Liability-shiability absurdity

Liberalise the nuclear power industry!

It is painfully hard to watch the ongoing drama over civil nuclear liability. So much is the political class—from the UPA government to the opposition BJP—engrossed in lawyerly detail, so much has the Congress party abandoned the idea of economic reforms which Manmohan Singh was once famous for, that the biggest policy issue is not even being debated.

That issue is the full liberalisation of the nuclear power sector. There is no good reason why only state-owned (or majority state-owned) enterprises should operate the engines that make electricity from uranium. Instead of quibbling over whether or not to limit liability to operators or to extend it to their suppliers, the political class and the strategic analysts who advise them should be setting their sights on amending the Atomic Energy Act to liberalise the sector and allow for a neutral regulator to supervise them.

During the thick of the debate over the India-US nuclear deal, this blog had argued that liberalising the nuclear power industry is necessary, and that the nuclear deal is an opportunity to accomplish that task. Instead, both the government and the opposition have tied themselves in a legalistic bind over the irrelevant issue of supplier liability.

Irrelevant? Largely, yes. Because in a liberalised environment, all the government needs to do is hold the operator liable, and leave it to the operator to decide how it wants to cover its liabilities.

Related Link: PRS Legislative Research’s M R Madhavan’s brief on the civil nuclear liability bill, in Pragati

My op-ed in Mint: Don’t lose sleep over reprocessing

And anyway, the United States just confirmed that it won’t block ENR technology transfers to India

Image: Jayachandran/Mint (Copyright © 2009. Mint)
Image: Jayachandran/Mint (Copyright © 2009. Mint)

In today’s Mint, I argue that the anxiety over the G-8 statement on restricting transfers of enrichment and reprocessing (ENR) technologies is unwarranted.

It might be that the Obama administration’s prejudices make it less sensitive to its own need to strengthen the India-US relationship by building on common interests. On any number of issues— from balancing China, stabilizing Afghanistan-Pakistan, to engaging Iran and addressing climate change—the US cannot do without India’s cooperation. It will be impossible for the United Progressive Alliance government to take bold steps in any of these areas if the US is seen as insensitive to Indian interests or, worse, reneging on its commitments. [Mint]

This is echoed by Arundhati Ghose, a stalwart of the Indian foreign service, in a piece that also appeared in the same newspaper. The India-US nuclear agreement, she notes “was meant to remove the nuclear thorn in the side of Indo-US relations. Even if this issue is not on the agenda of secretary of state Clinton, the opportunity should not be missed to clarify issues rather than permit a potential irritant to fester.”

The good news is that when asked if “if America opposed transfer of ENR technology to India, US Secretary of State Hillary Clinton replied, “Well, clearly we don’t.”” The joint statement (linkthanks Ram Narayanan) at the end of her visit says “India and the United States will begin consultations on reprocessing arrangements and procedures, as provided in Article 6 (iii) of the 123 Agreement for Peaceful Nuclear Cooperation between India and the United States.”

Reactors of the grandfathered kind (2)

Actually, there were quadruplets

A report in yesterday’s Hindustan Times (linkthanks Swami Iyer) reveals that China, after all, is assisting Pakistan in building the third and fourth reactors at the Chashma nuclear complex. These reactors have been grandfathered (see this post for details of this deal) over the United States’ objections that that “cooperation on the construction of two new reactors, Chashma III and IV, would be inconsistent with the commitments China made at the time of its adherence to Nuclear Suppliers Group guidelines in 2004.”

China clearly believes that presenting the incoming Obama administration with a fait accompli on this front will do the trick. It is unlikely to be mistaken on this account.

Reactors of the grandfathered kind

Getting under the China-Pakistan nuclear deal

Among the news that Asif Zardari brought back from Beijing was that of a deal under which China would supply two more 300MWe(?) reactors to add to the existing ones at the Chashma complex. China, unsurprisingly, has remained silent on the deal. For good reason—because it will likely be a contravention of the rules of the Nuclear Supplier Group (NSG) that China joined in June 2004.

Here’s some background. China applied to join the NSG in January 2004, at its membership was to come up for consideration at the NSG meeting in May that year. Joining the NSG would require it to refrain from supplying nuclear technology and fuel to countries that were not signatories to the NPT. But there is a loophole in the NSG rules—states who had contracted to do this before they joined the NSG are allowed to fulfill their commitments.

