the final contract concerns India's 2010 nuclear liability law. The World Nuclear Association offers this explanation of the law:
World Nuclear Association. Nuclear Power in India (Updated May 2016)

The 2010 Act places responsibility for any nuclear accident with the operator, as is standard internationally, and limits total liability to 300 million SDR (about US$ 450 million) "or such higher amount that the Central Government may specify by notification". Operator liability is capped at Rs 1500 crore (15 billion rupees, about US$ 285 million) or such higher amount that the Central Government may notify, beyond which the Central Government is liable.

However, after compensation has been paid by the operator (or its insurers), clause 17(b) of the bill allows the operator to have legal recourse to the supplier for up to 80 years after the plant starts up if in the opinion of an Indian court the "nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services." This clause giving recourse to the supplier for an operational plant is contrary to international conventions and undermines the channeling principle fundamental to nuclear liability internationally. Also, no limit is set on suppliers' liability. The supplier community interpreted this provision as ambiguous and one that rendered it vulnerable to open-ended liability claims. A new explanation seeks to address it by relating Section 17(b) to ‘actions and matters such as product liability stipulations/conditions or service contracts’ between the operator and the supplier and therefore to be dealt with in the context of such contractual terms. The attempt is to remove the open-ended nature of possible liability claims by limiting these to the terms and conditions of the contract.

A second sticking point was Section 46 which stated that the provisions of the Act ‘were in addition to, and not in derogation of, any other law for the time being in force’, leading to concerns among the suppliers that they could be subjected to multiple and concurrent liability claims. This is sought to be addressed by explaining that all civil claims can only be brought under the Act since that was the intention behind this special legislation and further, that these claims would come under the jurisdiction of the specially constituted Claims Commission, thereby excluding any jurisdiction of foreign courts. And arguably clause 46 of the Act reinforces operator liability. 
Clearly, Japanese and American nuclear interests want to cap liability entirely and prevent any supplier liability.

What a racket! Unsafe technology is granted limited liability at a fraction of the measurable economic costs of the most recent nuclear disaster.

Today's Images of that Most Recent of Disasters