French Areva confident liability law won't stop Indian contract
Paris (Platts)--7Sep2010/648 am EDT/1048 GMT
French nuclear reactor vendor Areva is "confident" that a new Indian
nuclear liability law won't prevent signature of a contract with Nuclear Power
of India Ltd, or Npcil, to build up to six EPR reactor units at Jaitapur near
Mumbai, Areva spokeswoman Pauline Briand said Monday.
The 1,650-MW European Pressurized water Reactor is Areva's flagship
She said "a lot of people" at the state-owned firm "are working with
Npcil to find a solution that will allow us to work in India the way we are
able to work with other countries."
Areva remains hopeful a way would be found to protect the firm and enable
it to sign the deal soon. "We are confident...We have a great contract."
President Nicolas Sarkozy is scheduled to visit India in early December,
following on the heels of US President Barack Obama. According to media
reports, Npcil and its partners hoped that reactor contracts could be signed
during both those visits.
The law, which passed the Indian parliament last week, contains a clause
that allows a nuclear plant operator to seek reimbursement from suppliers for
compensation it has paid to members of the public for nuclear-related damages,
if the accident is due to defective or substandard equipment or services.
The Indian legislation is the first in the world to make suppliers
potentially liable for nuclear damage.
Twenty-eight national laws and three international nuclear liability
conventions all channel such third-party liability to the operator of a
nuclear installation, but limit the amount of operator liability, under a
no-fault principle that is designed to facilitate and accelerate compensation.
Under the existing international system, suppliers do bear commercial
liability for their products, but that is usually limited in time and scope,
whereas nuclear liability is long-term--up to 80 years--and covers a broad
scope of potential damage.
Nuclear law specialists say the clause will prevent India from joining
the Convention on Supplementary Compensation--one of the three international
treaties in the field--and will make nuclear power more expensive because
suppliers will have to take out liability insurance, assuming the insurance
market will even provide it.
India's energy strategy calls for adding 40,000 MW of foreign-design
nuclear power plants by 2032, and the country has designated sites for each of
four suppliers: Areva, Toshiba/Westinghouse, GE Hitachi, and Russia's
Last week, a spokesman for Atomstroyexport parent Rosatom said the
Russians thought their industry would be protected from liability by an
intergovernmental agreement, which would take precedence over the Indian
But an Indian legal expert said that was not necessarily the
Julia Schwartz, head of legal affairs for the OECD Nuclear Energy Agency
in Paris, said in the runup to passage of the Indian legislation that unlike
the US nuclear industry and its legal advisers, "the French and the Russians
haven't been very vocal" in complaining about the supplier-liability
"The Americans say that's because in the event of a problem in
France,...the French government will back up any (liability) claims" against
Areva because it is state-owned, she said.
Jack Spencer, research fellow on nuclear energy for the Heritage
Foundation, a conservative think tank in Washington, DC, said last week that
"The US industry is not owned by the state and that's a good thing. But
because many other supplier countries around the world are state-owned or have
strong state interest in them, they are able to defer a lot of that liability
onto the state."
But Briand said that was not true for Areva. "The French state will not
put up a guarantee for Areva," she said this week. "We are not better
protected than any other company."
Briand said Areva didn't consider the clause "good news", noting that
Npcil had also criticized it.
The Indian supply industry, including the head of Larsen & Toubro, has
also said it will hurt the nuclear business.
--Ann MacLachlan, email@example.com
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