India's first private-sector nuclear tender plagued by cost, funding issues

There are 687 queries bothering bidders, documents show, with financing being the thorn, followed by issues of cost over high service charges by NPCIL

India’s first tender calling for private sector participation in small nuclear reactors — a bellwether for long-awaited reforms in the nuclear power industry — is facing repeated delays.

 

This comes after bidders like Tata Power, Reliance Industries and Adani Energy raised several queries relating to ownership, charges and operations, which threaten to make the projects unviable, Nuclear Power Corporation of India Limited (NPCIL) documents show and senior industry officials said.

 

State-owned NPCIL announced a tender in March 2024 for a stepped down version of indigenously-produced nuclear reactors.  It is to support the government's plans to involve India's private sector in the nuclear power business.

 

The tender, which proposed to develop a minimum capacity of two units of 220 megawatts (Mw) Bharat Small Reactors (BSRs) at a single site for captive use, has attracted inquiries from ACME Solar, BHEL, BSNL, Bharat Aluminum, Greenko, Godrej & Boyce, HPCL Mittal, ITC, JSW Energy, Indian Railways and Torrent Power, among others, according to NPCIL documents.

 

The minimum criterion for captive usage is 51 per cent.

 

Reliance Industries, Jindal Steel & Power, Tata Power and Hindalco Industries have submitted necessary documents to sign non-disclosure agreements (NDAs) with NPCIL. But Adani Power and JSW Energy are yet to sign NDAs, an NPCIL document dated 29th September shows.

 

The bidders have proposed 16 sites in six states, including Gujarat, Madhya Pradesh and Odisha.

 

There have been several delays in the tender process because of the wide chasm between NPCIL and the bidders over the terms, a 72-page document by NPCIL on its website shows. 

 

An initial March 2024 request for proposal (RFP) gave a year for companies to respond, but in January and February 2025, the last date for receiving queries was changed thrice.

 

In February, the due date for receiving bids was extended by a month to April 2025, pushed forward by two months, further extended to September 30, and in a statement on September 29, extended to March 2026.

 

The issues raised by bidders are part of the pre-proposal clarification sought by firms and published by NPCIL on its website.

 

BSRs are different from India's new Bharat Small Modular Reactor (BSMR) project, which is still on the drawing board at Bhabha Atomic Research Centre, a senior nuclear scientist said.

 

Explaining the difference between both reactor types, R. Srikanth, dean of School of Natural Sciences at National Institute of Advanced Studies, said the BSR is “based on the outdated 220 Mw pressurised heavy-water reactor (PHWR) design with some modern features” but a BSMR is based on the light water reactor (LWR) technology. 

 

Barring Canada and India, other nations use the more modern and safer LWRs, he added.

 

The BSR design for the tender is based on standard 2x220 MWe PHWRs under operation at Kaiga and Rajasthan.

   

Tender structure

   

A nuclear power plant is an expensive clean energy project, but it is ineligible for a waiver of inter-state transmission charges, akin to green hydrogen and pump storage. And, it does not offer the gains of renewable purchase obligations, bidders said.

 

In all, bidders posed 687 queries to NPCIL, documents show, with financing being the thorn.

 

The tender is structured as a double-edged sword — on one hand, it enables the private sector to participate under existing atomic energy laws, which currently bar the private sector from operating nuclear power plants. Also, in order to qualify under current atomic energy laws, the private sector must bear the costs of installing and operating the reactor, but transfer the asset to the books of NPCIL at no cost.

 

That means private companies cannot avail depreciation or loans on the asset as it is not on their books, an industry official said.

 

“Finances are to be arranged by the user (bidder) against intangible assets as the nuclear power plant (NPP) would be transferred to NPCIL at ₹1. This is likely to create issues in project funding, particularly raising debt,” Reliance Industries said, referring to the document.

 

Banks typically ask for collateral, but in this case with the land lease and plant transferred to NPCIL, there will be no collateral to show, ACME Solar said.

 

Legal ownership by NPCIL is a requirement of the Atomic Energy Act, the corporation said. The licence duration is short, crimping funding, Reliance said. It sought to provide a licence for the entire project life at one go (instead of 5 years for initial operation and balance for regular operation) with intermittent milestones.

 

But NPCIL has rejected it because the terms are based on Atomic Energy Regulatory Board (AERB) regulatory requirements.

 

Project costs

   

Project costs may be unviable, ACME Solar said, seeking a cut in NPCIL’s “expertise charge” by 88 per cent to 7 paise per kilowatt hour (Kwh).

 

Jindal Nuclear Power called the 60 paise/Kwh charge “quite high, arbitrary and unreasonable,” compared to the 7 paise/Kwh federal renewables auction agencies charge.

 

Bidders also questioned the ₹15-22 crore per Mw capex (in 2022) compared to just ₹5-6 crore per Mw (in 2010-11).

 

The annual energy produced from a twin BSR unit of 440 Mw at 72.5 per cent plant load factor (PLF) (net of auxiliary consumption) is around 2.5 billion Kwh, according to ACME, with NPCIL's charges on this energy amounting to ₹150 crore annually. (The present value of annual expertise charges, discounted over 40 years of operation at a 12 per cent discount rate, would be around ₹1,250 crore.)

 

“This cost is significant (around 33 per cent), especially when compared to the total project cost of around ₹3,500 crore," ACME said, negatively impacting the project and the adoption of nuclear energy.

 

Adani Energy has said that the operating expenses ₹47.47 lakh/Mw (2017-18) is significantly on a higher side and makes the overall project unviable. Also, all clearances must be obtained according to AERB regulations. Moreover, the cost of waste management will also be borne by the bidder.

 

Bidders have also complained that the PLF of 68.5 per cent on which the contract is based is very low because similar units in Kaiga and Rajasthan have a five-year average of 95 per cent.

 

There are also issues with renegotiating contracts if new regulations or tax laws affect project economics. The operation of BSRs is under NPCIL scope for the entire life of the plant even if the winning bidder gains expertise. Also, provisions of the Civil Liability for Nuclear Damage Act, 2010 (“CLND Act.”) will apply in the case of an accident.

 

While service charges and PLFs can be discussed, any change in core tender terms of ownership and operations is non negotiable. This is because it will mean changing India's Atomic Energy Act, the nuclear scientist said.

 

Amendments to India's nuclear laws are delayed and may be presented in the winter session of Parliament, industry officials said. 

Tender issues

• The tender has attracted enquiries from Reliance Industries, Tata Power, Adani Energy, BHEL, BSNL, Godrej & Boyce, ITC, and JSW Energy, among others
• Delays in the tender process are due to a wide chasm between NPCIL and the bidders over the terms
• Several private players said NPCIL’s “expertise charge” was very high
• Bidders have also complained that the PLF of 68.5% is very low