regulatory issues for setting up a nuclear power plant final

7/30/2019 REGULATORY ISSUES for setting up a Nuclear Power Plant Final

1/26

INFRASTRUCTURE ISSUES

RISK MITIGATION

DEVELOPMENT CONSIDERATIONS

TENDERING

CONTRACT

FINANCE MODELS

LEGAL FRAMEWORK

INDIAN INSTITUTE OF TECHNOLOGY KHARAGPURI N F R A S T R U C T U R E R E G U L A T O R Y I S S U E S

Presented by: P R AT E E K D A S G U P TA

P R A N A V M I S H R A


2/26

When a neutron strikes an atom of uranium,

the uranium splits into two lighter atoms and

releases heat simultaneously.

This heat energy is used for various purpose,

such as electrical power generation, powering

submarines, space shuttles, nuclear bombs

and missiles etc.

It doesnt emit any polluting gases which have

adverse effects such as Global Warming, Acid

Rain, Ozone Depletion etc.

It is a highly concentrated source of energy,

with 1 kg Uranium producing power of over

50,000 kWh and 35,00,000 kWh on

reprocessing.

N U C L E A R E N E R G Y



3/26

N U C L E A R P O W E R P R O J E C T S T A G E S


A nuclear power plant essentially has 5 stages

Pre-Project

Project Decision Making

Plant Construction

Plant Operation

Plant Decommissioning

The overall project life of Nuclear Power Plant

is about 75 100 years


4/26

N U C L E A R P O W E R P R O J E C T S T A G E S



5/26

N U C L E A R I N F R A S T R U C T U R E I S S U E S


International Agreements and Safeguards

Financial Resources

Nuclear Law

Educational Programmes

Public Consultation

Engineering / Manufacturing

Human Resources

Project Management

Regulatory Framework

Codes and standards

Safety Assessment Capabilities

Physical Facilities

Communication

Procurement

Emergency Response Planning

Construction / Commissioning


6/26

N U C L E A R R I S K S A N D M I T I G A T I O N



7/26

N U C L E A R R I S K S A N D M I T I G A T I O N



8/26

A S S O C I A T E D O R G A N I Z A T I O N S


THE GOVERNMENT (policy making)

Energy Supply

Safety and Regulation

Environmental protection

Domestic Infrastructure development

THE FUTURE PLANT OWNER

Electricity system expansion planning

Performance of economic analyses

Defining the projects

Obtaining licensing and executing them

and operating the plant safely

THE NUCLEAR REGULATORY BODY

Safety of pressure vessels, electrical installations, pollution control, environmental protection

Promotion and Co-ordination between various R&D organizations

Encourage participation for Nuclear Power Plant Projects

Advancement of educational institutions


9/26

D E V E L O P M E N T C O N S I D E R A T I O N S


LAWS

Law and regulations for radiation protection

Law and regulations for safety of nuclear installations

Compatibility of national radiation protection and nuclear safety regulations with IAEA codes

Law and regulations for ownership of nuclear installations and materials

Law or policy concerning nuclear third party liability

Bilateral nuclear supply agreements Conventions on early notification and assistance

Physical protection convention

Nuclear safety convention

Convention on safety of waste and spent fuel management

Radiation Protection

Plant / Material Ownership

Nuclear SafetyLaws Concerning


10/26



ENERGY AND ELECTRICITY SUPPLY POLICIES

National Development policies and plan.

Implementation mechanisms for National Development plan.

National policies for the Energy and Electricity sectors. Perceptions of major constraints, priorities.

Electricity tariff policies.

Environmental Protection Policies and their impact on the energy sector.

FINANCIAL MECHANISM

Mechanisms for International Financing.

Mechanisms for Local Financing.


11/26



INTERNATIONAL AGREEMENTS

Treaty on the non-proliferation of Nuclear weapons (NPT) INFCIRC/140

Guidelines for Nuclear transfers, 1993 revision of NSG London guidelines

Convention on the prevention of Marine pollution by dumping of wastes and other matter

