Discussions with Russians on the net price for Kudankulam 3 & 4 are in final stages

The impasse in setting up new nuclear reactors in India due to the Nuclear Liability Act could end soon with India and Russia in the final stages of finalising a cost mark-up to cover the additional insurance burden that suppliers must bear as a result of the new law.

The Civil Liability for Nuclear Damages Act 2010 makes suppliers liable in case of an accident, both through the section giving operators a right of recourse against them (section 17) in the event of faulty equipment or design, and through normal tort law (section 46).

American, French and Russian suppliers, assured by New Delhi of lucrative orders for power reactors, have baulked at these two sections of the liability law. They claim it would be difficult for them to go ahead with the setting up of nuclear reactors because of the additional financial liability due to the higher insurance premia.

“Discussions with the Russians on the net price for Kudankulam 3 & 4 are in the final stages. We are working out how the Nuclear Liability Act plays on the price. There will be some change in the price and negotiations are nearing conclusion,'' official sources told The Hindu. They declined to spell out the quantum of additional costs or the percentage increase in the price of the proposed Russian origin reactors at Kudankulam.

India has identified `nuclear parks' for reactors originating from Russia, France and the U.S. after these countries played a pivotal role in ensuring a special exemption for India at the Nuclear Suppliers Group (NSG), which prohibits its members from selling nuclear equipment to countries that do not allow international inspections over all their nuclear installations.

Prime Minister Manmohan Singh had discussed this issue with Russian President Dmitry Medvedev at the BRICS (Brazil, Russia, India, China and South Africa) summit in China in April and they had agreed to speed up discussions since both countries had no other issues apart from the nuclear liability law hindering progress, unlike France and the U.S.

The French company, Areva, cannot go ahead with its plans due to India's inability to ink a civil nuclear agreement with Japan. Areva, as well as GE from the U.S., depend on Japan Steel Works (JSW) for reactors pressure vessels. The US companies too have Japanese equity in their civil nuclear ventures and cannot go ahead without an Indo-Japan civil nuclear pact, even if the nuclear liability issue is sorted out.

However, to get around this problem, officials hope that the South Korean Doosan Heavy Industries and a U.K. based company would be able to step in for Japanese companies if the civil nuclear pact with Japan remains elusive.

But till then, the Russians will remain in the lead. They have sorted out the safety issues and India's largest ever nuclear reactor, Kudankulam-I, based on Russian technology, is likely to go critical in the next few months. This reactor will be followed by another Russian reactor going critical at an adjoining site.

On the other hand, the political uncertainty in Tokyo in the wake of the Fukushima nuclear plant accident has dimmed the chances of a quick end to negotiations on a India-Japan civil nuclear agreement.

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