Monday, June 14, 2010

Oil lessons for "nuclear" India

There is a bill in the parliament which if enacted would cap the liability of companies engaged in nuclear power to some fixed amount. For eg. in the BP gulf oil mess the liability of BP is limited to USD75Million plus the "clean up costs". The calculation that BP has been criminally liable of doing is:

cost of clean up = 75+x

loss due to a full cap (tech available with them since day 1 of oil spill) = y

now as "y > 75+x" the business decision is to "let the oil flow". Full cap is that the well is "closed" and is written off as a total loss for BP!!

Similarly in the future when a nuclear disaster were to occur the business decision will keep the "leak" going on as long as y>75+x !!

truly very interesting times we live in!!