Rule changed: Kudankulam 3 and 4 reactors to come under n-liability law


Setting aside Russian contentions, the government has decided that the next two reactors in Kudankulam will come under the new civil nuclear liability law, and not be covered by the agreement on Kudankulam 1 and 2.

The move, which comes a month before Russian President Vladimir Putin's visit to India, is expected to provoke a major price escalation in the deal, with the Russian side likely to go back to the drawing board and factor in possible costs to the supplier for any probable liability damage.

Sources said India was prepared to restart price negotiations if Russia were to decide in this direction.

Moscow had urged New Delhi to recognise Kudankulam 3 and 4 as being grandfathered under the agreement for Kudankulam 1 and 2, and that the inter-governmental agreement of 2008, which firms up plans for setting up four additional reactors, was done before the liability law.

The Department of Atomic Energy and Nuclear Power Corporation of India Ltd had agreed with the Russian contention and backed the proposal. The Prime Minister's Office, however, raised questions and sent the matter for detailed legal consideration.

According to reliable sources, the legal view made available to the PMO is that the 2010 civil nuclear liability law would have to apply on any future reactor regardless of any technical argument. No contract, as per the legal view, could be inconsistent with the law.

Based on this, the government has decided against making any exception for Russia, given that DAE is in negotiations with several other prospective reactor suppliers. A waiver, sources said, could also open the government up to the charge of distorting the level playing field.

The India-Russia agreement on Kudankulam 1 and 2 puts the onus of any liability on the operator and does not provide a provision for recourse to the supplier. However, the new liability law does provide for such recourse, and its recently framed rules require this to be reflected in the contract.

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