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India plans fund for compensation over $170 mln, sources

say

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Looks to draw private, foreign investment into nuclear

sector

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Bill set to be unveiled in parliament in December, sources

say

By Sarita Chaganti Singh

NEW DELHI, Sept 25 (Reuters) - India plans to set up a

nuclear liability fund to cover accident compensation in excess

of 15 billion rupees ($169 million) owed by plant operators, in

a bid to ease risk-sharing concerns among global suppliers and

private firms, two government sources said.

The move holds out potential to unlock long-stalled private

and foreign investment in the nuclear industry, by aligning

India's compensation framework with global norms, added the

sources, who have direct knowledge of the matter.

The statutory fund, proposed by a new atomic energy bill,

would supplement an operator's capped liability, in a shift from

the current ad hoc payout system, said the sources, who sought

anonymity because the plan has yet to be made public.

"The fund seeks to bolster the government's ability to

compensate victims in the event of an accident," said one of the

sources.

India's atomic energy department, the prime minister's

office and the finance ministry did not respond to requests for

comment.

India, which plans to expand nuclear power capacity 12-fold

by 2047, is relaxing rules to end a decades-old state monopoly

and a stringent liability provision so as to free up private

participation and attract foreign suppliers of technology.

Some of the South Asian nation's big conglomerates, such as

Tata Power, Adani Power and Reliance

Industries, have begun preparing investment plans.

Prime Minister Narendra Modi's government is in the final

stages of drafting legislation expected to be introduced in

parliament's winter session in December, the sources said.

It aims to lure private companies into the areas of atomic

energy generation and uranium mining, with foreign players

taking minority stakes in nuclear power plants.

It also wants to ease nuclear liability laws by removing the

provision exposing suppliers to unlimited liability for

accidents. The planned fund would provide a clear legal

mechanism to finance compensation beyond the operator's cap.

For insurance coverage against nuclear accidents, India now

relies on a nuclear insurance pool, a policy tool launched in

2015 but not embedded in law.

Though designed to support operator and supplier liability

under legislation dating from 2010, it failed to overcome the

caution of foreign firms from nations such as France and the

United States.

Once passed, the new bill will replace the Atomic Energy Act

of 1962 and the Civil Liability for Nuclear Damage Act of 2010.

($1=88.7280 rupees)