State-run Nuclear Power Corporation, which is engaged in increasing nuclear capacity to 63,000 Mw by 2032 from the present 4,560 Mw, would set up a fund of Rs 1,500 crore (Rs 15 billion) to take care of supplier liabilities.
However, it has told the central government it was against nuclear insurance wherein foreign reinsurers would be brought in by Indian firms and be entitled to inspect the projects.
NPC director Jagdeep Ghai told reporters on Monday, "NPC, in the wake of passage of the civil nuclear liability bill, will set up a corpus of Rs 1,500 crore to provide financial security, from its cash reserve of Rs 12,000 crore (Rs 120 billion).
"By the new law, it is NPC as an operator that will first pay up to Rs 1,500 crore. If the amount exceeds this, NPC will be entitled to get that amount from the Government of India."
He said NPC was taking insurance cover for the conventional portion, which includes turbines and generators. It pays annual premium of Rs 15 crore to Indian insurance companies.
Ghai said Indian insurance companies lack adequate funds to provide insurance for a nuclear island, as they can at best shell out Rs 250-300 crore (Rs 2.5-3 billion).
"Beyond that, Indian insurance companies would have rope in foreign reinsurers, who will press for inspections of nuclear plants under operations.
"NPC is opposed to this idea and thus decided to set up a special fund."
On the formulation of rules on civil nuclear liabilities, Ghai said NPC has engaged leading legal firms, including Amarchand Mangaldas and J Sagar.
It also, he said, proposes to rope in US legal firms through Indian legal firms.
The effort is to put in place rules before the visit of US President Barack Obama from November 6 and also before the commencement of the winter session of Parliament on November 9.
On funds for the 10,000-Mw Jaitapur project (in Maharashtra), with the involvement of French reactor supplier Areva, Ghai said NPC has received commitment worth $6.5 billion from BNP, Credit Agricole, Societe Generale, Natixis and HSBC.
"These banks and financial institutions have sought some government guarantee, for which NPC will formally approach the government of India.
Funds will be available for 25 years (eight years of moratorium and 18 years of repayment) at the rate of six-seven per cent. NPC will go in for a combination of fixed and floating rate of interest.
