Governance

Importing a nuclear albatross?

There has been no sign of any nuclear renaissance or revival in the US, but nuclear multi-nationals along with the US government persist in pushing it down the throat of energy-starved India and our government is playing ball

l200507195003THE Indo-US nuclear jugalbandi (duet) commenced in July 2005 with then US President George Bush and Indian Prime Minister Manmohan Singh signing an agreement in Washington, DC, under Section 123 of the US Atomic Energy Act, 1954, to facilitate India importing nuclear reactors from the US despite not being a signatory to the Nuclear Non-Proliferation Treaty (NPT).

Manmohan Singh hailed this agreement as a ‘Nuclear Renaissance’, an echo of a phrase coined by the nuclear industry and US government officials in 2003 to boost the comeback of commercial nuclear power in the US. ‘Renaissance’ had replaced ‘revival’ as the word being used by nuclear proponents to describe their desired recovery of the nuclear industry. This was because there had not been a single new order for a nuclear power plant in the US since the 1979 Three Mile Island accident which shattered public trust in nuclear technology. The 1986 Chernobyl nuclear disaster further damaged confidence in atomic energy worldwide. But the US nuclear industry and government were talking about ‘renaissance’ and the Indian Prime Minister sang the same tune.

The ‘breakthrough’ compromise has been designed to circumvent the central principle enshrined in that law-the right to bring civil legal action for damages against suppliers in the event of a nuclear accident caused by defective equipment, components or designs

Soon after, India signed a safeguards agreement with the International Atomic Energy Agency (IAEA) under which all nuclear material and equipment transferred to it by the US as part of this deal would be subject to safeguards. In August 2008, the IAEA’s Board of Governors approved an India-specific safeguards agreement outside the NPT, thus clearing the deal. In October 2008, the US Congress gave final approval to the deal-formalising nuclear cooperation between the US and India. In July 2009, New Delhi designated two projects for imported nuclear reactors from US companies-Westinghouse in Mithi Virdi, Gujarat (6×1000 MW) and General Electric (GE) in Kovvada, Andhra Pradesh (6×1594 MW)-for generating power. Alongside, approval was given to the Nuclear Power Corporation of India (NPCIL) to import 6×1650 MW European Pressurised Reactors (EPR) from French company Areva for its Jaitapur site in Maharashtra. All these projects are facing fierce protest from lakhs of local people on livelihood and environmental grounds.

The mighty nuclear lobby was behind all this. But the Civil Liability for Nuclear Damage (CLND) Act passed by Parliament in August 2010 put off the US MNCs who said that seeking legal redress against nuclear suppliers is a sharp deviation from the IAEA liability regime, which holds nuclear operators solely responsible in case of an accident. So the conclusion of the deal lingered.

During these 10 years (2005-2015), there has been no sign of any nuclear renaissance or revival in the US. But nuclear multi-nationals along with the US government have persisted in pushing it down the throat of energy-starved India and our government is playing ball. Bowing to their diktats, the Government of India recently tripled its nuclear energy target to 63,000 MW by 2032-over 12 times the present installed capacity in just 17 years! And pronto, US President Barack Obama landed in India and, along with the ‘development’-obsessed Prime Minister Narendra Modi, set about tinkering with India’s nuclear liability law, calling it a ‘breakthrough’!

Obama and Modi made the nuclear deal the centrepiece of the ‘transformed’ India-US relationship and strategic partnership. The Joint Statement issued on January 25, 2015, said this about the deal: “…the leaders welcomed the understandings reached on the issues of civil nuclear liability and administrative arrangements for civil nuclear cooperation, and looked forward to US-built nuclear reactors contributing to India’s energy security at the earliest.” This is crisp and cryptic.

