India's decision to increase Nuclear Civil Liability Three Fold to $330 million does not mitigate Moral Hazard

India and USA has signed a 123 Agreement under which USA could supply Nuclear Fuel and Reactors to India for Civilian Energy purposes.This Cooperation Pact was a Landmark deal as it circumvented US laws to make a special exception for India which is not a NPT signatory.With US behind it,India managed to get this agreement passed through the Nuclear Suppliers Group (NSG) which is an international body controlling the supply of Nuclear Fuel.This Deal had to face strong opposition from strong domestic forces both in India and the USA which were opposed to this Agreement.It took a lot of political capital on the part of the Indian and US leaders to get this landmark deal passed through their legislative bodies.

India  Civil Nuclear Liability Risks Moral Hazard

For private civilian nuclear suppliers,a cap on liability due to nuclear accidents is necessary before they start building reactors in India.The government had initially tabled a Rs 500 crore (~$110mm) liability bill in the parliament but faced strong opposition so it was delayed last year.But with the imminent visit of President Obama to India,the government wants to put the final touch to the deal during November.The government has raised the cap Three Fold to $330 million in order to win the support of the main opposition party the BJP.However Greenpeace the international Green NGO has opposed the cap.The reason is there should not a be cap as it increases the moral hazard of the companies.With a cap on their liability,their is an incentive for the private players to loosen their safety standards.There is no cap on liability for any other type of industrial hazard so a nuclear cap also does not make much sense .The recent BP Oil Spill is estimated to cost BP around $20-30 billion despite the Disaster being of lesser magnitude than a Nuclear Accident like Chernyboyl.

Greenpeace for unlimited compensation in nuclear bill – ET

Environmental organisation Greenpeace on Wednesday asked opposition parties in parliament to not settle at a compensation cap of Rs 1,500 crore in case of an accident as proposed in the civil nuclear liability bill.

“There should not be any cap on accidental compensation. Earlier, the Bharatiya Janata Party (BJP) was opposing it but now they have agreed on Rs 1,500 crore. We are appealing to all the parties to oppose any cap on accidental damage in the bill,” said a Greenpeace activist. Ending weeks of impasse over the contentious civil nuclear liability bill, the BJP Tuesday indicated its willingness to accept the trebling of compensation in case of an accident to Rs 1,500 crore.