Cracking The Nuclear Liability Barrier With Russia
If the Russian press is to be believed, Kiriyenko has a big plan in India. He wants Russia to build up to 20 nuclear power reactors in India, of which a total of six will come up in Kudankulam, with another four to six in West Bengal. The remaining will be built in another location, which has not been chosen yet
On June 7, the Department of Atomic Energy (DAE) told the nation through a press release that the Kudankulam unit 1 nuclear power reactor, built in collaboration with Russia, attained its full power of 1000 MW and became, and this is important to note, “the single largest power generating unit in the country”. The second unit of the Kudankulam, also of 1,000 MW, is currently under construction because of what is said to be some unnecessary delays due to the protests by some foreign-funded non-governmental organisations (NGOs) and slated to produce power early next year. In fact, according to Sergei Kiriyenko, Director General of Rosatom (Russian equivalent of DAE), on April 19, a general framework agreement to build the third and fourth units of the Kudankulam Nuclear Power Plant (KNPP) was signed between India and Russia. “We’ll be able to settle all disagreements, if any, even though the commercial terms of building the third and fourth units have been finalised and technical parameters approved,” Kiriyenko told a group of Indian journalists, including this writer, at Moscow during the 6th ATOMEXPO 2014 International Industry Forum (June 09-11).
Though Kiriyenko did not give the details of the cost of the new projects, it is believed that the sum involved is about Rs. 33,000 crore or $5.78 billion. In fact, this agreement was supposed to be signed in December 2012 when Russian President Vladimir Putin visited India for the annual summit, but that time a common ground on the legal issues as well as the costs could not be reached. That way, the April Agreement is significant. According to Russian sources, Russia has agreed to $3.5 billion in export financing for units 3&4, to cover 85 per cent of their cost. A further credit line of $800 million is available to cover fuel supplies. The credit lines carry interest at 4 per cent pa and would be repayable over 14 years and 4 years respectively, from one year after the start of power generation. The Indian government is expected to take up the credit offers to the value of $3.06 billion, about 53 per cent of the $5.78 billion estimated total project cost.
If the Russian press is to be believed, Kiriyenko has a big plan in India. He wants Russia to build up to 20 nuclear power reactors in India, of which a total of six will come up in Kudankulam, with another four to six in West Bengal. The remaining will be built in another location, which has not been chosen yet. It may be noted that Rosatom has an impressive list of projects in Bangladesh, Belarus, China, Finland, Hungary, India, Turkey, Kazakhstan and Vietnam worth $98 billion for work in the next ten years. The order book also includes a range of nuclear goods and services Rosatom and its subsidiaries supply internationally, including uranium and nuclear fuel.
Obviously, as in other fields such as defence, Indo-Russian nuclear cooperation is quite deep. In fact, when India was under nuclear sanctions following its nuclear tests, first in 1974 and then in 1998, Russia was the country which was most understanding and provided nuclear fuel to keep India’s programme of peaceful nuclear energy (PNE). My interactions with Russian officials and scientists in Moscow revealed that India is a critical market for the Russian nuclear industry. In fact, the Russian officials have great expectations from the Modi government. They have followed critically the BJP election manifesto and Modi’s election speeches on the importance of renewable energy such as solar, nuclear, hydel, ocean and wind. The BJP has promised to encourage clean energy, causing least or zero pollution. And that is
what nuclear energy is all about. In fact, the BJP has promised in its manifesto that the Modi government will come out with a “National Energy policy”, in which there will be proper investments in nuclear power, including the indigenous Thorium Technology Programme.
According to a World Nuclear Association (WNA) study, as of today, nuclear power provides over 11 per cent of the world’s electricity as continuous, reliable base-load power, without carbon dioxide emissions. And there are 56 countries that operate a total of about 240 research reactors and a further 180 nuclear reactors power some 150 ships and submarines. 16 countries depend on nuclear power for at least a quarter of their electricity. France gets around three quarters of its power from nuclear energy, while Belgium, Czech Republic, Hungary, Slovakia, Sweden, Switzerland, Slovenia and Ukraine get one third or more. South Korea, Bulgaria and Finland normally get more than 30 per cent of their power from nuclear energy, while in the USA, UK, Spain and Russia almost one fifth is from nuclear. Japan is used to relying on nuclear power for more than one quarter of its electricity and is expected to return to that level. Among countries which do not host nuclear power plants, Italy and Denmark get almost 10 per cent of their power from nuclear.
