Is India's Insolvency Law Ready for the Nuclear Age?

India intends to increase its nuclear energy capacity from 8.8 GW today to 100 GW by 2047. As a prelude, the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (Shanti) has been enacted, opening the sector to private players, but a closer look reveals that many areas of ambiguity remain to be addressed.

Shanti is predicated on rising energy demand from the growth of artificial intelligence, computing, quantum technologies and semiconductors, among others. Under it, a non-transferable licence is required to build, own, operate or decommission a nuclear plant, and to fabricate, store, transport or acquire nuclear fuel.

The Act imposes liabilities on operators for damage and mandates financial safeguards for the disposal of radioactive substances and the decommissioning of nuclear facilities. However, Shanti does not categorically address whether licensees, in the event of a debt default, are to be adjudicated under the Insolvency and Bankruptcy Code, 2016 (IBC). This is an important omission, because the nuclear industry is prone to bankruptcies — every earlier cycle of euphoria has been followed by distress and insolvency, as detailed below.

The saga of the Washington Public Power Supply System (WPPSS) has been brilliantly chronicled by Daniel Pope in his book Nuclear Implosions. WPPSS, a coalition of public utilities, municipalities and rural cooperatives whose directors were neither nuclear experts nor professional managers, embarked on the construction of five nuclear plants in the 1960s on the basis of an inflated demand forecast extrapolated from past growth.

The plants faced delays and cost overruns due to reliance on multiple unproven reactor technologies, the absence of standardisation, the commencement of construction before design finalisation, repeated design changes, labour disputes, contractor conflicts, shifting regulatory requirements, a lack of professional managers and poor internal policies and procedures: for example, the absence of change-order processes. The result was severe financial strain. By the late 1970s, WPPSS had become the largest municipal borrower in the United States (US), accounting for 20% of all public utility borrowings. It subsequently faced high interest costs — new debt was being raised to service existing obligations — and four partially completed reactors were cancelled. In 1983, WPPSS defaulted on $2.24 billion of municipal bonds, then the largest such default in US history, triggering securities fraud litigation.

The travails of British Energy Plc (BE) have been meticulously described by Simon Taylor in his book Privatisation and Financial Collapse in the Nuclear Industry. BE's nuclear programme, initially a product of British military ambitions, was later driven by the United Kingdom's quest for energy security, the severe winters of the 1950s, the Suez crisis of 1956 and the Yom Kippur war of 1973. Though the objective was electricity generation, the initial design was finalised without inputs from Britain's electricity industry. The gas-cooled reactors, variations of which formed the basis of subsequent expansion, were technologically and economically inferior, suffered from design flaws, exhibited manufacturing defects and were built by varied consortium members, which inhibited standardisation and resulted in cost escalation.

Labour challenges and nuclear fuel reprocessing costs made plant operations further uneconomical. Post-privatisation, from 2000 onwards, falling electricity prices, operational disruptions and aggressive cost cutting that depleted institutional memory placed the company under severe stress. External shocks, including the Enron collapse, further constrained access to capital. In September 2002, BE faced insolvency and required government support. It received emergency government funding of £450 million; its total liabilities at the time were estimated at £14 billion.

Westinghouse Electric Corporation (WEC), founded in 1886, was a pioneer in nuclear power and a symbol of US supremacy in the sector. Its nuclear division was acquired by British Nuclear Fuels Limited and, in 2006, sold to Toshiba Corporation at a steep price.

WEC's Gen III+ AP1000 reactors were based on a simplified design, modular construction and passive safety features. The reactors were perceived to be easier and less expensive to build, operate and maintain, requiring fewer materials and a smaller footprint. WEC embarked on construction for two projects: one for Georgia Power and the other for South Carolina Electric and Gas.

However, reality turned out to be different from theory. Modular construction proved difficult in practice, regulation mandated the incorporation of additional safety features that delayed progress, and sub-contractors turned out to be incapable. Multiple litigations ensued, the corporate strategy of acquiring sub-contractors failed, and the project manpower was inexperienced. The cumulative result was a cost escalation of $13 billion. To make matters worse, more economical sources of energy — gas, solar and wind — posed further challenges. In March 2017, WEC filed for Chapter 11 bankruptcy, citing $9 billion in losses from its two US nuclear construction projects.

