India Signs International Nuclear Liability Accord That May Ease GE Entry
India signed an international nuclear liability accord that aims to shield technology suppliers from damages in the event of an accident, protection that companies including General Electric Co. don’t have under new domestic laws.
“Signing the convention will benefit India,” Swapnesh Kumar Malhotra, spokesman for India’s Department of Atomic Energy, said by phone from the eastern city of Kolkata after the pact was initialed in Vienna. “Even if ratification takes a while, business can go on.”
India becomes a signatory to the Convention on Supplementary Compensation for Nuclear Damage 10 days before U.S. President Barack Obama visits the country. U.S. technology suppliers wanted India to join the pact, which needs to be ratified by one more major nuclear-power generating nation to take effect, as a move that may brighten prospects for them to grab contracts in the South Asian country’s $175 billion atomic- energy market.
Indian lawmakers in August passed the Civil Liability for Nuclear Damage Bill that allows the nation’s monopoly nuclear operator to seek compensation from technology providers if faulty equipment triggered a reactor accident. That’s broader than a 1997 framework -- that includes the convention signed by India today -- in which more than 80 nations agreed to limit compensation claims to operators.
“Americans have an issue with current Indian arrangements on liability,” A.V. Kameswara Rao, executive director at PricewaterhouseCoopers Pvt., which advises companies in the nuclear energy business, said by phone. “But as far as India is concerned, there is a strong case for supplier liability as well.”
Today’s signing will not be “of much help” in determining the extent of liability in India without a “political signal” from the government, Rao said.
Ratification
India’s decision to join the convention will help provide “affordable and clean electricity for the people of India,” U.S. Ambassador to New Delhi Timothy J. Roemer said today.
In May 2008, the U.S. became only the fourth country to ratify the treaty; the others are Argentina, Morocco and Romania. At least one other country, such as Japan, that meets a required minimum of nuclear power output must ratify the accord for it to go into effect. India’s backing alone wouldn’t be enough because the country doesn’t have sufficient current generation capacity to reach the threshold.
The government headed by Prime Minister Manmohan Singh’s ruling Congress Party, which lacks a majority in parliament, had to insert a clause to allow compensation claims against suppliers to gain enough votes to pass the liability bill.
Under the convention, reactor operators must set aside about $450 million for compensation, and governments that sign the treaty must cover additional claims.
India needs suppliers including GE Hitachi Nuclear Energy and Westinghouse Electric Co. to meet its target of boosting nuclear power generation 13-fold by 2030 to drive economic growth.
To contact the reporter on this story: Archana Chaudhary in New Delhi at achaudhary@bloomberg.net
To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net
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