15 April, 2020
India is yet to come of age as far as the nuclear sector is concerned due to sustained lack of support from the International Atomic Energy Agency (“IAEA”), and exclusion from the Nuclear Non-Proliferation Treaty (“NPT”) and Nuclear Suppliers Group (“NSG”). In 2014, a few nuclear reactors like Narora, Kudankulam and Kakrapar were brought under the IAEA safeguards. However, the Additional Protocol of 2014 allowed the IAEA enhanced access to India’s facilities, but this was limited to only the reactors included under the safeguards. As a result, a majority of nuclear power plants in the country are still untapped, which has led to a bearish curve in the investment inflows in the country, on account of lack of both financial commitments and savvy technology.
Globally, the United States of America (“US”), France, Russia, South Korea and China are also among the biggest nuclear power generating countries[1]. Out of their energy pool, nuclear energy comprises of one-fifth of the energy usage for US and Russia, seventy five percent for France, thirty percent for South Korea and four percent for China.[2] For India, nuclear energy consists of three percent of its energy pool, and is predicted to rise to six percent by 2030[3].
Historically speaking, the nuclear energy sector in India has braved treacherous waters. The Civil Liability for Nuclear Damage Act, 2010 (“Civil Liability Act”) deals with victim compensation by imposing liability on the operator of the nuclear power plant. However, the Civil Liability Act has been criticised on aspects including failure to properly address liability in the face of an accident or even day-to-day risks, monetary capping on compensation, failure to take into account additional costs of decommissioning and cleanup of the affected site, indirect tax burden on citizens since the nuclear plants in India are largely operated by the government owned Nuclear Power Corporation of India (“NPCIL”), in addition to claims under tort and general contract law. Further, the proposed pool under the Civil Liability Act is highly insufficient for victims’ compensation in the event of any industrial disaster or an accident. This issue has persisted since the Bhopal Gas Tragedy had surfaced in 1984, wherein the settled amount of compensation, which was eventually paid by Dow Chemicals, was highly inadequate and not commensurate with the magnitude of damage caused to the victims. The Kudankulam plant in Tamil Nadu, which was built by NPCIL in collaboration with Atomstroyexport, a Russian state company, has also faced severe backlash for various environmental hazards that it poses. One of the major disasters in the nuclear energy space, the Fukushima Daiichi accident in Japan that took place in 2011, led to large scale evacuation of its residents and also several deaths. TEPCO (Tokyo Electric Power Company) being the responsible entity ended up coughing up an approximate of 52 billion Japanese Yen as compensation to families affected by the accident.[4] The Chernobyl disaster in 1986 also led to the death of several people and exposed thousands to radiation, thereby causing severe health implications. The victims there were paid approximately $1.12 billion through the sovereign relief fund and other voluntary contributions.
Regulation related to Nuclear Energy in India
India’s nuclear energy programme is mostly indigenous, unlike the US where there is considerable private sector participation in nuclear energy production. In 1970, India had declined to ratify the NPT because of its weapons programme, and as a natural corollary, is not a member of the NSG, leading to several sanctions against developing advanced nuclear weapons and testing mechanisms. Subsequently, foreign technology provisions were limited due to the incompatibility between international conventions and India’s civil liability law. Hence, developing nuclear energy as a major source of energy has been spasmodic.
Presently, India has nuclear agreements with 14 countries, including but not limited to France, Russia, Japan, and the US. In 2005, India achieved the establishment of a civil nuclear agreement with the US, after having faced nuclear trade sanctions for several years. Subsequently, India signed several bilateral nuclear agreements, such as the US-India Civil Nuclear Agreement of 2008, which allowed India to be the only non-signatory of the NPT, which could engage in nuclear trade. In 2009, India entered into an agreement with IAEA under which its civil nuclear plants became subject to IAEA safeguards.
Understanding between India and the World
Globally, France has played a huge part in the progress made in nuclear technology. Under several bilateral agreements since 1951, France has offered technical cooperation in civil nuclear innovations to India.[5] The cooperation in the field of nuclear technology with Canada in the 1960s had led to the development of Indian reactors based on the CANDU (Canada Deuterium Uranium) reactor model.