But so is not what Obama said on January 27 while addressing students and citizens at the Siri Fort auditorium: “…And with the breakthroughs we achieved on this visit, we can finally move toward fully implementing our civil nuclear agreement, which will mean more reliable electricity for Indians and cleaner, non-carbon energy that helps fight climate change. And I don’t have to describe for you what more electricity means. Students being able to study at night; businesses being able to stay open longer and hire more workers; farmers being able to use mechanised tools that increase their productivity; whole communities seeing more prosperity….And now we have a historic opportunity with India leading the way to end the injustice of extreme poverty all around the world.”

kudankulam_nppObama seems to be living in a wonderland without any understanding of what ‘energy security’ is and what poverty elimination means. Does he know why no nuclear power plant has come up in the US in over three decades? He would have known if he had read the MIT Report of 2003: “The prospects for nuclear energy as an option are limited by four unresolved problems: high relative costs; perceived adverse safety, environmental, and health effects; potential security risks stemming from proliferation; and unresolved challenges in long-term management of nuclear wastes.” While the latter three-safety, security risks, nuclear waste problems remain as unresolved as they were, the cost of nuclear power has spiralled to such heights that the rich US is heavily subsidising it. By importing US reactors, this subsidy burden will now be borne by poor India!

Mired in deep secrecy, it is virtually impossible to get any credible information out of India’s nuclear establishment to work out the true costing of nuclear power. But experts have culled tariff projections from the estimates for Areva’s Jaitapur project. As of now, no EPR is in commercial operation anywhere in the world. Estimates of costs from EPR plants under construction in Finland and France suggest that each unit may cost as much as Rs. 60,000 crore and at this price, six units will cost Rs. 3.6 lakh crore. This works out to Rs. 36.36 crore per MW and Rs. 363,600 per Kw ($6,610 @ Rs. 55 per dollar). Hopefully, negotiations may bring down the price to about $6,000/Kw.

From America, India wants to import prototype reactors that are not in operation anywhere in the world. This includes GE-Hitachi’s Economic Simplified Boiling Water Reactor, which only recently received US regulatory approval and Westinghouse’s AP1000, criticised in the US for supposed design failings. Prototypes usually face major teething troubles and carry greater long-term risks. The cost of these reactors would also be identical to that of Areva’s EPR and other parameters of costing would be the same.

The table gives first-year tariff projections of power generated from imported nuclear reactors. In these projections, the cost of the reactor is taken as $4,000/Kw and the value of the dollar at Rs. 55. Component costs are worked out at actual market rates/norms laid down by the Central Electricity Regulatory Commission. Provision made for decommissioning is too meagre if Fukushima costs are taken into account. There is no provision for the cost of spent, fuel storage for hundreds of years.

If calculated at $6,000/Kw and Rs. 60 per dollar, the actual tariff could be as high as Rs. 22 per kWh (unit).

Insurance liability could further push up the costs. Tariff does not include transmission and distribution losses. The crash of oil and gas prices has made nuclear power’s economics totally unfavourable. Nuclear power is already the world’s most subsidy-fattened energy industry. Since the 1980s, average international costs for nuclear power have jumped from $1,000 per installed kilowatt to nearly $8,000 and are heavily subsidised.

All these facts are being concealed and a false picture is being presented before the public as if imported nuclear power is among the cheapest sources of energy. Such is the influence of the nuclear lobby! What is worse, thousands of acres of land are being acquired for these predatory projects despite public protests and for this purpose, the Land Acquisition Act 2013 has been amended through an ordinance! Environmental imperatives have been cast to the wind.

The might of nuclear MNCs is also implicit in the health and safety aspects. As early as 1959, IAEA, the atomic energy regulator, had entered into an agreement with the World Health Organisation (WHO) that prevents the latter from reporting diseases caused by nuclear radiation. This is evident from the fact that WHO waited five years before visiting territories heavily contaminated by the Chernobyl accident and had hidden the health consequences of this catastrophe. Article 3 of the 1959 agreement states: “Whenever either organisation proposes to initiate a programme or activity on a subject in which the other organisation has or may have a substantial interest, the first party shall consult the other with a view to adjusting the matter by mutual consent.” This restricted WHO from reporting on Chernobyl and information was suppressed. The Japanese media believes the agreement has also prevented WHO from taking stock of the effects of the nuclear disaster in Fukushima in 2011.

India wants to import US prototype reactors that are not in operation anywhere in the world. This includes GE-Hitachi’s Economic Simplified Boiling Water Reactor, which only recently received US regulatory approval, and Westinghouse’s AP1000, criticised in the US for design failings

As energy-hungry India is rushing to get more reactors, very little information is available on the health effects of radiation. In September 2014, the Department of Atomic Energy criticised the media for reporting an RTI query reply that 2,600 people in India’s nuclear hubs have died due to cancer between 1995 and 2014. The DAE gave the figure of 152 deaths. WHO could have played a significant role in resolving such confusion had it not been gagged by its agreement with IAEA.

