India Woos GE, Westinghouse With Cap on Atomic Equipment Supply Liability
India, planning $175 billion of atomic power plants, has capped liability of equipment suppliers in the event of an accident, paving the way for General Electric Co. (GE) and Westinghouse Electric Corp. to supply reactors.
Claims by plant operators against component suppliers “shall in no case exceed the actual amount of compensation” paid by utilities, according to a notification by the Department of Atomic Energy dated Nov. 11 in the Gazette of India, the official record of government rules. No statement accompanied the publication, a copy of which was posted by state-owned Nuclear Power Corp. of India on its website yesterday.
Concerns about the extent of liabilities following three meltdowns at Japan’s Fukushima plant in March, the worst civil atomic accident since Chernobyl in 1986, cast doubt over India’s plan to boost atomic generation 13-fold by 2030. GE, Westinghouse and Areva SA sought changes to a law that allows Nuclear Power Corp. to claim damages from suppliers for equipment defects.
“Capping of liability for suppliers will address their biggest concern,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. This “will help companies like GE and Westinghouse to join the Indian nuclear program.”
The rules give plant operators the right to recourse against equipment suppliers “for not less than the extent of the operator’s liability” or “the value of the contract itself, whichever is less,” according to the notification.
“The Indian government has been as considerate as possible to the nuclear suppliers and they should welcome this,” S.K. Malhotra, a spokesman for the Department of Atomic Energy, said by telephone from Mumbai.
Obama, Singh
The notification came a week before Prime Minister Manmohan Singh’s scheduled meeting with U.S. President Barack Obama during the East Asia Summit in Bali, Indonesia, and brings the Indian government a step closer to ratifying an international convention on global liability standards.
Westinghouse, the U.S.-based nuclear reactor builder owned by Toshiba Corp., will wait for India to ratify the Convention on Supplementary Compensation for Nuclear Damage before offering equipment, Gary T. Urquhart, the company’s vice-president for India, Taiwan and South East Asia, said in a Sept. 30 interview.
U.S. Secretary of State Hillary Clinton urged India in July to amend its nuclear liability law this year to ensure it complies with international accords. The law has made it difficult for U.S. companies to enter the market and is broader than the global agreement in which more than 80 nations agreed to limit compensation claims to operators of atomic plants.
Liability Limit
The Indian law sets a 15 billion rupee ($296 million) cap on payouts by Nuclear Power Corp., the country’s monopoly atomic generator, with the government responsible for damages beyond that. Nuclear Power can seek compensation from suppliers for defective equipment or materials.
Paris-based Areva SA will supply reactors for a 9,900- megawatt project at Jaitapur to be built in stages. India is waiting for French authorities to complete a safety review, Indian Foreign Minister S.M. Krishna said Oct. 20.
“We welcome the publication of the rules, but are still to fully read and understand them,” Patrick Teyssier, marketing and strategy director at Areva’s India unit, said by e-mail today. “We do not wish to comment on the rules for the time being and will comment in due time.”
M.V. Kotwal, president at Larsen & Toubro Ltd. (LT), India’s biggest supplier of nuclear plant components, said the company is yet to study the notification. Nuclear Power Corp. Chairman S.K. Jain didn’t answer six calls and a text message to his mobile phone.
To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net