|Singh at Moscow (PTI)
Moscow, Oct. 20: India and Russia will not reach any final agreement on the setting up of two more Russian nuclear reactors in Tamil Nadu during Prime Minister Manmohan Singh’s summit meeting with Vladimir Putin tomorrow, top government sources confirmed here today.
The two sides have “settled most of the issues, except one,” a source said. “The lawyers have to clear the final text — it is with the lawyers on our side and with the lawyers on their side.”
It is only after the “last legal vetting” — for which no timeframe was specified — that a commercial agreement between the Nuclear Power Corporation of India Ltd (NPCIL) and Russia’s Rosatom on the Kudankulam III and IV reactors can be inked, the sources said.
Government officials maintained that this should not be seen as a setback and that negotiations were at the final stage.
But the fact remains that this latest development only reinforces the troubles India has been having in convincing nuclear suppliers to come on board to set up reactors even after the landmark Indo-US civil nuclear deal in 2008 that led to the NSG waiver for nuclear commerce with India.
If the 2008 deal was Manmohan Singh’s “crowning glory”, the subsequent Civil Liabilities for Nuclear Damage Act passed by India’s Parliament in 2010 is proving to be a nagging headache.
Negotiations on the two fresh Kudankulam units have been stuck with Russia raising serious concerns over the implications of India’s new liability law.
Kudankulam’s first 1,000-MW reactor is already operational and is likely to be connected to the electricity grid within a week, while the second reactor will be ready to deliver electricity in the first half of 2014. A Nuclear Power Corporation source said the first unit was now running at 30 per cent capacity (300MW), the threshold at which it can be connected to the grid.
All potential nuclear suppliers, be they American or Russian, Indian or foreign, are deeply uncomfortable with India’s “unique” liability law, especially the clause which provides the operator “a right to recourse” against the supplier in case of a nuclear accident.
Indian negotiators have been trying to allay the fears of the suppliers by underlining that the law is not as draconian as it sounds and does not entail any automatic right to recourse.
This has not been entirely convincing because the wording of the various clauses in the law can be interpreted in varied ways. Part of the trouble is that the law, made under pressure from activists and Opposition parties, is made to sound tough against errant suppliers and seeks to impose heavy liabilities on them. At the same time, the wording is vague enough, and the Indian negotiators are trying to convince suppliers that the law is not as tough as it sounds.
Keen to seal the deal with Russia during the Prime Minister’s Moscow visit, India sought to quantify the costs of the liability to the supplier by asking the government-owned General Insurance Corporation (GIC) to work with the Department of Atomic Energy (DAE) and work out an insurance rate chart. The chart will quantify the liability amount against every item supplied for a fixed timeframe.
This exercise has two implications. First, the Indian government itself would end up underwriting the risk through a state-owned insurance company.
Second, the “rate chart”, as it were, would help the supplier — Russia’s Rosatom in this case — work out the costs of liability and factor it in while pricing the reactors.
This, in turn, is bound to increase the cost, which entails a fresh round of negotiations on pricing, ending up causing even more delay.
If India had managed to clinch the deal with the Russians on this visit, it would have provided a framework to negotiate other pending deals, too. That this has not happened even with an old and trusted friend only shows how difficult India’s dream of harnessing civil nuclear power in an energy-hungry economy is proving to be.
But there is a positive side as well. Officials said the detailed negotiations with nuclear suppliers, and particularly with Russia, had been a great learning experience and the fact that negotiations on Kudankulam III and IV had reached the penultimate stage was something to cheer about.
But unless the two sides ink the deal over the next few months, Singh is unlikely to reap in his second term what he had sown in his first.