India looks to sway Americans with nuclear power insurance plan

Walchandnagar Industries

19/12/2014 14:16

* India looking to get around strict liability law 
    * Foreign nuclear suppliers wary of entering market 
    * Insurance pool "encouraging signal" - Areva 
    * Initiative comes ahead of Obama's January visit 
 
    By Tommy Wilkes and Sanjeev Miglani 
    NEW DELHI, Dec 19 (Reuters) - India is offering to set up an 
insurance pool to indemnify global nuclear suppliers against 
liability in the case of a nuclear accident, in a bid to unblock 
billions of dollars in trade held up by concerns over exposure 
to risk. 
    Prime Minister Narendra Modi's government is hoping the plan 
will be enough to convince major U.S. companies such as General 
Electric  GE.N  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. 
    India's national law grew out of the 1984 Bhopal gas 
disaster, the world's deadliest industrial accident, at a 
factory owned by U.S. multinational Union Carbide Corp which 
Indian families are still pursuing for compensation. 
    The law effectively shut out Western companies from a huge 
market, as energy-starved India seeks to ramp up nuclear power 
generation by 13 times, and also strained U.S.-Indian relations 
since they reached a deal on nuclear cooperation in 2008. 
    GE-Hitachi, an alliance between the U.S. and Japanese firms, 
Toshiba's  6502.T  Westinghouse Electric Company and France's 
Areva  AREVA.PA  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. 
    Even Indian suppliers refused to sell equipment until the 
law is amended or they can be sure they are indemnified against 
any liabilities. 
    "We are working fast to address the concerns of suppliers. 
We are working on a solution with the insurance companies," R.K. 
Sinha, Chairman of India's Atomic Energy Commission, told 
Reuters. 
     
    "ENCOURAGING SIGNAL" 
    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. 
    India wants to generate 62,000 megawatts from nuclear 
sources within two decades from the current level of 4,780 
megawatts, even as other countries shift away from nuclear 
energy following Japan's Fukushima disaster. 
    GE declined to comment on the Indian proposal to offer 
insurance cover. Westinghouse said it needed more information 
before it could comment. 
    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. 
     
    RUSSIA MUSCLING IN 
    One Indian company said it was ready to return to the 2,800 
megawatt Gorakhpur nuclear power project in the northern state 
of Haryana it abandoned, once the insurance cover is in place.  
    The insurance scheme would convince Walchandnagar Industries 
Ltd  WALC.NS , which makes heat exchangers for reactors, to 
restart supplying equipment for Gorakhpur, managing director and 
CEO G.K. Pillai told Reuters. 
    Moves to win over the Americans coincide with Russia's push  
to build more nuclear reactors in India.  
    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.  ID:nL3N0TV2PH  
    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 U.S. 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. 
    The group is meeting again early next month, before Obama 
arrives, to move the discussion forward. 
    Creating the insurance scheme to help projects get off the 
ground is GIC's "top priority", chairman Ashok Kumar Roy said in 
an email, although he cautioned that the timing, coverage and 
level of participation were yet to be finalised. 
 
 (Editing by Mike Collett-White) 
 ((thomas.wilkes@thomsonreuters.com; +91 114 178 1030; Reuters 
Messaging: thomas.wilkes.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA NUCLEAR/