India Considers Allowing 49% Foreign Stakes in Nuclear Power Plants

Syllabus: GS3/ Infrastructure and Energy

Context

• India could allow foreign companies to take a stake of up to 49% in its nuclear power plants, to help achieve goals to cut carbon emissions.

Background

• Traditionally, nuclear power plants in India have been owned and operated only by state-owned Nuclear Power Corporation of India Ltd (NPCIL) and its fully-owned subsidiary Bharatiya Nabhikiya Vidyut Nigam (BHAVINI).
• To allow private sector participation government has proposed amendments to key legislations;
  • Atomic Energy Act, 1962, a framework for nuclear energy development and regulation.
  • Civil Liability for Nuclear Damage Act, 2010, ensuring compensation mechanisms for nuclear incidents.

What is Nuclear Energy? – Nuclear energy is the energy released during nuclear reactions, either through fission (splitting of atomic nuclei) or fusion (merging of atomic nuclei).  – In nuclear fission, heavy atomic nuclei, such as those of uranium or plutonium, are split into lighter nuclei, releasing a large amount of energy.  1. This process is utilized in nuclear power plants to generate electricity. Status of Nuclear power capacity in India – The current installed nuclear power capacity in the country is 8,180 MW (2% of the total installed electricity capacity), spread across 24 nuclear power reactors. – Capacity Expansion: 10 new reactors (totaling 8 GW) under construction across Gujarat, Rajasthan, Tamil Nadu, Haryana, Karnataka, and Madhya Pradesh. 1. Approval for a 6×1208 MW nuclear plant in Andhra Pradesh in collaboration with the USA.

Need for Foreign and Private Sector Involvement

• Clean Energy Transition: India remains heavily dependent on coal, which accounts for over 70% of its electricity.
  • Nuclear energy, being a stable and low-carbon source, is essential for reducing emissions without compromising baseload supply.
• High Capital Costs: Nuclear projects require large upfront investments. Allowing foreign direct investment (FDI) would enable faster resource mobilization and technology transfer.
• Post the 2008 Indo-US Civil Nuclear Agreement, India gained access to international nuclear markets. However, the expected commercial collaborations failed to materialize due to liability concerns.

Reform Proposals Under Consideration

• FDI up to 49% in Nuclear Sector: The government is considering amending existing laws to allow foreign companies to hold stake in nuclear power ventures.
• Atomic Energy Act, 1962: The proposed amendments would allow licensing of private players to construct, own, and operate nuclear power plants.
• Easing Civil Liability for Nuclear Damage Act, 2010: It was enacted in the wake of the 1984 Bhopal Gas Tragedy, the Act imposes stringent liability on suppliers, which has deterred foreign participation.
  • Under the proposed amendments, the operator’s right to claim compensation from the supplier would be capped to the contract value and be limited to a specified duration.
  • The draft law also proposes a lower liability cap on small reactor operators at $58 million, but is unlikely to alter the cap for large reactor operators from the current level of $175 million.

Regulatory and Safety Oversight

• The Atomic Energy Regulatory Board (AERB) and Department of Atomic Energy (DAE) will continue to supervise all activities. 
• Any relaxation in investment norms will be coupled with strict compliance to India’s safety protocols, aligned with the International Atomic Energy Agency (IAEA) guidelines.

Way Ahead

• Clear Regulatory Framework: Establish a robust regulatory environment to ensure safety, compliance, and transparency, addressing concerns about accountability and national security.
• Gradual Implementation: Start with pilot projects and small-scale initiatives to test private sector involvement, ensuring risk management before large-scale implementation.

Source: ET