Despite serious reservations in the US about India’s nuclear liability law, New Delhi and Washington have agreed to push ahead with a “pre-early works agreement” that is expected to pave the way for the 6,000 MW nuclear power project in Mithivirdi in Gujarat. The Nuclear Power Corporation of India (NPCIL) and Westinghouse Electric Co. propose to sign the agreement during Prime Minister Manmohan Singh’s visit to the US next month. Government lawyers of the two sides, who have been grappling with the liability issue, plan to hold another round of talks next month to try and overcome the hurdles. The pre-early works agreement, it is learnt, will be in the nature of a “small contract” that will facilitate feasibility studies for the project at the coastal site about 50 km south of Bhavnagar. It will cover environmental impact studies, licensing issues, cost of building the reactors, and training and research among others. It will also allow further exploration of the advantages and disadvantages of the location, land acquisition issues and spreading awareness about the design of Westinghouse’s AP1000 reactor. Westinghouse is expected to invest several million dollars under this agreement, with NPCIL likely to pitch in as well. The pact will not lead to any kind of groundbreaking or brick and mortar activity, top sources said. It will only allow the two sides to work together on the way forward on a landmark in bilateral ties, which is also a complex issue, the sources said. The Mithivirdi project is one of the first India hopes to build after the civilian nuclear deal it signed with the US in 2008. It is to be spread over 777 hectares, and in phases house six reactors manufactured by Westinghouse, a subsidiary of Japan’s Toshiba. The project aims to supply power to Gujarat, as well as to Maharashtra, MP, Rajasthan and Chhattisgarh. The cost of the project was estimated at Rs 60,000 crore in 2009. Richard Stratford, director for nuclear energy, safety and security in the US State Department, who was the US negotiator on the India-US 123 agreement and the reprocessing pact, said that there were “some issues that need to be resolved” before nuclear business deals can be struck, but Washington was not “frustrated” by the time that this was taking. “The biggest issue is the liability issue. We are engaged in a dialogue with India, lawyer to lawyer, to try and resolve the issues,” he told a group of visiting Indian journalists. Although Washington and New Delhi were both eager to work together on civilian nuclear cooperation, “it is unfortunate that we have not gone further in terms of nuclear trade”, Stratford said. Since it was conceived in 2005, the India-US civilian nuclear deal had assumed centrestage in the relationship between the two countries and there is a palpable unhappiness on the American side about the Indian nuclear liability law — which is seen as being excessively stringent — scaring US companies away from striking business deals. However, there also seems to be a realisation that the two sides would have to work through the law, and “it is taking some time as complex things do”. Stratford said there were options to resolve the liability tangle without India having to dilute the law. One was to build the cost of supplier liability into the price of the reactor, but that could hugely raise costs. Another option was for the Indian government to indemnify the liability — but that would be inconsistent with the mandate of the Indian Parliament, he said. However, there are no indications that Washington is giving up. “The nuclear liability law doesn’t need to stop the negotiations,” said a source. “We don’t think it is insurmountable. Liability is an issue that can be resolved. While we do that, the pre-early works agreement will allow companies to move forward in a preparatory stage and that itself will take years.”