India’s government withdraws nuclear power legislation

The Indian government’s bid to cap liability for nuclear plants, seen by U.S. reactor-builders and operators as a prerequisite for entering the Indian market, was dealt a blow Monday when the ruling coalition withdrew legislation in the face of mounting opposition.

The measure would limit to about $65 million the compensation that foreign nuclear operators would be liable for in the event of a nuclear accident. It would also cap the government’s liability at about $385 million and mandate that all claims be presented within 10 years.

The government has argued that the protection is necessary to implement a landmark 2008 Indo-U.S. deal that opened the way for cooperation on India’s civilian nuclear power program.

But the opposition has charged that the bill was being pushed through under U.S. pressure, that it failed to protect Indian citizens in the event of a disaster and that it placed most of the burden of any cleanup on taxpayers.

The sudden withdrawal in the Lok Sabha, or lower house of parliament, sparked howls from the opposition, which had sought a showdown. Science and Technology Minister Prithviraj Chavan told reporters that he needed to reevaluate support for the measure. “There is no urgency to introduce the bill,” he added.

Without the liability law, U.S. firms will not get insurance coverage for their projects in India. Local media reported in November that several global players eager to grab a share of India’s nuclear energy market, which could exceed $150 billion in coming years, were unable to do so without the legislation.

Prime Minister Manmohan Singh reportedly wanted the bill passed before he travels to Washington next month for a two-day global nuclear security summit. Having missed that deadline, analysts said, he will probably seek passage before President Obama visits India, likely later this year.

Opposition parties accused the government of “safeguarding the interests of the United States at the expense of the safety of Indian people.”

Infusing the debate is the specter of the 1984 Bhopal gas tragedy. Poisonous gas leaked from a Union Carbide plant, killing more than 8,000 people and injuring more than 20,000. In 1995, liabilities in the disaster were fixed at $470 million, far above the cap provided under this bill despite inflation.

India suffers frequent blackouts, even in the capital. The government argues that the world’s second-most populous nation needs some sort of liability structure to bring it in line with global standards.

Rana is a special correspondent.