Westinghouse needs break in India nuclear stalemate

Jan. 25--It was hoped, if not expected, that there might be a break in the stalemate holding back commercial nuclear development in India before President Barack Obama's visit to that country this weekend.

A group of government leaders and nuclear company officials -- among them legal and business representatives from Cranberry-based Westinghouse Electric Co. -- have been meeting for months to figure out a solution to India's nuclear liability law. The 2010 legislation leaves nuclear equipment suppliers vulnerable to lawsuits from power plant operators and the public in the event of an accident, and has been the single greatest obstacle to India's ambitious plan to expand its nuclear fleet, Westinghouse says.

Ever since an international agreement made it legal to pursue nuclear contracts in India in 2007, Westinghouse has been working to get a foothold in the country. It has a tentative agreement with the Nuclear Power Corporation of India to build between two and eight plants in the Gujarat, in the western part of the country. Each reactor would cost between $5 billion and $6 billion.

Westinghouse's CEO Danny Roderick said Indian would-be suppliers have already built factories to manufacture equipment for the company's AP1000 plant -- factories that now sit empty waiting for a resolution to the liability question.

"We're certainly ready to go in India," Mr. Roderick said on Thursday. "It would be huge for our company if we could find a way to get through it. And it would be huge for India."

But just days before Mr. Obama's visit, Mr. Roderick said he had heard nothing from his team about progress.

"We're losing daylight," he said.

Recently, India's government -- the part that's sympathetic to companies' liability concerns -- has proposed setting up a national insurance pool where either suppliers or nuclear plant operators would take out policies to protect themselves in the event of post-accident lawsuits.

Proponents of the idea argue that a company like Westinghouse could then pass along that cost to Indian utilities by charging more for its services. Indian officials have said there isn't enough political will to reverse the 2010 law and that the pool would be a workable solution.

Mr. Roderick said he couldn't comment on the concept as a whole without seeing the fine print, which isn't yet ironed out.

India's nuclear liability law is unique among nations with commercial nuclear power.

Like other countries involved in nuclear power development, India has signed on to the Convention on Supplementary Compensation, which creates a framework for how countries impacted by a nuclear accident can seek recourse. The convention requires each signatory country to pass a law placing the responsibility for such accidents on nuclear operators and indemnify third-party vendors. That gives the operators access to the international insurance pool to start paying victims swiftly and without litigation.

"The whole idea (of the convention) was because nuclear accidents were so potentially catastrophic, if litigants were able to file suit against suppliers, essentially it could destroy the whole industry," said Ashley Tellis, a senior associate at the Carnegie Endowment for International Peace. Mr. Tellis, during a previous post at the U.S. State Department, helped negotiate the civil nuclear agreement with India.

Even though India passed its nuclear liability law in 2010, it has yet to ratify it with the convention and many experts, including Mr. Tellis, believe the national legislation would be found to conflict with the CSC.

Mr. Obama's visit to India and the work that's been done since his last trip there in September are intended to address the issue.

Two sections of the liability law trouble the U.S. and companies like Westinghouse. One places the main responsibility for a nuclear accident with the plant operator but allows that operator to try to seek damages from its suppliers.

Another allows civilians to seek unlimited damages under the tort law. Suppliers are nervous that the language of the law isn't definitive as to who might be subject to it.

"The way the current law was written, every person in India can sue you," Mr. Roderick said. "That's the bigger issue -- to withstand the legal costs of a billion people trying to sue you.

Even though companies like Westinghouse and GE, which also has a tentative deal to build reactors in India, have been doing a lot of the advocacy on this issue, Mr. Tellis believes it's Indian nuclear suppliers who are being hurt the most by the nuclear liability law.

Their assets are inside the country and therefore any lawsuit brought in India against a domestic nuclear supplier would be much easier to enforce than coming after Westinghouse or GE, he said.

"Even if there is a tiny component that is provided by an Indian sub, that sub is going to be liable," he said. "They have been quiet about this because they wanted the Americans to take the lead. But now they're beginning to tell their own government very quietly that this is not simply an American problem or a French problem."

The May 2014 election of Prime Minister Narendra Modi, a native of the region where Westinghouse would build its reactors, gave Mr. Roderick some optimism. Mr. Tellis said it signals a change in the government's business climate. Restrictions on foreign companies have been eased and the prime minister has indicated a broad willingness to work with the U.S. on this and other business issues, he said.

<p>"We're just still hopeful there is a solution there," Mr. Roderick said.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

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