USEC Inc, privatised in 1998, was a uranium enrichment company that used an inefficient and energy-intensive method known as gaseous diffusion. It became increasingly reliant on purchased Russian material to fulfil customer contracts — a strategy that left it susceptible to geopolitics. An imbalance in global supply and demand put downward pressure on the prices of its products, ultimately resulting in its Chapter 11 filing in 2014.

Apart from bankruptcies, another feature of the industry is the inordinate delays that projects face — a recipe for distress in the private sector.

At Olkiluoto, Finland, construction began in 2005 with a projected cost of €4.2 billion and a 56-month timeline. As detailed by David Kemp and Peter van Doren in a Cato working paper, the project faced persistent quality control issues — in concrete, welds and valves — leading to Areva's technical bankruptcy in 2015; the company was saved by a bailout from the French government. The reactor was finally grid-connected in March 2022, 13 years late and at more than double the initial cost.

In a similar vein, at Flamanville, France, construction started in 2007 with an estimated cost of €4.1 billion and a five-year schedule. Problems with concrete, welds and carbon-weakened steel components — the last linked to decades of document falsification — pushed projected costs to €12.7 billion and delayed the project by 12 years.

EDF's Hinkley Point C nuclear power plant in Somerset, UK, has suffered the same fate. The first of its two reactors, originally scheduled to begin operation in 2025 when the project was approved in 2016, is now expected to enter service in 2030. As per a Financial Times report, the projected cost has risen to nearly £49 billion, against an initial estimate of £18 billion.

The delays are geographically agnostic. In China, the AP1000 reactors at Sanmen began operation in 2018, four years late and at over $8 billion — more than double the initial projections. Two EPRs at Taishan, started in 2009 with a 46-month plan, began commercial operation in 2018, five years behind schedule and 40% over budget due to quality control and safety concerns.

Indian reactors, too, have had time and cost overruns. The earlier era was admittedly marked by India's exclusion from the nuclear club, which compounded the difficulties; nevertheless, delays persist even now. According to the country profile by the World Nuclear Association, the first four indigenous PHWRs were to be operational by 2017 after a 60-month construction period; all were delayed by several years. Kakrapar-3 was connected to the grid in January 2021, Kakrapar-4 in February 2024 and Rajasthan-7 in March 2025, while Rajasthan-8 remains under construction. Finally, the 500 MWe Prototype Fast Breeder Reactor (PFBR), scheduled for commissioning in September 2010, achieved criticality only in April 2026. Delays inevitably lead to cost escalation — both the PFBR and Kakrapar, for instance, saw a 100% increase in costs, as per a MOSPI report.

This implies that the underlying problems transcend national differences. Globally, the final costs of nuclear plants built through 1980 were, on average, 50% higher than those of comparable coal plants. Further, a study of construction cost overruns showed that 175 of the 180 nuclear projects examined exceeded their initial budgets — by 117% on average — and took, on average, 64% more time than projected.

In fact, delayed project execution has been the norm in India across all infrastructure projects. According to the MOSPI report of November 2025 on central infrastructure projects, 823 ongoing projects experienced a 22% increase in costs due to delays. Even the eagerly awaited Mumbai–Ahmedabad High Speed Rail Corridor is running seven years late and is now expected to be operational in December 2029.

Such delays and cost overruns, when replicated in the private sector, will certainly lead to bankruptcies. The average construction time for a nuclear plant exceeds ten years; delivering over 90 GW of additional capacity in twenty years is an unviable stretch target, given the operational challenges described below. Moreover, a number of marquee projects — airports, tunnels, bridges, important buildings — have suffered from quality issues, something India can ill afford in the rushed construction of a nuclear project.

Even setting aside the vestiges of history, a fresh evaluation of demand and price economics does not look enticing.

Future electricity demand from data centres is subject to several uncertainties: how much data centre capacity will actually be built, the effects of India's extreme climate on data centres, the availability of water amidst rising temperatures — both for data centres and for nuclear power plants, the time data centres take to reach peak demand, the effects of energy efficiency improvements in chip design and regulations.