Similarly, several agreements with Russia facilitated the exchange of science and technology, leading to the development of plants like Rajasthan’s Atomic Power Station (RAPS-I&II)[6]. In 2016, the nuclear agreement signed with Japan has spurred the possibility of India joining the NSG.
NPCIL currently has 22 operating plants that are regulated with radiological protection, surveillance, approved standard operating and maintenance procedures, a waste management system, emergency preparedness and disaster management plans. A significant step in this regard is the strategic cooperation agreement between the French energy company, EDF and General Electric (GE) for setting up several European Pressurised Reactors, which are proposed to be operated by NPCIL in Maharashtra.
Prevailing issues in India’s Nuclear Sector
While India is a member of several export control regimes like the Missile Technology Control Regime (2016), Wassenaar Arrangement (2017) and Australia Group (2018), restrictions on India’s nuclear programme exists due to factors like China’s unwillingness to accept India into the NSG. Further, India is yet to play catch up in serious technological advancements in the nuclear energy sector, burdened with uranium shortage, which is a significant resource for the programme.
India’s status as a non-signatory to the NPT has become one of the biggest impediments in it being accepted as a responsible nuclear power globally. Internally, India has faced a lot of backlash against the establishment of nuclear facilities in the aftermath of the Supreme Court judgment on the Bhopal Gas tragedy. However, the necessity for more energy globally and domestically requires greater impetus from both the Government as well as the private sector. To safeguard this interest, India must achieve enhanced safety protocols and technological advancements while setting up nuclear power plants. The adoption of sophisticated equipment will support energy shortages and help in improved and safer production of energy. The lessons learnt from past disasters across the world are still scarce.
There is an imminent need for strengthening the mechanisms for safety and compensation. These factors need to be addressed sufficiently before any investment is made in any large-scale commissioning of nuclear power plants in the country. To increase the cost and production efficiency of nuclear energy, PPP model in the nuclear sector could be explored. However, this must be balanced against security concerns, for risk of disasters and proliferation of nuclear material globally. Further, clearances arising from the Ministry of Home Affairs, Ministry of Defence, environmental laws and coastal zone regulations operate as impediments for more parties to be involved in the sector. In the long run, securing more agreements with nuclear rich countries for exchange of technological know-how will help India achieve the much-needed energy in higher quantities.
In India, the nuclear energy space is largely controlled and held by the government owned NPCIL. Hence, accumulation of power or monopoly in the hands of a few governmental agencies may be avoided since more competition, facilitated through private sector participation, may help develop the energy sector for better creation and utilisation of energy. This could be done through bidding systems for private parties to participate in the generation and operation of nuclear power plants. This should be cushioned by prequalifications prescribed by the Government to attract suitable private parties for PPPs in the nuclear sector to achieve greater energy output at competitive prices.
For further information, please contact:
Jatinder Cheema, Partner, Cyril Amarchand Mangaldas
jay.cheema@cyrilshroff.com
[1] “Why Nuclear is Clean and Sustainable”, Office of Nuclear Energy, US available at https://www.energy.gov/ne/articles/3-reasons-why-nuclear-clean-and-sustainable last accessed on 23/01/2020.
[2] ‘Nuclear Power in the World Today’, World Nuclear Association.
[3] ‘Nuclear will account for 6% of India’s energy mix by 2030: Saraswat’, (May, 2018) Hindu Businessline available at https://www.thehindubusinessline.com/economy/nuclear-will-account-for-6-of-indias-energy-mix-by-2030-says- vk-saraswat/article23803135.ece.
[4] https://www.statista.com/statistics/238791/compensation-of-fukushima-accident-victims/
[5] Pulkit Mohan and Pallav Agarwal, “India’s Civil Nuclear Agreements: A New Dimension in India’s Global Diplomacy”, Issue No. 320 (October 2019), Observer Research Foundation.
[6] Ibid.
