'MEA's Details on Nuclear Liability Act Unsatisfactory'

Published: 11th February 2015 06:00 AM  |   Last Updated: 11th February 2015 02:37 PM   |  A+A-

NEW DELHI: Indian suppliers are not fully satisfied by the additional details provided by Ministry of External Affairs on the nuclear liability act, asserting that it doesn’t provide enough clarity and requires Nuclear Power Corporation of India Limited to step in and throw more light on the grey areas before the stalled train of nuclear commerce can chug forward.

On Sunday, the MEA released as a set of 19 Frequently Asked Questions (FAQs) on the ‘understanding’ reached by India and US over the application of nuclear liability act – essentially concluding that the domestic act was in compliance with the IAEA’s Convention for Supplementary Compensation for Nuclear Damage.

The ‘breakthrough’ in implementing the India-US civil nuclear deal was announced by the Indian Prime Minister Narendra Modi and US president Barack Obama standing side-by-side.

Speaking to Express, the managing director and chief executive officer of Walchandnagar industries, GK Pillai said that that FAQs were not enough for his company to re-start negotiations for supplying equipment to build NPCIL’s reactor.

“No, I don’t think so. The answers (FAQs) have been drafted for foreign companies,” said Pillai, whose company is one of the oldest Indian firm in the domestic nuclear industry, supplying heat exchangers and Calandria for NPCIL-designed reactors.

He pointed out that there was only mention of domestic suppliers in context of concerns raised over definition of ‘supplier’, controversial section 46 and the creation of the nuclear insurance pool.

Domestic suppliers were earlier exempt from liability as per the contract conditions with NPCIL, before the passage of the civil liability for nuclear damage act was passed in 2010.

Since then, Walchandnagar, along with other players in the domestic nuclear industry like Larsen and Toubro and Godrej have stalled the construction of new power plants, like the Gorakhpur power project with no contracts signed under the new acts.

India has ambitious plans to generate 62,000 MW from nuclear energy within 20 years, but this target is was in doubt after the passage of the 2010 act.

Pillai noted that Indian suppliers were unfairly penalized by the CLND act, as they were making equipment based entirely on the design and specification of NPCIL, which also conducted inspections. “Basically, we are subcontractors,” he said. The foreign firms like Westinghouse, GE and Areva were however trying to sell their own patented and designed reactors.

Pillai noted that definition of supplier as mentioned in the FAQs is not good enough. “The third clause in the definition says that a supplier provides quality assurance or design services.. But, in case of NPCIL, we are just manufacturing to specification, with the inspections even taken care. So, it is still vague,” he said.

Two days after the publication of the FAQs, Walchandnagar wrote to NPCIL on Tuesday asking for further clarification. “FAQs don’t really help. NPCIL has to take the call,” he said.

This was also echoed by Larsen and Toubro’s Director & President (Heavy Engineering) MV Kotwal who said that confirmation will be sought from NPCIL soon. “They will hopefully give us a clarification separately or when the tenders are released.” Kotwal told Express.

He said that there were still lingering doubts about the three main issues, which were mentioned in the MEA’s FAQs. “It says that the proposed nuclear insurance pool would be available to both operator and supplier, which is good. But, we need more clarity on the terms and policies,” he said.

The FAQs clarify that section 46 of the CLND Act applies only to operators, not to suppliers.

The argument is made on the basis of “intent” of the parliament, as it rejected two amendments to introduce the word ‘supplier’ in this section. “It sounds logical, and I hope it is legally acceptable” he said.

Further, L&T’s Kotwal said that the FAQs support Rule 24 of the CLND rules, which allows a cap on the liability for suppliers. “There have been arguments from some quarters that the courts may not uphold a clause if it goes against the intent of the parliament when it enacted the legislation. So, we need to know if this is legally tenable,” he said.

The Larsen and Toubro director reiterated that the next step will need to be taken by NPCIL. “I am optimistic, but NPCIL should give necessary clarifications so that it allows us to move forward quickly,” he said.

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