By Viola Gienger and Gopal Ratnam
Oct. 30 (Bloomberg) -- Indian foes of an agreement that allows U.S. companies to sell nuclear-energy supplies to their country are now trying to hinder General Electric Co. and other American businesses from taking advantage of it.
The opponents are turning to the ghosts of Bhopal for help. They are invoking the December 1984 leak of poisonous methyl isocyanate gas at a Union Carbide Corp. factory in that Indian city, which killed 3,800 people, to argue against ratifying a separate accord that would shield U.S. suppliers from liability in the event of a nuclear accident.
``We think it's immoral and unethical for any company or any government to even suggest'' that suppliers of nuclear plants and technology be granted a legal safeguard, said Brinda Prakash, a leader in Parliament from the Communist Party of India (Marxist). ``India has a very bad experience already with a disaster caused by the Union Carbide factory.''
The public resonance that Bhopal still holds in India may add months or years to Indian ratification of the international nuclear-liability treaty. That threatens to make GE and other U.S. suppliers laggards in the race for at least $175 billion that India plans to spend on nuclear energy production in the next 30 years.
Competitors such as Paris-based Areva SA and Russia's Rosatom Corp. are covered by sovereign immunity because they are fully or partially controlled by governments.
``It's essential that there be some kind of liability regime in place,'' said Omer Brown, a Washington lawyer who is helping promote ratification of the treaty for eight companies, including Fairfield, Connecticut-based GE and Tokyo-based Toshiba Corp.'s Westinghouse Electric Co. subsidiary in Monroeville, Pennsylvania. ``It's a show-stopper.''
`Extraordinary' Risk
Karan Bhatia, GE's vice president for international law and policy in Washington, said ``everyone acknowledges that this form of liability is extraordinary because there's no private market'' to purchase insurance ``against a nuclear incident.''
Bhatia said he doesn't see the nuclear liability issue as ``at all comparable to Bhopal, and I'd hope that the two have no relationship or even a perception of a relationship.''
GE, the world's biggest maker of power-generation equipment, is pushing for ratification of the treaty before Indian Prime Minister Manmohan Singh's government faces national elections, due by May, which might weaken his political support.
An official with India's largest industry lobbying group says that timeline is probably unrealistic.
``It'll take two to three years,'' said V. Raghuraman, the New Delhi-based principal adviser on energy and environment to the Confederation of Indian Industry.
Amending Law
Before considering the treaty, the Indian government first must amend its 1962 Atomic Energy Act to enable private companies to invest in the state-controlled nuclear power industry, Raghuraman said in an interview in Washington.
The U.S. barred American companies from selling nuclear reactors, fuel, services and technology to India after India's atomic bomb test in 1974. Congress passed legislation lifting that ban earlier this month.
As part of the maneuvering to get that bill through Congress, as some U.S. lawmakers were balking at final approval, the Indian External Affairs Ministry pledged to take steps to ratify the liability treaty in a memo to the State Department last month.
Pledge on Plants
The memo also promised that American companies would get to work on at least two plants totaling 10,000 megawatts of power, or about a quarter of the nuclear capacity that India plans to add by 2020.
``We'd hope the nuclear-liability limitation law would come into effect so as to remove that as an impediment,'' Bhatia said.
The Communist Party of India (Marxist) lost its fight to defeat the nuclear agreement with the U.S. when Singh cobbled together enough support in parliament to replace that party in his coalition.
So now opponents are hoping to use the liability treaty to gum up the works. The issue will resonate with the Indian public, particularly before next year's elections, Prakash said.
Union Carbide, on a Web site dedicated to the 1984 accident, says the disaster ``understandably continues to evoke strong emotions'' decades later. About 70 protesters marched 500 miles from Bhopal to New Delhi in March, demanding Dow Chemical Co., which bought Union Carbide in 2001, clean up toxic chemicals at the site, the Washington Post reported at the time.
Bhopal Claims
Union Carbide said all claims were settled 18 years ago, and Dow said in a statement that it didn't inherit liabilities in the case. Their positions infuriate Indian opponents of the nuclear deal.
``Any agreement for the provision of nuclear reactors from any country, including the United States, has to carry with it the most important aspect -- the liability of the provider,'' Prakash said.
The liability treaty is known as the Convention on Supplementary Compensation for Nuclear Damage. It makes plant operators, usually a utility, responsible for damages from any accident and shields suppliers from liability. Operators must set aside about $450 million for compensation in case of damage, and governments that sign the treaty would cover additional claims.
In May, the U.S. became only the fourth country to ratify the treaty; the others are Argentina, Morocco and Romania. At least one other country, such as Japan, that meets a required minimum of nuclear power output must ratify the treaty for it to go into effect.
Bush Administration
U.S. nuclear suppliers are enlisting the help of the Bush administration to pressure India to ratify the treaty. The administration pursued the nuclear-supplier deal in the face of protests by arms-control advocates that the accord didn't contain enough safeguards to separate India's military program from its power-generation projects and prevent the spread of nuclear weapons.
Secretary of State Condoleezza Rice and other State Department officials have said they expect India to create a ``level playing field'' for American companies now that the U.S. has agreed to lift the ban.
``What we have done, I think, is to demonstrate that the United States was willing to take a strategic step that has made it possible for India'' to integrate into global industry, Rice told reporters traveling with her to India after the congressional approval.
To contact the reporters on this story: Viola Gienger in Washington at vgienger@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net.
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