In the aftermath of the nuclear leaks in Japan, there have been concerns regarding the safety of nuclear power plants around the world. There are some proposals to change the regulatory framework in India to ensure the safety of these plants. We examine some of the issues in the current structure. Which body looks at safety issues regarding nuclear power plants in the country? The apex institution tasked to look at issues regarding nuclear safety is the Atomic Energy Regulatory Board. The AERB was set up in 1983 to carry out regulatory and safety functions regarding nuclear and radiation facilities. The agency has to give clearances for establishing nuclear power plants and facilities. It issues clearances for nuclear power projects in stages after safety reviews. The safety of setting up a nuclear plant in any given area is also assessed by the AERB. For example, it would have looked into the safety of setting up a nuclear power project in Jaitapur in Maharashtra. AERB also reviews the safety mechanisms within existing nuclear plants and facilities. To do this, it requires nuclear facilities to report their compliance with safety regulations, and also makes periodic inspections. Under the recently passed Civil Liability for Nuclear Damage Act, 2010 the AERB is also the authority responsible for notifying when a nuclear incident takes place. Mechanisms for assessing and claiming compensation by victims will be initiated only after the nuclear incident is notified. Why is the Atomic Energy Regulatory Board in the news? Prime Minister Manmohan Singh announced on March 29, 2011, "We will strengthen the Atomic Energy Regulatory Board and make it a truly autonomous and independent regulatory authority." This announcement came in the backdrop of the continuing crisis and high radiation levels at the Fukusima nuclear plant in Japan. News reports opined that the lack of proper autonomy of Japan's nuclear regulator curbed its effectiveness. Japan's ministry of economy, trade and industry regulates the nuclear power industry, and also promotes nuclear technology. These two aims work at cross-purposes. India's regulatory structure is similar to Japan in some respects. What measures has the AERB taken post the Fukushima nuclear incident in Japan? Following the nuclear incident in Japan, a high-level committee under the chairmanship of a former AERB chairman has been set up to review the safety of Indian nuclear power plants. The committee shall assess the capability of Indian nuclear power plants to withstand earthquakes, tsunamis, cyclones, floods, etc. The committee will review the adequacy of provisions for ensuring safety in case of such events. Is there any issue in the current regulatory structure? The AERB is a regulatory body, which derives administrative and financial support from the Department of Atomic Energy. It reports to the secreatry, DAE. The DAE is also involved in the promotion of nuclear energy, and is also responsible for the functioning of the Nuclear Power Corporation of India Limited, which operates most nuclear power plants in the country. The DAE is thus responsible both for nuclear safety (through the AERB), as well as the operation of nuclear power plants (through NPCIL). This could be seen as a conflict of interest. How does the system of independent regulators differ from this? The telecom sector provides an example of an independent regulator. The Telecom Regulatory Authority of India does not report to the Department of Telecommunications. The DoT is responsible for policy matters related to telecommunications, promoting private investment in telecom, and also has a stake in BSNL. Had TRAI reported to the DoT, there would have been a conflict of interest within the DoT. What will the proposed legislation change? Recent news reports have stated that a bill to create an independent regulatory body will be introduced in Parliament soon. Though there is no draft bill available publicly, news reports state that an independent Nuclear Regulatory Authority of India will be created by the bill, and the authority will subsume the AERB within it. This post first appeared as an article on rediff.com and can be accessed here.
TRAI released its recommendations on auction of spectrum on April 23, 2012. The recommendations are in pursuance of the Supreme Court order cancelling 122 telecom licences. The cancellation was ordered on grounds of procedural irregularities and arbitrariness in the first-cum-first-serve policy for allocation of spectrum. The recommendations, if adopted by the Department of Telecommunications, would change various aspects of the present telecom policy, including (a) relationship between a telecom licence and spectrum; (b) procedure for allocation of spectrum; (c) pricing of spectrum; (d) limits on spectrum allocation; and (e) use of spectrum. Relationship between telecom licences and spectrum Previously, under the Telecom Policy 1994 (updated in 1999), spectrum was tied in with telecom licences. Since 2003, licence conditions provided for award of two blocks of 6.2 MHz of spectrum for GSM technology and two blocks of 5 MHz for CDMA technology. As per the government’s decision of January 17, 2008 (as explained in TRAI's consultation paper, see page 3 paragraph 7) additional spectrum would be awarded on the basis of increment in the number of subscribers. Service providers had to pay a licence fee (on obtaining the licence), an annual licence fee and a spectrum usage charge determined on the basis of their adjusted gross revenue. TRAI has recommended that telecom licences and spectrum should be de-linked. The service provider would thus pay separately for the value of the licence and the spectrum. With this formulation an entity that does not hold a licence, but is eligible to secure one, may also procure spectrum. This would help in avoiding situations where licence holders have to wait to secure spectrum or offer wire line services in the absence of spectrum. Procedure for allocation of spectrum TRAI has recommended that spectrum be auctioned by means of a simultaneous multiple round ascending auction (SMRA). This means that the service providers would bid for spectrum in different blocks simultaneously. In the first round of auction a reserve price (base price) set by the government is used. Reserve price for auction and payment mechanism A reserve price indicates the minimum amount the bidder must pay to win the object. In case it is too low, it may reduce the gains made by the seller and lead to a sub-optimal sale. If it is too high, it may reduce the number of bidders and the probability of the good not being sold. Various countries have adopted a reserve price of 0.5 times the final price. TRAI has recommended that the reserve price should be 0.8 times the expected winning bid. It has also recommended that telecom companies pay 67% to 75% of the final price in installments over 10 years, depending on the spectrum band. TRAI has reasoned that a higher price would reduce the possibility of further sales upon bidders securing spectrum. However, this may lead to fewer bidders and ultimately fewer service providers. It is argued in news reports that this may increase investments to be made by the service providers and eventually an increase in tariffs. Spectrum blocks and caps TRAI has recommended that the spectrum cap should be determined on the basis of market share. A service provider can now secure a maximum of 50% of spectrum assigned in each band in each service area. However, a service provider cannot hold more than 25% of the total spectrum assigned in all the bands across the country. As per the January 2008 decision, additional spectrum could be awarded to telecom companies when they reached incremental slabs of subscribers. This could extend to two blocks of 1 MHz for GSM technology, and two blocks of 1.25 MHz for CDMA, for each slab of subscribers. TRAI has recommended that spectrum should be auctioned in blocks of 1.25 MHz. Each auction would at least offer 5 MHz of spectrum at a time. Smaller blocks would ensure that service providers who are nearing the spectrum cap may secure spectrum without exceeding the cap. However, experts have argued that 1.25 MHz block may be too limited for launching services. Also, TRAI in the recommendation has noted that a minimum of 5 MHz of contiguous spectrum is required to launch efficient services with new technologies. Use of spectrum TRAI has recommended that the use of spectrum should be liberalised. This implies that spectrum should be technology neutral. Telecom companies would now be free to launch services with any technology of their choice.
