India Joins Nuclear Liability Pact, Opening Door to Foreign Reactor Investments

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India’s decision to join a global treaty on nuclear accident liability may help it woo reactor suppliers, including Westinghouse Electric Co. and General Electric Co., that have been reluctant to sell technology to the nation.

The country ratified the Convention on Supplementary Compensation for Nuclear Damage, also known as CSC, the International Atomic Energy Agency said on Thursday. India’s current law allows operators to hold suppliers responsible for accidents, making international equipment makers hesitant to sign deals as the nation seeks to expand nuclear power capacity more than 10-fold by 2032.

“This is important for foreign firms to be able to provide needed investments in India power plants,” Lake Barrett, a former official with the U.S. Nuclear Regulatory Commission, said by e-mail. “This is a very positive step for India and the global community as well. India’s electricity needs are huge.”

The country’s liability law, enacted in 2010, is a legacy of the 1984 Union Carbide chemical accident at Bhopal that killed more than 10,000 people. General Electric won’t risk building a nuclear plant in the country, Chairman Jeffrey Immelt said last year, citing the liability issue.

One Step

Ratifying the CSC is the latest effort the government has taken to ease suppliers’ concerns that they would be open to liability claims in case of a nuclear accident. Joining the treaty “marks a conclusive step in the addressing of issues related to civil nuclear liability in India,” the country’s external affairs ministry said in a statement Thursday.

In 2011, India capped suppliers’ liability, saying claims by the nation’s nuclear plant operator can’t exceed the amount of compensation paid by the utility. That was followed last year with the creation of a 15 billion rupees ($222 million) insurance pool to shield the operator, Nuclear Power Corp. of India Ltd., and the suppliers against claims. The government also last year issued a note explaining the law, including the sections that leave suppliers exposed to lawsuits.

No Modification

“The ratification is a very important step for the comfort of foreign vendors,” said Sekhar Basu, secretary at India’s Department of Atomic Energy.

Westinghouse Electric expects to reach a deal with India by the end of this year to provide at least six nuclear reactors, Chief Executive Officer Daniel Roderick said in December. France’s Areva SA signed an accord in 2009 to supply six 1,650-megawatt reactors at Jaitapur, a coastal town in India’s western province of Maharashtra.

“Ratifying the CSC is a step in the right direction towards unlocking the market potential for further nuclear development in India,” Jeff Benjamin, senior vice president of new plants and major projects at Westinghouse, said by e-mail. General Electric and Areva didn’t respond to requests for comment outside normal business hours.

The ratification doesn’t change the country’s existing liability laws, according to R. Rajaraman, emeritus professor of physics at Jawaharlal Nehru University’s School of Physical Sciences.

“This will not lead to a re-think or a modification of our liability act,” Rajaraman said in an e-mail. “That would not be politically feasible.”

Vikas Swarup, spokesman for India’s External Affairs Ministry, didn’t respond to requests seeking comment. Calls to Jagdish Thakkar, a spokesman at the prime minister’s office, weren’t answered.

–With assistance from Archana Chaudhary.

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