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

14 thoughts on “Liability-shiability absurdity”

  1. Though I do in principle agree to what you are saying; in a country like ours with such a damning precedent like Bhopal, don’t you think it makes sense to make supplier liability an important aspect of the civil nuclear liability bill? I am a little terrified how cheap we are selling our dead and live people! Just to think that if God forbid, any nuclear disaster takes place in a 20 million strong Mumbai, each citizen is bound to receive (in the present 1500 crore liability cap) only a few thousands of rupees. Nowadays, even a normal bone fractures need more than that to get fixed. In this respect, I do believe that the ‘squabble’ is important .. although the manner and focus is as usual, completely messed up ..

    1. All that is fine…but you don’t need to make the supplier liable to achieve the desired outcome.

      1. That point is completely agreed from me.. but, especially given the government apathy to provide monetary relief and instant relief to the real affected, it has its significance ..

  2. India needs energy right now and fast, in order to build up manufacturing capacity — discussing liability issues till we are all blue in the face achieves nothing.

    Bhopal would not have happened if Indians valued the lives of other Indians more than they currently do — the plant managers and other Indian employees of Union Carbide that let the plant rot to the point of calamity are as much to blame, as much as Warren Anderson and the US branch of Union Carbide. Though public memory in India seems to be strangely silent about the rather huge part played by Indian operators of the MIC plant.

    For all the “debate” on “liability issues” by the ignoramuses in Parliament, none of these worthies are yet to find the need to construct policy to ensure that Indian employees of such industries never sleep on the job to cause another disaster of this sort causing severe and irreparable damage to public health on such a massive scale.

    Instead, the discussion seems to be perniciously focus on how much money a person’s life is worth based on the foregone conclusion that a nuclear disaster is not only inevitable but also unavoidable.

    If Indians continue to treat the lives of other Indians with similar callousness, it does not matter if the liability is 20 crores or 20,000 crores.

    Any dream of feeding India’s huge thirst for energy will be finished after the first such accident, going by the level of ignorant and moronic debate on this issue by the comedians and criminals who represent the Indian people in the Lok Sabha and Rajya Sabha.

  3. The max liability can be trillions of dollars but nobody is going to cough up even a single USD without decades of litigation, should the worst happen. The courts are likely to find the operator guilty in any case, because several levels of checks and monitoring would have to be disabled for a meltdown to occur.

  4. Bhopal was not the result of a botched liability clause but one of Govt apathy. No amount of legal mumbo jumbo is going to prevent that.

    Where was all this concern when India signed up similar deals with Russia and no liability bill? No Left, no BJP, no whimper, no grand standing – just plain old fashioned hypocrisy.

  5. Obviously I am with all of you when you say that liability of supplier is a foregone conclusion and that there will be a watchful restraint especially when it comes to nuclear establishments. I believe this impasse is unnecessary and the easier way out is not to put an absolute cap but a percentage cap as a fine to whosoever is responsible (and not just the supplier)!
    I agree Bhopal was more a case of absolute Government apathy and I am more worried because the same set of politicians (or fairly the same guys! at least same party!) is in power at the center ..Just a little wary. The money cap I believe is any ways wrong from my perspective and an unnecessary hurdle. I am more worried if the liability or other checks that the government will institute will be properly regulated and importantly, enforced .. Till we can find that out (or at least trust this government on that) and especially given its apathy to India’s most significant industrial disaster, this Civil Nuclear Liability Bill has its importance and hence, what money the center is allocating for immediate liability and relief to the affected is also important.

    1. Sorry I meant operator in the first line of this comment .. its a typo ..apologies.

  6. the purpose of supplier liability is not purely for opening another channel for compensation in the event of the disaster (which every buyer – private or public should do), but to create an additional safeguard against poor design at component level.

    additionally, operator-only liability ignores political and logistical factors in the event of a disaster. Any large nuke disaster is likely to drive the private operator into bankruptcy (in spite of insurance protection — or in fact, additionally because of it..), so where does the govt get money to fully cover damage costs? What if suppliers belong to same country as operator, and that country decides to let one guy go bust but not the rest by pressuring the operator to not demand payment from the suppliers?

    Contrary to the general consensus that supplier liability ‘presumes a disaster will happen’, it is in fact a good mechanism to prevent it from happening. The first rule of deal-making – build as many options as you can.

    Lastly, if anyone had any doubt that the Congress policy towards US is any different from their attitude towards the Soviets (embarrassing subservience is too weak a phrase), then the cabinet drafts of this bill should firmly put them to rest. “Intent to cause damage” Are these people real??? The level of corruption with this PM/cabinet is truly breathtaking. Guess that’s the advantage of being a ‘clean and honest man’. You get away with mass murder (in intent).

  7. Whilst we discuss who should take the responsibility in case of an incident that may never happen, we also need to ask how are we going to dump this nuclear waste. There’s very little or no plan in place for that, and as the Americans are discovering now, our next generations would face the question eventually.

  8. “the purpose of supplier liability is not purely for opening another channel for compensation in the event of tnse.he disaster (which every buyer – private or public should do), but to create an additional safeguard against poor design at component level.”

    That’s errant nonsense which appears to be politically motivated.

    If the liability kicks in only AFTER the disaster, how on earth is the liability a “safeguard” against poor design? Safeguards are preventative in nature, and this supplier liability is not preventative.

    Policies to safeguard against nuclear accidents will be policy to ensure the non occurrence of a nuclear accident — “liability” does nothing to stop the occurrence of nuclear accident. After all, manufacturers may not know about the faults in their own systems, as any competent engineer will tell you.

  9. gbz:”The first rule of deal-making – build as many options as you can.”

    India has ambitions to be a supplier in civlian nuclear energy in the long term, so how exactly does this “liability clause” help India if it ends up hobbling India’s civilian nuke ambitions in the long term? Is India prepared to adhere to these clauses if it ends up selling Indian civilian power plants to other countries? Why this presumption that this “liability bill” will only hurt foreign companies, when that is not true?

  10. Ashish:”Whilst we discuss who should take the responsibility in case of an incident that may never happen, we also need to ask how are we going to dump this nuclear waste.”

    Ashish, Saurav Jha’s, “The Upside Down of India’s Nuclear Power” is a detailed, well-written, and well-researched account of India’s plans (present and past) according to the Indians scientists in researchers associated with the nuclear Industry and a lot of painstaking research.

    In my understanding, for the long-term to develop Thorium-based nuclear technology that does not require any long-term storage of fuel rods, because the fuel can be recycled after “processing” and reused and finally ends up as non-radioactive material.

    However, as explained in the book, there is still a lot of research to be done in this area with open problems that Indian scientists are working to solve.

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