INFRASTRUCTURE   REGULATORY   ISSUES                          INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR                    ...
NUCLEAR ENERGY      When a neutron strikes an atom            of      uranium, the uranium splits into two lighter      at...
N U C L E A R P O W E R P R O J E C T S TA G E S     A nuclear power plant essentially has 5 stages     •    Pre-Project  ...
N U C L E A R P O W E R P R O J E C T S TA G E SINFRASTRUCTURE   REGULATORY   ISSUES                INDIAN INSTITUTE OF TE...
NUCLEAR INFRASTRUCTURE ISSUES      International Agreements and Safeguards      Regulatory Framework                Financ...
N U C L E A R R I S K S A N D M I T I G AT I O NINFRASTRUCTURE   REGULATORY   ISSUES                 INDIAN INSTITUTE OF T...
N U C L E A R R I S K S A N D M I T I G AT I O NINFRASTRUCTURE   REGULATORY   ISSUES                 INDIAN INSTITUTE OF T...
A S S O C I AT E D O R G A N I Z AT I O N S   THE GOVERNMENT (policy making)                         THE FUTURE PLANT OWNE...
D E V E L O P M E N T C O N S I D E R AT I O N S   LAWS                                                                   ...
D E V E L O P M E N T C O N S I D E R AT I O N S   ENERGY AND ELECTRICITY SUPPLY POLICIES   •   National Development polic...
D E V E L O P M E N T C O N S I D E R AT I O N S   INTERNATIONAL AGREEMENTS   •   Treaty on the non-proliferation of Nucle...
TENDERS   Information provided by the owner        Information requested from bidders   1. INVITATION LETTER              ...
CONTRACT   Contract conditions   •   Financing arrangements   •   Down-payments   •   Governmental approval or authorizati...
CONTRACT   Contract Components   •Definitions                                      •Licensing   •General clauses          ...
FINANCING   Major Challenges   •   The high capital cost and technical complexity of       NPPs, which present relatively ...
FINANCING   Financial Model for project fully financed through government guarantee.INFRASTRUCTURE     REGULATORY     ISSU...
FINANCING  Financial Model for Public Private Partnership projects.  The private sector investors bring the equity and loa...
LEGAL FRAMEWORK  Nuclear laws and regulations address the following  •   THE SAFETY PRINCIPLE (PREVENTION AND PROTECTION) ...
LEGAL FRAMEWORK  List of clearances required for setting up a Nuclear Power Plant  1. Clearance of the Ministry of Environ...
LEGAL FRAMEWORK  List of clearances required for setting up a Nuclear Power Plant  10. Exemption from Section-10(15)(iv) o...
LEGAL FRAMEWORK  List of clearances required for setting up a Nuclear Power Plant  17. A certificate form the General Insu...
LEGAL FRAMEWORK  NUCLEAR LIABILITY BILL  India framed the civil liability for Nuclear damage bill 2010, which stipulates t...
T H E AT O M I C E N E R G Y A C T, 1 9 6 2     The Atomic Energy Regulatory Board (AERB) was constituted on November 15, ...
T H E AT O M I C E N E R G Y A C T, 1 9 6 2                                            Section 10.1-(c)  Rights to use and...
NUCLEAR POWER IN INDIA  The Nuclear Power Corporation of India Limited (NPCIL), a Public Sector Undertaking (PSU) under th...
