Liability costs of environmental disaster revealed in Russia
04 August 2021
The potentially enormous liability costs of an environmental catastrophe have been exposed with a recent claim made by Russia's state fisheries agency, Rosrybolovstvo.
The agency is claiming 58.7 billion rubles (Euros 674 million) in damages, from the Russian firm Nornickel over an Arctic fuel spill in 2020 with experts suggesting it will take 18 years for the affected rivers and lake to recover.
Rosrybolovstvo filed the claim against Nornickel, which has already paid Euros 1.68 billion ($2 billion) for the environmental damage caused by the leak of 21,000 tons of diesel fuel at its power plant in Norilsk in May 2020 which forced President Vladimir Putin to declare a state of emergency.
The claim has been filed against Nornickel's wholly owned subsidiary NTEK to the Arbitration Court of the Krasnoyarsk region. Nornickel President and main shareholder Vladimir Potanin is Russia’s richest man and environmentalists say the spill in Norilsk, an industrial city in the Arctic Circle, was the country’s worst environmental disaster in the Arctic this century.
The spill leaked into the soil, two rivers, and a downstream lake after a storage tank at a Nornickel-operated power plant collapsed or sank due to what the company said was thawing permafrost.
Russian investigators and a report commissioned by Nornickel, found significant flaws in the tank’s design and construction, which should have allowed the tank to better withstand the melting permafrost.
A Rosrybolovstvo statement put the cost of work to restore aquatic bioresources at more than 55 billion rubles (Euros 631 million) and estimated direct damage caused by the death of fish at 3.6 billion rubles (Euros 41 million).
Nornickel, the world's leading nickel and palladium producer, said the agency’s estimates were “overstated” and it would challenge Rosrybolovstvo's claim for damages and the methodology used to calculate the amounts in court.
Nornickel said the Siberian branch of the Russian Academy of Sciences estimated direct damage to the Doldykan and Ambarnaya rivers and the Pyasino Lake was between 1.9 million and 52.1 million roubles, depending on the basis for the calculations. Nornickel did not disclose its estimate of costs for restoration of bioresources in the area.
Two plant managers and two top engineers were arrested in the wake of the spill on suspicion of violating environmental-protection rules. The mayor of Norilsk and a government inspector have also been charged with negligence.
W Denis are specialists at procuring broad form Environmental Impairment Liability Insurance for all types of industries, including Oil and Gas companies around the world. Our policies include high limits of indemnity to pay for the cost of remediating damaged habitats, cleaning up environmental damage as well as the legal costs and damages awards associated with such events.