India puts off nuclear bill after opposition protests

India’s government shelved for now a crucial nuclear energy bill after opposition protests on Monday.

The move is likely to delay the entry of U.S. firms into India’s $150 billion nuclear market.

The decision is the latest in a series of setbacks for the Congress party-led coalition which, despite its parliamentary majority, has sometimes also given in to opposition pressure on moves entailing painful adjustments to free markets.

The government backed off from introducing in parliament the bill to limit nuclear firms’ liability in the case of industrial accidents after it became clear the opposition would block it. While the government has a majority in the powerful lower house, it needs the support of the BJP to ratify the bill in the upper. The legislation has been cleared by the cabinet.

Opposition parties say the bill favors private players as it seeks to put a maximum liability of about $450 million on the state-run reactor operator without placing any compensation burden on private suppliers and contractors.

Ratifying the Civil Liability for Nuclear Damage Bill is imperative for private U.S. firms reluctant to do business in India without legislation that underwrites their compensation liability in the case of industrial accidents.

“The liability of the operator under the Price Anderson Act of the U.S. is $12.5 billion which is 23 times higher than the liability fixed for an Indian operator,” said Yashwant Sinha of main Hindu-nationalist opposition Bharatiya Janata Party (BJP). “Clearly, the life of an Indian is only worth a dime compared to the life of an American.”

The issue is sensitive in a country where a gas leak in a Union Carbide factory killed about 3,800 people in 1984, one of the world’s worst industrial disasters.

India has offered to tender construction of two nuclear power plants, a business opportunity worth $10 billion, to U.S.-based firms such as General Electric Co and Westinghouse Electric Co, a subsidiary of Japan’s Toshiba Corp.

But the liability issue has delayed things, putting U.S. firms at a competitive disadvantage over Russian and French firms whose accident liability is underwritten by their governments.

The Russian and French have already been awarded contracts.

A 2008 U.S. deal ended the nuclear isolation India had experienced since its 1974 atomic test and gave it access to U.S. technology and fuel, while also opening up the global nuclear market to India.

Congress said it would try to seek consensus over the bill.

“I would like to consult all the political parties informally before introducing the bill,” Prithviraj Chavan.

The South Asian nation, which relies on imported oil for some 70 percent of its energy needs, says the U.S. nuclear supply pact will help feed energy demands in its expanding economy, while helping combat global warming linked to fossil fuel emissions.

It could also help double nuclear power’s share in India’s electricity grid to 5-7 percent in the next two decades.

Source: Khaleej Times.
Link: http://www.khaleejtimes.com/DisplayArticle08.asp?xfile=data/international/2010/March/international_March623.xml§ion=international.