(London Dumping Convention), INFCIRC/205

International Convention for the safety of life at sea

Convention for the suppression of Acts of Nuclear Terrorism


12/26

T E N D E R S


Information provided by the owner

1. INVITATION LETTER

2. ADMINISTRATIVE INSTRUCTIONS

3. GENERAL INFORMATION

4. TECHNICAL REQUIREMENTS

5. SCOPE OF SUPPLY AND SERVICES6. NATIONAL PARTICIPATION

7. BID EVALUATION CRITERIA

8. DRAFT CONTRACT TERMS AND CONDITIONS

9. COMMERCIAL CONDITIONS

10. SAFETY AND SECURITY CONSTRAINTS

Information requested from bidders

1. GENERAL INFORMATION

2. GENERAL TECHNICAL ASPECTS

3. TECHNICAL DESCRIPTIONS

4. SCOPE OF SUPPLY AND SERVICES

5. ALTERNATIVES AND OPTIONS6. QUALITY ASSURANCE PROGRAMME

7. TRAINING

8. PROJECT SCHEDULE

9. TECHNOLOGY TRANSFER

10. GUARANTEES AND WARRANTIES

11. DEVIATIONS AND EXCEPTIONS

12. COMMERCIAL CONDITIONS


13/26

C O N T R A C T


Contract conditions

Financing arrangements

Down-payments

Governmental approval or authorization

International commitments

Safeguards requirements

Export license, construction license, operation license

Pertinent regulatory and licensing requirements.

1. The owner has one contract with the mainsupplier.

2. The main supplier has overall responsibility for

construction, and turns over responsibility for

the project to the owner/operator in stages

during the commissioning phase.

1. The owner has multiple contracts withsuppliers.

2. The overall responsibility is divided

between a relatively small number of

contractors, each building a large section

of the work.

Turnkey Contract Split Package Contract


14/26

C O N T R A C T


Definitions

General clauses

Object of the contract

Planning and execution of the work

Information, inspection, testing and controlAssignment of the work and subcontracting

National participation and technology transfer

Training of personnel

Changes and additional work

Transport and customs clearance

Risks and transfer of titleLiability

Insurances

Quality assurance

Licensing

Delivery times

Documentation

Spare and wear parts, consumables and special

toolsGuarantees or warranties

Take-over

Prices, price adjustments and terms of payment

Force majeure

Termination and suspension of the contract

Guarantee of title and proprietary informationExecution of the contract

Applicable law

Arbitration

Contract Components


15/26

F I N A N C I N G


Major Challenges

The high capital cost and technical complexity of NPPs,

which present relatively high risks during both construction

and operation

The relatively long period required to recoup investments

or to repay loans for NPP construction, which increases the

risk from electricity market uncertainties

The often controversial nature of nuclear projects, which

gives rise to additional political and regulatory risks

The need for clear solutions and financing schemes for

radioactive waste management and decommissioning,

which only governments can formulate


16/26

F I N A N C I N G


Financial Model for project fully financed through government guarantee.


17/26

F I N A N C I N G


Financial Model for Public Private Partnership projects.

The private sector investors bring the equity and loans and the government participates through

assets and risk mitigation mechanisms.


18/26

L E G A L F R A M E W O R K


Nuclear laws and regulations address the following

THE SAFETY PRINCIPLE (PREVENTION AND PROTECTION)

THE SECURITY PRINCIPLE (PEACEFUL USE OF NUCLEAR POWER)

THE RESPONSIBILITY PRINCIPLE (OPERATOR OR LICENSEE)

THE PERMISSION PRINCIPLE (REVIEW AND AUTHORIZATION BY REGULATORY BODY)

THE CONTINUOUS CONTROL PRINCIPLE (RIGHT OF INSPECTION AND ACCESS BY THE

REGULATORY BODY)

THE COMPENSATION PRINCIPLE (EXTENT OF NUCLEAR LIABILITY)

THE SUSTAINABLE DEVELOPMENT PRINCIPLE (PROTECTION OF FUTURE)

THE COMPLIANCE PRINCIPLE (INTERNATIONAL AND TRANSBOUNDARY AGREEMENTS,

TREATIES AND CONVENTIONS)


19/26



List of clearances required for setting up a Nuclear Power Plant

1. Clearance of the Ministry of Environment and Forests

2. Clearances from the Gol (Civil Aviation Department) and the Director, National Airports

Authority in connection with the height of any chimneys.

3. Confirmations from the Department of Economic Affairs, Ministry of Finance, the Department

of Industrial Development, Ministry of Industry, the Department Company Affairs and the RBI,

that the Company is permitted to enter into the Financing Agreements,4. Consent of Gol to the issue of equity to Foreign investors

5. Consent of RBI for the subscription by he Foreign Investors in Shares in the Company pursuant

to Section-29 of FEMA (Foreign Exchange Management Act 1999)

6. Consent of RBI for the provision by the Company of guarantees and / or indemnities and the

ability of lenders and suppliers to receive payments in enforcement thereon including

liquidated damages pursuant to Section-9 and 26 of FEMA 1999.

7. Consent of RBI for payment to non-resident directors of the Company-Commissioner of

Electricity

8. Consent of RBI for the Company to establish and office outside India pursuant to Section-8 of

FEMA 1999 and to acquire immovable property to Section-25 of FEMA, 1999

9. Approval of the Chief Engineer Inspector for the Power Station


20/26




10. Exemption from Section-10(15)(iv) of the Income Tax Act 1961 in connection with the interest

and other charges payment by the company on offshore debt

11. Permission from the Director General of Foreign Trade for the various imports pursuant to the

Foreign Trade (Development and Regulation) Act 1992.

