India's Nuclear Liability Fund Has Hit Its Cap, But It Is Not Enough |
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The Nuclear Liability Fund (NLF) established under the Civil Liability for Nuclear Damage (CLND) Act of 2010, and rules thereof, reached the stipulated limit of Rs 2,000 crore in the second quarter of financial year (FY) 2025-26. With that, the levy on sale of nuclear electricity by the Nuclear Power Corporation of India Limited (NPCIL) to nuclear power consuming entities – the instrument by which the fund had been built since 2015-16 – has ended, according to reliable sources that are familiar with the issue.
Under the CLND Act, which now stands repealed, the maximum prescribed liability in case of a nuclear accident was 300 million Special Drawing Rights (SDRs). The liability on the operator of the nuclear power plant was fixed at Rs 1,500 crore, for which the operator is required to maintain financial security by taking an insurance policy with assured compensation payout through a ‘Nuclear Insurance Pool’ mechanism backed by a consortium of re-insurers.
How the fund was created
The NLF was created to meet any situation where the central government is rendered liable under the CLND Act for nuclear damage, where the compensation amount exceeds the operator liability of Rs 1,500 crore, including any nuclear incident occurring due to a natural disaster or armed conflict. The modality of creating the fund, and its target amount, were prescribed under Section 3 of the NLF Rule, notified on December 8, 2015. The NLF Rule flowed from Section 7(2) of the CLND Act. Clauses 3-5 of Section 3 specified the following modus operandi:
The operator [of the nuclear installation, namely the NPCIL] shall pay to the fund, a levy at the rate of Rs 0.05 (five paise), or a levy at such rate between Rs 0.05 to 0.10 (five paise to ten paise), for every unit of electricity sold to its customers. The levy shall be collected and paid to the fund till the total amount reaches Rs 2,000 crore and thereafter, the process shall resume in the event of any withdrawals from the fund so as to ensure that the Fund balance remains at Rs 2,000 crore at any given time. The levy shall be payable on quarterly basis and the levy amount for every quarter of the year shall be credited to the fund within the 15th day of the month........