In other words, if China were to sign a deal with Pakistan (a non-signatory to the NPT) before it became a member of the NSG, then it could continue its supply relationship even after joining the NPT. And that is exactly what China did. In March 2004, it emerged that a deal was in the works, and indeed, a supply agreement was signed on 4th May. On 28th May, the NSG approved China’s membership, which took effect on 10th June 2004. (This still required Pakistan to accept IAEA safeguards on the reactors, which it did in February 2007.) [See these sources]

Thus the second nuclear reactor at Chasma (Chasnupp 2) was ‘grandfathered’. It is unclear how many reactors were included in the deal they signed on 4th May 2004. That’s not the only thing that is murky. Now, unless China and Pakistan claim that the third and fourth reactors at Chashma were part of the same deal (and they might, because this was talked about), and hence qualify to be grandfathered as well, the deal that President Zardari announced will require China to cock a snook at the rest of the NSG members. It’ll be interesting to see what China says when it breaks its silence. But if it was part of the older deal then President Zardari didn’t bring back anything new.

My essay in The Friday Times: Nuclear power for a nuclear power

Civilian motivations, geopolitical implications

The debate over the India-US nuclear deal in the Indian parliament was interesting, controversial and had its dramatic moments. And though it was lost on the members of parliament, there was deep irony too. For the parliament was debating the virtues of a deal that could add to India’s power generation capacity when a large number of Indian citizens could not watch the debate live on television because of power-cuts and load-shedding.

Indeed, even without full electrification, supply has fallen short of demand by around 8 percent. In fact, during peak periods, the shortage has grown from 12.2 percent in 2002-03 to about 16.6 percent in 2007-08. More than power generation targets for 2030 (some 950GW, compared to 145 GW today) the today’s ever more frequent power cuts bring home the reality that India could do with more power, whether thermal, solar or nuclear. Indeed, it is this realisation that underpins the strategic rationale for the India-US nuclear deal. It does have geopolitical implications—those are inescapable in a deal of this nature—but if India was merely interested in increasing its nuclear arsenal it need not have gone in for this deal at all.

The nuclear deal represents a conscious decision by India to move to a different balance in the trade-off between its nuclear weapons capability and the needs of its growing economy. Some hardline strategists have argued that nothing must be allowed to come in the way of India’s development of more nuclear weapons. Now, nuclear weapons will remain rather powerful guarantors of survival and security well into the conceivable future. But mere ownership of nuclear weapons without broad, comprehensive national power is counterproductive.
Continue reading My essay in The Friday Times: Nuclear power for a nuclear power

Jumping over Mamata’s nuclear hurdle

Meet the Academician Lomonosov

Swaminomics points out that the issue of land acquisition—epitomised by Mamata Banerjee—will prove to be the real hurdle in building nuclear power plants after the India-US nuclear deal (linkthanks BOK). Mr Aiyar is right—land acquisition is an important issue. (See the December 2007 and August 2008 issues of Pragati).

But who says nuclear reactors must be built on land? The Russians are building a floating nuclear power plant (FNPP), and the first, the Academician Lomonosov, is expected to be completed by 2010.

FNPP via RIA NovostiThe FNPP will be a barge able to move with the help of a tug boat. Transportation will be done without nuclear fuel, so on the move it will be non-threatening hardware.

The FNPP will look like a small island with an area of between 7.4 and 12.4 acres. It resembles a “symbiosis” of a nuclear-powered vessel and a standard land-based nuclear plant. It could well arouse amazement and fear, as radiophobia is widespread. Nevertheless, according to Sergei Kirienko, chief of Russia’s Federal Nuclear Power Agency, “the floating nuclear power plant with several levels of protection will be much safer than a land-based one.” [RIA Novosti | See the infographic]

Uranium reservations

The Rudd government has created a window of opportunity for China to lock in Australia’s uranium supplies

Greg Sheridan writes that Australia’s policy on rejecting uranium sales to India will eventually change, but step by step.

Now, however, Australian policy suffers a serious contradiction. In supporting the deal, Australia is urging all other members of the international community to engage in full nuclear trade with India, including the supply of uranium, without which it will be impossible for India to build nuclear power stations.

Yet official Australian policy is that while it supports the deal and will engage in nuclear technology trade with India, it won’t supply uranium to the world’s biggest democracy because New Delhi is not a signatory to the NNPT.

This contradiction is, of course, madness. And make no mistake: while New Delhi fully understands Canberra’s position, deeply appreciates its support at the IAEA and the NSG and understands that the Rudd Government won’t support the various stages of the deal until they are actually agreed to, eventually a refusal by Australia to sell uranium to India, while selling it to China and Russia, would lead to deep trouble between Canberra and New Delhi.

That’s why eventually the Rudd Government will move away from its ban on uranium to India. Step by step, one stage at a time, in concert with the international community, but the destination of selling uranium to India is surely now inescapable as a result of the sensible decisions we’ve taken up to now. [The Australian]

Having overturned its predecessor’s decision, the Rudd government has only set the clock back by a few years. This gives China the opportunity to lock in Australia’s uranium supplies, and Chinese state-owned firms are doing just that. China’s failed attempt to block the NSG’s waiver to nuclear trade with India should be seen in this context.