On pricing, renewables plus storage are more cost-competitive than nuclear in India. Renewable energy capacity is inching towards 300 GW; nuclear, by comparison, lags in cost, deployment speed and scalability. Recent solar and storage auctions in India have yielded prices of ₹3.1–3.5 per kWh, compared with nuclear tariffs exceeding ₹6 per kWh. Admittedly, renewables cannot act as base load, but nuclear may not be the only option either.

Beyond demand and pricing, managers would face daunting odds, with supply chains, technology and trained manpower forming the key operational bottlenecks. According to a Ministry of Power report (MOPR) on achieving the goal of 100 GW of nuclear capacity, India's strategy hinges on the utilisation of domestic thorium reserves, the continued primacy of Pressurised Heavy Water Reactor (PHWR) technology, and the adoption and indigenisation of Pressurised Water Reactor (PWR) and other imported technologies, with large reactors for grid applications, and small reactors for captive use.

The primacy of the PHWR implies an additional 6,350 tonnes of heavy water capacity, a critical component, and the establishment of spent fuel reprocessing facilities, since the quantum of spent fuel equals the annual fuel requirement. While there have been many articles in the media on the interest of Indian corporates in the sector, relatively little has appeared on heavy water capacity augmentation and reprocessing.

Furthermore, as per the MOPR, achieving 100 GW will require an additional 8,029 tonnes of natural uranium and 1,045 tonnes of enriched uranium annually. To put the challenge in perspective: even at the current 8.8 GW capacity, only a quarter of the uranium requirement is met from domestic sources. The insolvency risk can be gauged from the events of just over a decade ago, when imported-coal-based power plants received a rude shock from a sudden increase in prices by overseas coal exporters.

Moreover, according to a UN News article, a total of 71 new reactors are under construction. A number of countries, such as South Korea, China, Russia, France, the United Kingdom, Poland and Argentina, intend to expand aggressively, and Japan is contemplating a return to nuclear energy. This implies that demand for uranium, and consequently its price, will skyrocket. Uranium prices have risen from $30/lb to $85/lb in the last five years, exceeding $100/lb, a sixteen-year high, in between. Securing feedstock supply at the right price is thus paramount to the economic viability of a nuclear energy plant.

The supply of enriched uranium, moreover, is concentrated in a few hands. Russia's Rosatom and Tenex are the dominant players; France's Orano, Urenco — a British, German and Dutch consortium — and China have enrichment capacity only for their domestic needs. Tenex also has a monopoly on high-assay low-enriched uranium (HALEU), required to power small modular reactors (SMRs); the US has recently funded its own demonstration project, led by Centrus (the post-bankruptcy avatar of USEC Inc).

A part of India's nuclear renaissance rests on SMRs. The Government of India's backgrounder on the Shanti Bill states that the Union Budget 2025–26 allocated ₹20,000 crore to drive the design, development and deployment of SMRs, with five indigenously designed SMRs to be operational by 2033.

The International Atomic Energy Agency (IAEA) defines SMRs as having an electrical output of 30 MW–300 MW. However, no commercial SMR is in operation, barring two prototypes in Russia and China, though according to the IAEA four are in advanced stages of construction in Argentina, China and Russia. The argument that SMRs, being smaller, will be cheaper, quicker and easier to build and site is therefore not yet backed by evidence; their technological viability, costs and construction timelines remain unproven.

Moreover, according to the Financial Times, the cost per unit for SMRs is expected to be higher than for conventional reactors. A single standard has yet to emerge — there are 130 SMR technologies globally. Studies also suggest the volume of waste from SMRs could be double, or as much as 30 times greater, owing to the use of chemically reactive fuels and coolants.

Beyond SMRs, the adverse consequences of technological uncertainty, and of using multiple technologies, or technologies still under development, are demonstrated by the bankruptcies of WPPSS, BE and WEC.

