Nuclear liability caps to get 5-year review under SHANTI Act draft rules

Under the new framework, operators of reactors above 3,600 megawatt-electric (MWe) face a maximum liability of Rs 3,000 crore, while those between 1,500 MWe and 3,600 MWe face a cap of Rs 1,500 crore. The limits fall to Rs 750 crore for reactors between 750 MWe and 1,500 MWe and Rs 300 crore for those between 150 MWe and 750 MWe.

For reactors up to 150 MWe, fuel-cycle facilities other than spent-fuel reprocessing plants, and transportation of nuclear material, the liability is capped at Rs 100 crore.

Supreme Court takes up the liability cap issue

The review mechanism is not entirely new. Section 6 of the now-repealed CLNDA also allowed the Centre to periodically review the operator’s liability and notify a higher amount. The draft SHANTI Act rules, however, explicitly provide for a defined time period for an expert group to undertake the review and recommend amendments to graded caps.

This comes as the issue of liability cap has also reached the Supreme Court, following a petition which challenged the act for allowing “private sector and foreign companies to operate nuclear power plants in India, [and] has also capped the liability of these operators at an absurdly low level and exempted the supplier from any liability,” in violation of the Constitution.

On Monday, the top court also asked the Centre to respond whether the SHANTI Act would preclude constitutional courts from determining a “fair and just” monetary compensation in case of a nuclear mishap.

Following the passage of the SHANTI Act, which opens India’s tightly regulated civil nuclear sector to private players, accountability and liability emerged as key concerns among critics.

Dilution of operator’s ‘right of recourse’

One of the most contentious changes is the dilution of the operator’s “right of recourse” against nuclear equipment suppliers in the event of an accident.

According to Section 17 of the CLNDA, the operator of a nuclear installation, after paying the compensation for nuclear damage, shall have the right to recourse where (a) such right is expressly provided for in a contract in writing; (b) 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; and (c) the nuclear incident has resulted from the act of commission or omission of an individual done with the intent to cause nuclear damage.

The SHANTI Act retains provisions (a) and (c) but omits provision (b), which previously exposed nuclear equipment vendors to long-term and uncertain liability risk in the event of a nuclear accident.

This provision was repeatedly flagged by foreign nuclear equipment vendors as a deterrent to investing in India’s nuclear sector as it exposes them to long-term and uncertain liability risk in the event of a nuclear accident.