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 product. 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 Atomstroyexport. 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 domestic law. But an Indian legal expert said that was not necessarily the case. 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 provisions. "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, ann_maclachlan@platts.com Similar stories appear in Power in Asia See more information at http://www.platts.com/Products/powerinasia/