Discussing Australia’s domestic debate on regulating Chinese investment into the country’s natural resource sector, Lowy’s Mark Thirlwell argues that while changes to rules on foreign investment are not necessary, “the number of cases where foreign government ownership will represent a challenge to Australia’s national interest will turn out to be very small. But ‘very small’ is not the same as zero.” It is for thinking Australians to consider whether it is their interest to allow the Chinese government to buy into its uranium mines before Indian companies are even allowed to purchase the ore.

BJP is tying itself in knots

…and making avoidable mistakes

The worst type of errors are the unforced ones. And the BJP’s leaders are making them. Sushma Swaraj’s ill-considered accusations gave pause to anyone who thought that the BJP might take internal security a little more seriously than the UPA. And it was followed by Manvendra Singh’s op-ed, of all places in The Hindu, that demonstrates the bind the party has gotten itself in in view of its partisan opposition to the nuclear deal. It is all the more surprising that such an article should come from Mr Singh, who is considered one of those rare politicians who have a good grasp of geopolitical and national security issues.

It is hard to understand why Mr Singh should dismiss India’s sense of confidence because it has “come from an access to markets, from an acquired sense of belonging” and “not from earning the seat or the role”. To the extent that this is true, it confirms the view that India’s foreign policy is lagging behind its actual geopolitical status. And that the nation and the economy have left the political class behind.

It is also hard to understand why Mr Singh should worry about “some fairly simple and laudable foreign policy intransigents” that we have jettisoned. He cites “From its stated position of a multi-polar world, India is now a practitioner of uni-polar politics.” He doesn’t support this assertion with any argument, other than contend that India would require Washington’s approvals to import South African, Russian, French or Japanese civilian power reactors. To the extent that this is true, isn’t it better to have a reactor—albeit one that comes with strings—than no reactor at all? Now, it would perhaps be cause for worry if these reactors accounted for a huge fraction of India’s energy supply, but he himself contends that at 40GW they won’t amount to more than 1 single-digit percent of India’s energy mix in 40 years. Surely, needing Washington’s approval for a mere 1 single-digit percent of India’s energy requirements isn’t something to lose sleep over?

Given its significance for party politics, it is understandable that Mr Singh should seek to justify his party’s position on the deal. But what is more worrisome is the underlying thinking that comes through in the op-ed.

The entire thrust of the deal is to secure for India technology from global civilian nuclear vendors. All of it depends on import. And how imports could make the country more secure is an oxymoron of the most perplexing kind. The only route India has to greater energy security is by implementing efficiency standards and building up on its abundant renewable resources…
What it needs is a re-working of the development vision for the country. Mega-projects and other big-ticket items are politics of the 20th century. India is a country that still refuses to urbanise at the global pace. All that it requires is to implement the panchayat level of thinking. Encourage, and allow, the development of renewable energy projects that are community-based, and sustained. Plan India, and implement village. This is the future, and there are ample examples of its success around the world. But it requires a change of mindset, shifting of gears, from Delhi to the districts. It is there that politics is played out, and there that energy security is available aplenty. [The Hindu]

Here Mr Singh is tossing out some simple and laudable intransigents of his own. The path to energy security—ask anyone in India’s nuclear power establishment—is the exploitation of abundant thorium resources. Some criticise Homi Bhabha’s vision as a chimera because it has proven so elusive. Yet the stakes are high enough not to abandon the project.

Now investment in renewable energy is a good idea. But just because India doesn’t have to import wind, water and sunlight it does not follow that renewable energy will not depend on imports—unless Mr Singh believes that all that technology will be developed and manufactured in India.

That brings us to his most perplexing statement: his contention that imports don’t make the country more secure. Unless Mr Singh is arguing that renewable energy will be sufficient to sustain 8 to 10 percent economic growth over the next two decades, India will have to import fuel: oil, natural gas, coal or uranium. Given this situation, India’s energy security lies in diversity: multiple sources of fuel from multiple countries such that no single source or country is large enough to cause trouble. That’s where nuclear power makes sense. Until the time thorium or renewables take us to the promised land, every kilowatt of nuclear power reduces India’s dependence on oil-producing countries of the Persian Gulf.

Decentralised power may be the answer for towns and bigger villages (see Reuben Abraham & Atanu Dey’s piece in the August 2007 issue of Pragati). India’s pace of urbanisation might be slower than China’s, but 300 million people live in cities today. This number is expected to increase to 900 million (55 percent of the population) by 2050. Empowering them will need more than panchayat thinking.