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India introduces controversial legislation on compensation for nuclear accidents

By Rama Lakshmi
Saturday, May 8, 2010; A07

NEW DELHI -- A controversial bill to establish a compensation system for nuclear accidents -- a key step toward allowing American companies to set up reactors in India -- was introduced in Parliament on Friday, as opposition lawmakers accused the government of favoring U.S. and business interests over the rights of the people.

Opponents chanted "shame, shame" as India's minister of science and technology, Prithviraj Chavan, moved the Civil Liability for Nuclear Damage Bill in the lower house of Parliament. They then left the chamber in protest.

"We tried our best to bring changes to this bill, but because of the stubborn attitude of this government, we have decided to walk out," said Sushma Swaraj, a member of the main opposition Bharatiya Janata Party. Other Parliament members called the bill "illegal" and "unconstitutional" and accused the government of acting under U.S. pressure.

The opposition lawmakers said the bill takes away the right of victims to bring compensation claims to court in the event of a nuclear disaster.

The bill seeks to place the burden of damages solely on the nuclear plant operator, not on suppliers of equipment. The legislation has been a subject of heated debate among Indians for months because it revives troubling memories of compensation battles in the aftermath of a poisonous gas leak from the Union Carbide factory in the city of Bhopal in 1984.

The liability legislation is one of the last steps needed to fully activate a landmark civilian nuclear agreement with the United States that will allow American companies to set up reactors in India.

The 2008 nuclear accord allows India to access global nuclear technology and fuel supplies after more than three decades of international boycott over a 1974 atomic test.

With the help of American, French and Russian nuclear companies, India hopes to fortify its power-starved emerging economy by generating 63,000 megawatts of nuclear energy by 2030 -- compared with 1,700 megawatts currently. Tens of thousands of jobs would be created in India and the United States, proponents say, generating business worth more than $100 billion.

But India has no legislation to cover claims in the event of a nuclear accident. A government official said that 416 of the 436 nuclear installations in the world are covered by liability laws. The exceptions are the 18 facilities in India and two in its neighbor and rival, Pakistan.

Until India passes a liability law, U.S. companies such as GE and Westinghouse cannot begin operations there, even though two sites have been set aside for nuclear plants supported by American technology.

"There is a strong and persuasive case to have a law that underwrites the compensation liability if a nuclear accident occurs," said Manish Tiwari, a member of Parliament from the ruling Congress party. "Companies will need insurance for setting up nuclear reactors, so the law makes clear the compensation liability. Without insurance, the companies cannot pay the victims of a disaster."

Critics say the legislation places legal liability for accidents on the government-run operator of the plant, the Nuclear Power Corp. of India, not on the private suppliers and contractors -- many of which would be foreign companies.

The bill places a compensation cap of $100 million on the operator and allows up to $450 million in direct damages from the Indian government.

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