NUCLEAR INSURANCE POOL TO HELP REVIVE STALLED PROJECTS

By Vikas Khanna

India has announced the launch of an insurance pool of Rs. 1,500 crores which should help clear decks for operationalisation of several projects held up for years. The insurance pool is meant to compensate companies, which have bagged the rights to construct reactors in the country, against liability in the event of a nuclear accident. The insurance pool was a mandatory requirement under the Civil Liability for Nuclear Damage Act.  The idea to form the pool was first mooted in 2013 but was caught in a logjam because of differences among stakeholders and various clauses. It is believed that the long-pending Gorakhpur Haryana Anu Vidyut Pariyojna (GHAVP) will finally see the light of day. The then Prime Minister Dr. Manmohan Singh had laid the foundation stone of 2800 megawatt project in Haryana in 2014 at an estimated cost of Rs. 23,500 crores. But the project has been in a limbo since then as tenders did not get matured due to absence of an insurance pool. The launch of the pool should now enable the concerned parties to come forward for the project.

It can now be hoped that the setting up of the insurance pool will also address the concerns of foreign companies wishing to build nuclear power stations in India but were held by a controversial law. The foreign companies were opposed to the Indian nuclear liability law which was passed by parliament in 2010. The law stipulated that the equipment suppliers would be held responsible for an accident, which was a major bone of contention. The firms considered the law to be against the global practice in which the nuclear operator bears responsibility for an accident, and not the equipment providers. This had held back several firms, including GE-Hitachi, Toshiba's Westinghouse Electric Company and France's Areva from proceeding with the construction of reactors. Both GE and Westinghouse have already been allotted land in Gujarat and Andhra Pradesh to begin construction of reactors, but there has been little progress since then. Similarly, Nuclear Power Corporation of India Ltd and the French supplier have been struggling to reach a contract for the past five years to build a plant in Jaitapur. If completed in full, the Jaitapur project would be the world's largest nuclear power station.

The law also strained ties between India and the US after the two countries signed the landmark civil nuclear agreement six years ago. The civil nuclear agreement itself was historic as the US allowed India access to nuclear technology and fuel without giving up its weapons programme. But since then no progress was made.

In this regard, Prime Minister Narendra Modi must be lauded for his efforts for reaching a breakthrough on the nuclear liability issue with the United States when President Barack Obama visited India early this year. Experts believe the deal, which will not only help inflow of billions of dollars in nuclear trade, will also establish an enduring strategic partnership between the two countries.

The India nuclear insurance pool is basically a risk transfer mechanism which is being formed by GIC Re and eleven other non-life insurers from the public sector undertakings in the general insurance business in India.

While creating the pool, the government has made it clear that it will not amend the liability law as an  understanding has been reached with the US recently under which foreign suppliers of equipment for the nuclear reactors cannot be sued by the victims in case of a mishap. With the world’s deadliest industrial accident, the 1984 Bhopal gas tragedy, in mind, Indian parliament was forced to pass the law which sought to prevent a repeat of the battles for compensation. It has been more than three decades since the tragedy struck, Indian families continue to battle for compensation.

The creation of insurance pool is a win win situation for all. It should help meet Prime Minister Narendra Modi’s vision of tripling energy generation from nuclear sector. According to the World Bank and the International Energy Agency, more than 300 million people in India lack access to electricity. This is compared with fewer than three million in China. India needs billions of dollars and foreign nuclear technology and fuel if it has to increase capacity by a planned 14 times over the next two decades. India has set up an ambitious target to generate 62,000 megawatts from nuclear sources. If India has to meet uninterrupted and affordable power, the nuclear power is the only solution.

UKRAINE CAUGHT IN A CROSSFIRE BETWEEN RUSSIA AND WEST

By Vikas Khanna


Tension seems to be escalating once again in Ukraine after a two-month lull. Reports of US considering military assistance to Ukraine and Russia massing troops near the border are warning signs. This amid a fierce debate in Europe over whether to impose more sanctions on Russia as the West accuses it of not adhering to the second Minsk accord signed in February this year. Any of these sparks could re-ignite the crisis and lead to the collapse of the fragile ceasefire which is in place despite sporadic incidents of violence. Already, more than 6,000 people have been killed in eastern Ukraine since the onset of the war in Donetsk and Luhansk last year.


The US is in a dilemma. Critics back home accuse President Barack Obama of wavering in his response to what they see as the most dangerous and complex security challenge since the Cold War. Hawks have been putting pressure on him to either intervene against Russian forces on the ground or to arm Ukraine. But it is easier said than done. The first option is fraught with greater risks. The Obama administration is puzzled. If it were to go ahead with arms supplies, who should be the recipient? The Ukrainian military is not a united force. There are many in the military who owe their allegiance to Russia. Since last year, Ukrainian authorities have arrested more than 300 senior officers for allegedly spying for Russia. There is every possibility of arms falling into the wrong hands.

 In any case, arming the Ukrainian military is not in the best interest of either the US or Ukraine. The US supply of arms to Ukraine will fuel Russian anger, which in all probability will escalate the war. This could flare up tensions between the US and Russia.


The sad truth is that among all those involved in the Ukraine imbroglio – no one seems to have any answer to the crisis as each side trades charges against the other. While Russia accuses the US of breaking the Minsk agreement by sending hundreds of troops to western Ukraine to train the national army, President Vladimir Putin denies that any of his forces are inside Ukraine. Obviously, both are hiding the truth.

Everyone in Kiev or for that matter in the West knows there is no way of getting back the lost territory by force. There were murmurs of protests when Russia occupied and annexed Crimea last year. The best the West could do was to slap sanctions on Russia. Intending to inflict pain on Moscow, some of the countries in the West started bleeding on the contrary as their energy bills inflated and economy started showing signs of weakness after President Putin stopped energy supplies to them in retaliation. Today the West is completely divided as far as the sanctions are concerned. Some believe the more stringent and punitive sanctions will create problems inside Russia forcing it to eventually back off from Ukraine. But there are others who have been arguing to lift economic sanctions as these are proving to be counter-productive.


The Minsk accord itself is not a lasting peace settlement. It was a half-baked deal whose main aim was to de-escalate the war like situation between Ukrainian military and rebels, believed to have the backing of Russia. And till today, the West sees in the accord a ray of hope as it does not have a Plan B. The fact remains that there has been virtually no progress since the ceasefire came into being. The situation is lying in a limbo with no concrete effort made for dialogue to find a permanent solution.


With no early solution in sight, Ukraine is proving to be a burdensome ally to the West. The country is on the verge of financial collapse. Its economy has shrunk almost 18 percent in the first quarter of 2015 compared to the same period last year. Inflation is out of control, galloping to 61 percent year-on-year. Its currency has fallen more than a third with foreign exchange reserves down to a few weeks. It is estimated that Ukraine needs more than 50 billion dollars to survive. With the West sticking its neck in what was primarily a dispute between Moscow and Kiev, it will have to cough up that amount. And if the hostility escalates, the price tag is only going to increase. West today finds itself in a Catch 22 situation, struggling to wriggle out of the mess.