Though in some developed countries there have been demands to revisit the nuclear energy in the wake of the Fukushima nuclear disaster in 2011 in Japan, over 45 countries, both developed and developing, are actively considering embarking upon nuclear power programmes. The Chinese government plans to increase nuclear generating capacity to 58 GWe with 30 GWe more under construction by 2020. China has completed construction and commenced operation of 17 new nuclear power reactors over 2002-13, and some 30 new reactors are either under construction or likely to be so by the end of 2014. These include the world’s first four Westinghouse AP1000 units and a demonstration high-temperature gas-cooled reactor plant. Many more are planned, with construction due to start within about three years. China is commencing export marketing of a largely indigenous reactor design. R&D on nuclear reactor technology in China is second to none.
Russia plans to increase its nuclear capacity to 30.5 GWe by 2020, using its world-class light water reactors. Construction of a large fast breeder unit is nearly complete, and development proceeds on others, aiming for significant exports. An initial floating power plant is under construction, with delivery due in 2016. Russia is active in building and financing new nuclear power plants in several countries. Finland and France are both expanding their fleets of nuclear power plants with the 1650 MWe EPR from Areva, two of which are also being built in China. Several countries in Eastern Europe are currently constructing or have firm plans to build new nuclear power plants (Bulgaria, Czech Republic, Hungary, Romania, Slovakia, Slovenia and Turkey).
A UK government energy paper in mid-2006 endorsed the replacement of the country’s ageing fleet of nuclear reactors with new nuclear build, and four 1600 MWe French units are planned for operation by 2023. The government aims to have 16 GWe of new nuclear capacity operating by 2030. In the USA, there are five reactors under construction, four of them new AP1000 designs. One of the reasons for the hiatus in new build in the USA to date has been the extremely successful evolution in maintenance strategies. Over the last 15 years, changes have increased utilization of US nuclear power plants, with the increased output corresponding to 19 new 1000 MW plants being built.
Sweden has abandoned its plans to prematurely decommission its nuclear power, and is now investing heavily in life extensions and updates. Hungary, Slovakia and Spain are all implementing or planning for life extensions on existing plants. Germany agreed to extend the operating lives of its nuclear plants, reversing an earlier intention to shut them down, but has again reversed policy following the Fukushima accident. Poland is developing a nuclear programme, with 6000 MWe planned. Estonia and Latvia are involved in a joint project with established nuclear power producer Lithuania. Belarus has started construction of its first Russian reactor, and a second is due to follow.
This being the case, what about India? Though, a separate and detailed story on India’s nuclear programme is accompanying this piece, this writer will like to stress on the fact that India is a poor fuel resource country and that there is a need to tap every fuel resource to meet India’s energy needs. The contribution of nuclear energy, therefore, has to be increased at the fastest possible pace so that nuclear electricity is able to meet about a quarter of the national electricity demand after about five decades and gets poised to make still higher contribution in the subsequent years.
Of course, there are some bottlenecks on the way. And here, the most important one is the security factor, which the critics of the nuclear power cite to be the most important reason as to why the programme should not be promoted. But the fact remains that with each passing day, the nuclear power is becoming safer and safer, thanks to the tremendous advances made in the nuclear science. Apart from taking care of the climatic and geographic features of the location of plants( such as earthquake proneness and tsunami possibilities) into account, we have now what is called the passive safety system for nuclear reactors that keeps the reactors cool in the event of an accident. When a reactor shuts down, the radioactive byproducts of the nuclear fission continue to generate heat. Failure to remove that heat can damage the reactor’s nuclear fuel and cause radiation, something that happened at Fukushima. Here, there was nothing wrong with the nuclear reactor as such; the problem occurred when following the tsunami the plant was shut down, there was no electricity for the safety system to remove the heat. Under the traditional safety system, the vulnerability of the nuclear plants is dependent on the availability of the electric power for cooling operations.