It is this very same IAEA which is midwifing the Indo-US nuclear deal and one can only imagine the health and safety risks to which people living near nuclear plants are exposed. In a thickly populated country like India, the number of such people would run into several millions and any accident-whether due to supplier’s defective equipment or operator’s fault-would be catastrophic. The Modi-Obama ‘breakthrough’ on India’s nuclear liability requirements is to be seen in this context.

The detailed FAQ on this ‘breakthrough’ issued by the Ministry of External Affairs (MEA) raises more troubling questions. It contrives a model that shifts the liability risks for nuclear accidents to Indian taxpayers, thus undermining the CNLD Act which holds suppliers, designers and builders liable in case of an accident. The ‘breakthrough’ compromise has been designed to circumvent the central principle enshrined in that law-the right to bring civil legal action for damages against suppliers in the event of a nuclear accident caused by defective equipment, components or designs.

How damaging it will be can be seen from Japan’s 2011 Fukushima disaster. GE built or designed the three Fukushima reactors that suffered core meltdowns, yet the company escaped penalties or legal action after the disaster, despite a fundamental design deficiency in the reactors, because Japan’s law indemnifies suppliers, making plant operators exclusively and fully liable. It was to avert such a situation that India’s law armed NPCIL, the state-run plant operator, with the right of recourse to suppliers. India’s sensitivity on this point reflects its bitter experience over a 1984 gas leak from a chemical plant in Bhopal that killed as many as 3,000 people shortly after the accident. The plant was owned by Union Carbide of the US and the victims are still awaiting justice.

Supplier liability is a well-established legal concept, applied in many business sectors around the world to deter suppliers from taking undue risks. But the 2010 Act makes India an outlier in terms of current international standards on civil nuclear liability. The global nuclear power industry is controlled by a powerful group of a few state-controlled or state-supported private companies that push an opposite norm-one where plant operators assume absolute liability so that suppliers face no downside risks. They want India to follow suit and Bharat Sarkar has buckled.

componentSo, the nuclear deal lying in cold storage was galvanised, signed and sealed in quick time. President Obama used his executive powers to waive the issue raised from the US side to track the nuclear material being provided. The issue of nuclear liability that India wanted was addressed through a legal contrivance called a “memorandum of law”-essentially an executive order-creating an insurance pool for Rs. 1,500 crore with state-owned insurance companies chipping in with Rs. 750 crore and the rest footed by the government with taxpayer money.

This arrangement, although claimed by GoI to be “squarely within our law”, constitutes “a risk-transfer mechanism”, as the MEA has admitted. Under the arrangement, the Indian government is effectively scrapping the right of recourse to foreign suppliers provided by the CNLD Act and transferring the liability risk to taxpayers, offset partly by the modest insurance pool. US officials say the two governments are in agreement over this memorandum plan, which they view as a creative solution. But how can a “memorandum of law”, with no legislative mandate, reinterpret a statute in a way that effectively guts it? This question will haunt the ‘nuclear investors’. And, God forbid, if a serious accident were to occur, India would be saddled with staggering long-term costs if the estimated Fukushima disaster bill of $105 billion (Rs. 6,30,000 crore) is any indication!

Also, India is a water-starved nation and nuclear reactors are massive water-guzzlers. On all counts, it is a multiple whammy for the Indian populace-continuous dependence on imported uranium; prohibitively costly power; safety/environment risks; loss of land and livelihood; paltry accident cover-while nuclear MNCs laugh all the way to the bank. As for the track record, the 2×1000 MW Koodankulam project in Tamil Nadu that commenced 30 years ago is yet to generate firm power for the grid due to defective Russian reactors imported 10 years ago! What is more, setting up centralised ultra-mega-nuclear generation projects runs counter to what India really needs to solve its power crisis-transition to renewable energy-led decentralised and distributed generation.

What we are importing are not technologies or equipments that will provide India energy security, end extreme poverty, increase farm production and usher in prosperity. It is a nuclear albatross that could sink India’s power sector sooner rather than later.

VOL. 8 | ISSUE 12 | MARCH 2015

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