Nuclear Accident Liability Regulation Requires Insurance for Nuclear Operators and Transporters

The President has issued the Presidental Regulation No. 74 of 2012 on Nuclear Damage Liability (“Regulation“). The Regulation addresses two main issues that arise in the event of a nuclear accident. First, it sets out the maximum amount of damages that the nuclear energy related businesses would have to pay. Second, the Regulation stipulates an obligation that businesses obtain insurance or other financial guarantee to ensure that damages are paid. 

The Regulation applies to natural and legal persons (private and government owned) whose businesses relate to one of the following categories of nuclear energy related activity (Art. 1 (1) and (8)):

The abovementioned businesses are further classified into 15 subcategories (see the Appendix).

Although Indonesia does not actively use nuclear energy as a source of power, there are currently three non-power nuclear reactors located in Bandung, Yogyakarta, and Serpong - Banten. These non-power reactors were built for research purposes.

Nuclear Accidents

A nuclear accident is defined as an event, or a chain of events, that occurs either at a nuclear related facility or during transportation, which leads to loss/harm, such as death, injury, illness, property damage, contamination, or environmental damage (Art. 1 (5) and (6).      

Note that the Regulation is silent on defining the cause of a nuclear accident. This suggests that regardless of the cause of the accident, whether human or technical error, or act of God such as a tsunami, the business would be found liable in accordance with the Regulation.

Maximum Compensation

The maximum cumulative compensation that can be imposed is IDR 4 trillion per occurrence (Art. 4 (2). This provision is aligned with Government Regulation No. 46 or 2009 on Limit of Liability for Nuclear Damages, which raised the maximum monetary compensation for a nuclear accident from IDR 900 billion (stipulated under Law No. 10 of 1997) to IDR 4 trillion.

Businesses engaged in one of the 15 different nuclear activity categories (Appendix) are subject to pay different amounts, ranging from IDR 1 billion to IDR 4 trillion (see Appendix). For instance, a nuclear fuel and waste transporting business is subject to IDR 1 billion at most - per occurrence - while a commercial nuclear reactor business (> 2,000 MWe) is liable for IDR 4 trillion at most - per occurrence.    

Financial Assurance 

To ensure that businesses are financially able to pay compensation to the affected parties, each nuclear related business is obliged to have insurance or other financial instrument that guarantees payment (Art.5 (1)). The insurance policy, or the financial guarantee document (copies), must be submitted to the Head of the Nuclear Energy Regulatory Agency (“BAPETEN”) at the time of applying for a commissioning permit.

Note that the Head of BAPETEN will have one year to issue a commissioning permit, starting from the date when the application is declared complete (Art. 16, Government Regulation No. 43 of 2006 on Nuclear Reactor Permit).  

Transporting Nuclear Fuel/Waste 

Article 6 (1) provides that a business that sends nuclear fuel/waste will be liable for any nuclear accident during the transportation process. Liability can be shifted to the transporter or the recipient if it is stated in the written agreement (Art. 6 (2).

However, this does not create the possibility of a waiver from the general requirement that all transporters of nuclear material must carry insurance or otherwise maintain the ability to pay.

Government Liability

In the event that the Government owns the nuclear related facility or is responsible for the transportation process, it will be liable to pay damages in case of a nuclear accident.

A further implementing regulation on businesses’ accountability and compensation payment procedures will be further regulated under a Head of BAPETEN Regulation (for private owned facilities) and Minister of Finance Regulation (for government owned nuclear facilities).

The Regulation has been in force since 24 August 2012.