How cheap are you selling us, Prime Minister?

Governance Now, July 1-15

There is an old Oriya proverb which says “who can wake up a man who is only pretending to be asleep?” That is the case with the powers-that-be when it comes to dealing with the multinationals—be it Enron, Union Carbide or the other giants currently being wooed to set up nuclear power plants. Less than 24 hours after the Bhopal verdict numbed the nation, the government, on June 8, had quietly wanted to exempt the suppliers from the Civil Liability for Nuclear Damage Bill 2010 in the event of a nuclear disaster.

Had that gone unnoticed, it would have almost completely wiped out the polluter-pays principle—an internationally accepted policy upheld by the Supreme Court in its 2005 judgment (Indian Council for Enviro-Legal Action vs UOI & Ors).

It is a myth that the bill provides for a three-tier compensation system. The bill fixes the operator’s liability at a mere Rs 500 crore, the first-tier. Any compensation beyond that will be borne by the “central government”, which constitutes the second tier. Now, this amount can go up to a maximum of 300 million Special Drawing Rights (or Rs 2,000 crore at current valuation of SDR).

In the third tier, the money will come from an international fund to be set up under the Convention on Supplementary Compensation (CSC) of 1997. The CSC is yet to come into force because certain requirements are yet to be met—five countries with nuclear capacity of 400 GWTh must ratify it. It is highly unlikely that CSC will become operational after India becomes the fifth one to sign it. So, the third-tier doesn’t even exist!

There we are, left with just Rs 500 crore in case a nuclear disaster strikes. Those defending the bill say any amount higher than this would make the business unviable for the operator. Here is a simple reply: If Union Carbide could insure its pesticide plant in Bhopal for $ 350 million in mid-70s, surely a nuclear plant can be insured for the same amount (that Rs 1,650 crore) in 2010?

And how did the government fix “maximum” compensation at 300 million SDR? It is not clear but it seems the idea was taken from the CSC, which, interestingly, fixes the “minimum” liability at 300 million SDR.

Now, consider this: The liability limit in the US is $ 11.6 billion; in Spain $ 1 billion; in the Netherlands $ 495 million and in Japan and Germany “unlimited”. When governments throw high-sounding phrases at you, you know they are preparing to sell you cheap. But this cheap, Mr Prime Minister?