Technology is also intertwined with evolving regulation. WPPSS, BE and WEC were all saddled with extra costs on account of regulation; the latter two due to the 9/11 attacks, and WEC additionally due to the incorporation of Fukushima learnings. In the era of drone warfare, regulations may be the wild card. Shanti states that "an operator shall be liable for any nuclear damage except the damage caused by a nuclear incident due to a grave natural disaster or an act of armed conflict, hostility, civil war, insurrection or terrorism". As the residual liability will fall on the Central Government, it is likely that regulations will continuously evolve.

Another regulatory aspect that will affect operations is tariffs. Shanti states that "notwithstanding anything contained in the Electricity Act, 2003, the Central Government shall fix the tariff for supply of electricity from nuclear power plants and consider the cost of fuel, spent fuel management, decommissioning and such other relevant factors". Given the global dynamics of the value chain, this may result in nuclear energy prices higher than the market can absorb.

A regulated tariff is a double-edged sword: it can bankrupt a company in either scenario. If the tariff is higher than the market rate, distribution companies will not buy the electricity, resulting in lower revenues; if it is lower, the company will not be profitable. In May 2026, for example, the price of electricity on the Indian Energy Exchange twice fell to zero because, in the absence of storage, the solar energy supplied exceeded demand, resulting in the shutdown of solar power. A similar fate should not await nuclear power.

Recently, the French government chose to nationalise EDF, paying its minority shareholders approximately €10 billion, as the company was highly indebted and carrying losses of about €18 billion. One reason for the losses was a regulated tariff system under which EDF was forced to sell electricity below market prices to large customers, and even to competitors, to shield consumers from surging energy prices.

The final challenge managers will face is the availability of trained manpower. According to the MOPR, achieving 100 GW will require 61,000 personnel for the operation of nuclear power plants. Peak manpower requirements will be approximately 1,20,000 for construction in 2041 and approximately 5,500 for plant design activities in 2039. Currently, training institutions can train only 100 and 1,200 personnel per annum for design and operation respectively.

The historical examples and anticipated operational challenges above indicate that some nuclear projects will face distress and insolvency. Globally, the applicability of bankruptcy laws has not been consistent. In the case of BE, the UK’s National Audit Office said: "Normally, when private companies get into difficulty, the Department's policy is not to intervene on the argument that United Kingdom productivity goes up if relatively inefficient firms are allowed to close and this process should not be inhibited by government action. In this instance, the Department decided to intervene because, in its assessment, unplanned closures of British Energy's nuclear power stations would have had safety implications and put electricity supplies at risk." The government assumed the position of senior creditor. The other creditors, banks, bondholders and the like, were encouraged to take part in a deal whereby they swapped their claims on the company for equity. Existing shareholders' equity was reduced by 97.5%. The new BE shares were relisted in January 2005.

The WPPSS default, too, did not trigger bankruptcy. That, however, was an exceptional case, comprising municipalities and public utility districts, and with facts and nuances that will not apply to the Indian insolvency ecosystem. Bondholders took haircuts amid negotiated settlements.

Shanti does not mention what happens if a licensee becomes insolvent. It does not categorically affirm the applicability of the IBC: The Act is silent. It merely provides that, in the case of cancellation of a licence, the Central Government shall take measures to protect the interests of lenders, investors, consumers and other stakeholders.

However, in the event a plant or any reactor is abandoned at any stage after commissioning, or after the initial nuclear fuel loading, regardless of cause, all acquisition rights shall vest in the Central Government, including the assets thereof, free from all encumbrances.

It thus appears that for a working reactor, the IBC may not be applicable. Clarity on applicability will help investors, and if a bifurcation is to be made based on the nature of risk, it should be clearly articulated. For example, a nuclear power plant or fuel enrichment facility may be kept outside the IBC, whereas an equipment manufacturer or EPC contractor may be treated like any other corporate. If the answer on IBC applicability is in the affirmative, a few more issues need to be ironed out.