12. Land acquisition Power plant Land Acquisition Act 1894

13. Techno economic clearance under section 30 of Electricity Supply) Act, 194814. Permission from the Directorate General of Technical Development / Director General of

Foreign Trade to import helicopters, Aircrafts, Ships or other such vessels under the Foreign

Trade (Development and Regulation) Act, 1992

15. Consent under the Factories Act 1948 relating to firefighting capability

16. Tax confirmations and clarification in relation to the treatment of capital gains and offshore

securities offered by the Company and exemptions under Section-10(15)(iv) ofthe Income Tax

Act, 1961 in relation to any interest payable by the Company on offshore debt securities.


21/26




17. A certificate form the General Insurance Corporation or any of its subsidiaries to the effect

that such insurance or reinsurance cannot be obtained from them

18. Consent from the Gol (Controller of Insurance) to the effecting by the Company of such

insurance and / or reinsurance with offshore insurers and/ reinsures and

19. Consent from RBI under FERA 1973/FEMA 1999 for the taking out of insurance and / or

reinsurance with offshore insures and / or reinsures and for the payment of any premiumsthereunder

20. Permission from the Director General of Foreign Trade for the import of spares pursuant to

the ForeignTrade Development and Regulation Act 1992

21. Consent of the Direction General of Civil Aviation to use and operate an airstrip and helicopter

landing pad, and use and operate a helicopter and / or other aircraft pursuant of the Aircraft

Act 1934


22/26



NUCLEAR LIABILITY BILL

India framed the civil liability for Nuclear damage bill 2010, which stipulates the compensation

burden on the state-run reactor operator, the liability of government and the responsibility of

private suppliers and contractors.

Some major features of the bill are:

The Atomic Energy Regulatory Board has to notify a nuclear incident within 15 days from the date

of a nuclear incident occurring.

The operator of a nuclear installation will be liable for nuclear damage caused by a nuclear

incident in that installation or if he is in charge of nuclear material that caused the incident.

If more than one operator is liable for nuclear damage, all operators shall be jointly, and severally

liable to pay compensation for the damage.

The Bill states that the total liability for a nuclear incident shall not exceed the rupee equivalent

of 300 million Special Drawing Rights (Approximately Rs. 2100 crore)


23/26

TH E ATO MI C EN ER G Y AC T, 1962


Section2-1-(e)

"Plant" includes machinery, equipment or appliance whether affixed to land or not.

Section3-1-(e)

To provide for control over radioactive substances orradiation generating plant in order to -

Prevent radiation hazards

Secure public safety and safety of persons handling radioactive substances

Ensure safe disposal of radioactive wastes.

The Atomic Energy Regulatory Board (AERB) was constituted on November 15, 1983

by the President of India by exercising the powers conferred by Section 27 of theAtomic Energy Act, 1962 (33 of 1962) to carry out certain regulatory

and safety functions under the Act. The regulatory authority of AERB is derived from

the rules and notifications promulgated under the Atomic Energy Act, 1962 and the

Environmental (Protection) Act, 1986

Some of the important sections of the Atomic Energy Act are given as follows.


24/26

TH E ATO MI C EN ER G Y AC T, 1962


Section 10.1-(c)

Rights to use and occupy the surface of any land for the purpose of erecting any necessary buildings

and installing any necessary plant

Section 10-1-(d)

Rights to use and occupy for the purpose of working the minerals and to use or acquire any plant

used in connection with any such mine or quarry

Section 10-(3)

Compensation in respect of any right acquired under this section shall be paid in accordance with

section 21

Section 22(1)

Notwithstanding anything contained in the Electricity (Supply) Act1948, the Central Government

shall have authority -

(a) to develop a sound and adequate national policy in regard to atomic power, to co-ordinatesuch policy with the Central Electricity Authority and the State Electricity Boards constituted under

section 3 and 5

(b) to fix rates for and regulate the supply of electricity from atomic power stations, with the

concurrence of the Central Electricity Authority


25/26

N U C L E A R P O W E R I N I N D I A


The Nuclear Power Corporation of India Limited (NPCIL), a Public Sector Undertaking (PSU) under the Department

of Atomic Energy, was registered as a public limited company under the Companies Act in September, 1987 with

the objective of operating the Atomic Power Stations and implementing the Atomic Power Projects for thegeneration of electricity in pursuance of the schemes and programmes of the Government of India under the

Atomic Energy Act, 1962.


26/26

N U C L E A R P O W E R P R O J E C T S


regulatory issues for setting up a nuclear power plant final

Documents