NUCLEAR POWER PROJECTSINFRASTRUCTURE   REGULATORY   ISSUES   INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
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Regulatory Issues for setting up a Nuclear power plant

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Regulatory Issues for setting up a Nuclear power plant

  1. 1. INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR • INFRASTRUCTURE ISSUES • RISK MITIGATION • DEVELOPMENT CONSIDERATIONS • TENDERING • CONTRACT • FINANCE MODELS • LEGAL FRAMEWORK Presented by: P R AT E E K D A S G U P TA PRANAV MISHRA
  2. 2. NUCLEAR ENERGY 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 doesn’t 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.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  3. 3. N U C L E A R P O W E R P R O J E C T S TA 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 yearsINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  4. 4. N U C L E A R P O W E R P R O J E C T S TA G E SINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  5. 5. NUCLEAR INFRASTRUCTURE ISSUES International Agreements and Safeguards Regulatory Framework Financial Resources Codes and standards Nuclear Law Safety Assessment Capabilities Educational Programmes Physical Facilities Public Consultation Communication Engineering / Manufacturing Procurement Human Resources Emergency Response Planning Project Management Construction / CommissioningINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  6. 6. N U C L E A R R I S K S A N D M I T I G AT I O NINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  7. 7. N U C L E A R R I S K S A N D M I T I G AT I O NINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  8. 8. A S S O C I AT E D O R G A N I Z AT I O N S THE GOVERNMENT (policy making) THE FUTURE PLANT OWNER • Energy Supply • Electricity system expansion planning • Safety and Regulation • Performance of economic analyses • Environmental protection • Defining the projects • Domestic Infrastructure development • 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 institutionsINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  9. 9. D E V E L O P M E N T C O N S I D E R AT I O N S LAWS Radiation Protection Laws Concerning Nuclear Safety Plant / Material Ownership • 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 managementINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  10. 10. D E V E L O P M E N T C O N S I D E R AT I O N S 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.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  11. 11. D E V E L O P M E N T C O N S I D E R AT I O N S 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 TerrorismINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  12. 12. TENDERS Information provided by the owner Information requested from bidders 1. INVITATION LETTER 1. GENERAL INFORMATION 2. ADMINISTRATIVE INSTRUCTIONS 2. GENERAL TECHNICAL ASPECTS 3. GENERAL INFORMATION 3. TECHNICAL DESCRIPTIONS 4. TECHNICAL REQUIREMENTS 4. SCOPE OF SUPPLY AND SERVICES 5. SCOPE OF SUPPLY AND SERVICES 5. ALTERNATIVES AND OPTIONS 6. NATIONAL PARTICIPATION 6. QUALITY ASSURANCE PROGRAMME 7. BID EVALUATION CRITERIA 7. TRAINING 8. DRAFT CONTRACT TERMS AND CONDITIONS 8. PROJECT SCHEDULE 9. COMMERCIAL CONDITIONS 9. TECHNOLOGY TRANSFER 10. SAFETY AND SECURITY CONSTRAINTS 10. GUARANTEES AND WARRANTIES 11. DEVIATIONS AND EXCEPTIONS 12. COMMERCIAL CONDITIONSINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  13. 13. CONTRACT 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. Turnkey Contract Split Package Contract1. The owner has one contract with the main 1. The owner has multiple contracts with supplier. suppliers.2. The main supplier has overall responsibility for 2. The overall responsibility is divided construction, and turns over responsibility for between a relatively small number of the project to the owner/operator in stages contractors, each building a large section during the commissioning phase. of the work.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  14. 14. CONTRACT Contract Components •Definitions •Licensing •General clauses •Delivery times •Object of the contract •Documentation •Planning and execution of the work •Spare and wear parts, consumables and special •Information, inspection, testing and control tools •Assignment of the work and subcontracting •Guarantees or warranties •National participation and technology transfer •Take-over •Training of personnel •Prices, price adjustments and terms of payment •Changes and additional work •Force majeure •Transport and customs clearance •Termination and suspension of the contract •Risks and transfer of title •Guarantee of title and proprietary information •Liability •Execution of the contract •Insurances •Applicable law •Quality assurance •ArbitrationINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  15. 15. FINANCING 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 formulateINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  16. 16. FINANCING Financial Model for project fully financed through government guarantee.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  17. 17. FINANCING 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.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  18. 18. LEGAL FRAMEWORK 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)INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  19. 19. LEGAL FRAMEWORK 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 StationINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  20. 20. LEGAL FRAMEWORK List of clearances required for setting up a Nuclear Power Plant 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, 1948 14. 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) of the Income Tax Act, 1961 in relation to any interest payable by the Company on offshore debt securities.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  21. 21. LEGAL FRAMEWORK List of clearances required for setting up a Nuclear Power Plant 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 premiums thereunder 20. Permission from the Director General of Foreign Trade for the import of spares pursuant to the Foreign Trade 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 1934INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  22. 22. LEGAL FRAMEWORK 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)INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  23. 23. T H E AT O M I C E N E R G Y A C T, 1 9 6 2 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 the Atomic 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. Section 2-1-(e) "Plant" includes machinery, equipment or appliance whether affixed to land or not. Section 3-1-(e) To provide for control over radioactive substances or radiation generating plant in order to - • Prevent radiation hazards • Secure public safety and safety of persons handling radioactive substances • Ensure safe disposal of radioactive wastes.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  24. 24. T H E AT O M I C E N E R G Y A C T, 1 9 6 2 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-ordinate such 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 AuthorityINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  25. 25. NUCLEAR POWER IN INDIA 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 the generation of electricity in pursuance of the schemes and programmes of the Government of India under the Atomic Energy Act, 1962.INFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
  26. 26. NUCLEAR POWER PROJECTSINFRASTRUCTURE REGULATORY ISSUES INDIAN INSTITUTE OF TECHNOLOGY KHARAGPUR
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