Qualifications of an Insolvency Professional — Who will be appointed as, and be eligible to be, the interim resolution professional or the resolution professional? Would we entrust the running of a nuclear plant, with all its attendant safety requirements, to just any insolvency professional? Or, as in financial sector insolvencies, where the insolvency professional is recommended by the RBI, would the professional in a nuclear insolvency be recommended by the Atomic Energy Regulatory Board (AERB)? In addition, just as Regulation 18(4) of the corporate insolvency resolution process regulations allows the competent authority under the Real Estate (Regulation and Development) Act, 2016 to be invited to a committee of creditors meeting, would the competent authority under the AERB be similarly invited in a nuclear insolvency?

Transferability of Licence — Shanti states that the prior permission of the Central Government or the Board is required. What would be the modus operandi? The transfer of a licence can be a vexing issue, both BE and USEC faced this dilemma: BE in the context of a merger, and USEC in its restructuring plan under Chapter 11.

Debtor's Right to Earmarked Funds — Shanti stipulates that the licensee shall maintain sufficient financial security to ensure the safe disposal of radioactive substances, the decommissioning of the facility or mine and the settlement of claims. Clarity is required on whether this "financial security" will belong to the corporate debtor, to be distributed to creditors in the event of liquidation, or be treated as "assets held in trust for a third party" and excluded from the liquidation estate. In the US, decommissioning funds remain segregated and are not available to companies in distress or to the bankruptcy estate in bankruptcy proceedings. Would the financial security under the Shanti Act be deemed to be for the public good, similar to the Universal Service Obligation Fund under the aegis of the Telecom Regulatory Authority of India?

Corporate Structures and Cross-Border Insolvency — Investments from other jurisdictions are, as a matter of prudent practice, structured by corporates to optimise tax and other liabilities. However, if the quantum of liability arising out of Indian operations exceeds what is stipulated in the Shanti Act, the question arises whether the IBC will lift the corporate veil, as was discussed in the recent Supreme Court judgment in Alpha Corp Development Pvt Ltd, and whether such an approach will withstand judicial scrutiny.

It is also highly likely that a cross-border insolvency law will have been notified by the time the first bankruptcy in India's nuclear industry arises. A related issue that will surface is that of third-party releases. The IBC does not allow third-party releases; Chapter 15 recognition in the US, however, does, even after the Purdue Pharma decision. Thus, a structure that establishes its Centre of Main Interests (COMI) outside India and secures Chapter 15 recognition granting a third-party release will come into direct conflict with the IBC.

However, if the current deglobalisation trend persists, the UNCITRAL cross-border insolvency framework, based on modified universalism, may be discarded in favour of territorialism. In such a scenario, will agreements entered into with international companies include clauses on forum selection and the choice of bankruptcy law to govern the resolution of such bankruptcies?

Insolvency Due to Force Majeure Events — Strategic industries, including nuclear, are guarded as national treasures across the globe. The nuclear industries of China, Russia and France are under state control. The US, once the mecca of capitalism, which had even privatised dual-use technology in the case of USEC, is seeing cracks too: the US government recently announced a deal entitling it to a share of profits and an equity stake in WEC under certain conditions.

India has suffered from such gyrations before. According to the World Nuclear Association's country profile, in the era of India's isolation from the nuclear club, its reactors in the mid-1990s had some of the world's lowest capacity utilisation rates, reflecting a severe shortage of uranium fuel. Similarly, in 2004, at the behest of the Nuclear Suppliers Group, Russia briefly withheld uranium supplies for the Tarapur reactors. Though from a different sector, the recent shenanigans of the US vis-à-vis Anthropic buttress the argument.

Such situations may arise again, leaving Indian companies vulnerable to the whims of other nations. A clear pathway needs to be laid out for such scenarios, wherein an apparently healthy company may suddenly face distress due to the stoppage of supply of a machinery component or of fuel.

Disclaimer of Onerous Property — The Liquidation Regulations permit the disclaimer of onerous property where it is not saleable, or not readily saleable, because the possessor is bound to the performance of an onerous act. The question that arises is whether the IBC will permit the disclaimer of property that bears traces of radioactivity or requires decommissioning.

Ironing out these contentious matters will reduce litigation-driven delays, which have long been the bane of the IBC process. Experts and stakeholders must come together, deliberate and find solutions to the complex equation of nuclear industry insolvency, with all its concomitant constraints, for an outcome that is optimal in the interest of the nation.