However, now we have what is called the “Passive Safety System”, which relies on gravitational forces to remove excess heat. After all, heat-removal is the basis for safety. In addition, passive safety systems reduce the number of valves and pumps in nuclear plants by at least 50 percent, there by not necessitating a bigger space for a reactor, which, in turn, is less labour intensive and vulnerable to sabotage. Viewed thus, The Russian scientists like Sergey Sorokin say that the KNPP is among the world’s safest nuclear plants. As V Asmolov, first deputy general of Rosenergoatom, the Russian nuclear power station operations subsidiary of Rosastom, said, the Kudankulam plants have four channels of safety system and that these are sufficient for an “immediate stopping of chain reaction in case of crisis”, adding, “the system will ensure water supply for cooling of the reactor even if there is a black out for 24 hours.”
The second major bottleneck seems to be India’s unique nuclear liability laws of 2010 that talk of compensation in the event of nuclear accidents in a plant. As India is not self-sufficient in nuclear fuel and technology, it has to import them from outside. The universal practice is that in the event of an accident, it is the Nuclear Power Plant (NPP) that gives the compensation. No nuclear exporting country or farm undertakes the responsibility of safety, operations and maintenance of the NPP it has sold fuel and technology to. There has to be a national law or bilateral arrangement or international liability regime (such as Vienna-based Convention on Supplementary Compensation (CSC) for Nuclear Damage or Paris Convention on Third Party Nuclear Liability in the Field of Nuclear Energy) for the exporter and importer to manage the liability in case any nuclear accident takes place affecting a third party or the country. Based on this principle, India passed a Liability Act in the Parliament in 2010 that places responsibility for any nuclear accident with the operator, as is standard internationally, and limits total liability to 300 million SDR (about US$ 450 million) “or such higher amount that the Central Government may specify by notification”. Operator liability is capped at Rs 1500 crore (15 billion rupees, about US$ 285 million) or such higher amount that the Central Government may notify, beyond which the Central Government is liable. However, after compensation has been paid by the operator (or its insurers), clause 17(b) of the Indian Act allows the operator to have legal recourse to the supplier for up to 80 years after the plant starts up if in the opinion of an Indian court the “nuclear incident has resulted as a consequence of an act of supplier or his employee, which includes supply of equipment or material with patent or latent defects or sub-standard services.” This clause giving recourse to the supplier for an operational plant is contrary to international conventions and undermines the channelling principle fundamental to nuclear liability. Also, no limit is set on suppliers’ liability.
Obviously, all potential nuclear suppliers to India are unhappy. They want the law to be suitably amended, even though the fact remains that the stringent provision of 17(b) was incorporated under the pressure of the BJP, then in opposition. Will Modi do something? That is a question in the minds of the decision makers not only Russia but also France, the United States, Australia and Japan, last three being the countries that Modi is scheduled to visit this year.
Of course, in November 2011 the DAE published a notification that claims by plant operators against component suppliers “shall in no case exceed the actual amount of compensation” paid by utilities. The new Civil Liability for Nuclear Damage Rules give plant operators the right of recourse against equipment suppliers related to “the extent of the operator’s liability” or “the value of the contract itself, whichever is less.” They also limit it to the duration of the initial plant licence “or the product liability period, whichever is longer.” But still this is seen as confusing, and is not satisfactory to major suppliers.
It may be noted that for Kudankulam 1 and 2, the liability law does not apply as they preceded the making of the law; but it will apply to Kudankulam 3 and 4, or any other plant to be set up in future. However Russian officials are confident that the two countries will find out a via media to overcome the liability law. They say that in March 2014, the two governments reached some sort of an agreement to provide liability insurance through the government-owned General Insurance Corporation of India (GIC), though the actual arrangements for a nuclear liability insurance product had yet to be worked out. GIC apparently discussed reinsurance with international companies, but without any agreement, due partly to the unlimited provisions of the 2010 Act.
However, in April 2014, the DAE approached the Ministry of Finance to urge the setting up of a nuclear insurance pool as a high priority, since insurance risks for third party liability alone amounts to Rs 1500 crore. There is no nuclear insurance pool in India, either for direct damage or for third-party liability, apparently due to restrictions on inspection of facilities by international pools. But R K Sinha, Secretary, DAE has told the press recently that the government is working towards forming a nuclear insurance pool to cover the nuclear facilities, involving the GIC and New India Insurance. “We are on the way to find a solution (to liability law concerns). We will be putting in place a mechanism to cover the risk through insurance (for nuclear plants),” Sinha said. The ball is now in the court of the Finance Ministry. The Russians are keenly awaiting the final decision.
By Prakash Nanda from Moscow