Important Developments in Indian Energy Law: The PNG Rules & the SHANTI Bill

India's energy law scenario has had two massive updates in the last two weeks. The Ministry of Petroleum and Natural Gas has come up with a completely new Petroleum and Natural Gas Rules, 2025 ("PNG Rules 2025") replacing the Petroleum and Natural Gas Rules, 1959 ("PNG Rules 1959"). The PNG Rules 1959 defined upstream petroleum law for more than 65 years. With the enactment of the Oilfields (Regulation and Development) Amendment Act, 2025, the Government has thought it fit to come up with the PNG Rules 2025. This is a significant development for energy law in India. 

The second important development is the introduction of the SHANTI Bill 2025. We have been writing about the recent developments in Indian nuclear energy law post the popularity of Small Modular Reactors (SMRs) worldwide. Now, through the introduction of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Bill, 2025 (SHANTI Bill 2025), the Government has sought to reform the law on nuclear energy. The Long Title of the Bill reads:

"A BILL to provide for the promotion and development of nuclear energy and ionising radiation for nuclear power generation, application in healthcare, food, water, agriculture, industry, research, environment, innovation in nuclear science and technology, for the welfare of the people of India, and for robust regulatory framework for its safe and secure utilisation and for matters connected therewith or incidental thereto."

Thus, broadly, the objectives of the Bill are to promote and develop nuclear energy and ioning radiation for:

• nuclear power generation, application in healthcare, food, water, agriculture, industry, research, environment, innovation in nuclear science and technology;
• the welfare of the people of India; and
• robust regulatory framework for its safe and secure utilisation.

 The Bill (Clause 91) seeks to repeal the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 but save actions made thereunder. 

[AI Image from Google Gemini: Not representative of actual]

Govt. Tries to find a Way Around the Atomic Energy Act

In two previous posts in this blog, here and here, we discussed the exclusivity provided by the Atomic Energy Act, 1962 to the Central Government and Central Government Companies to harness atomic energy in India. In the Budget Speech for the FY 2024-25, the finance minister announced that the Union Government would partner with the private sector for establishing Bharat Small Reactors (BSR), which are basically SMRs or Small Modular Reactors. The relevant portion of the budget speech reads as under:

“75. Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat. Towards that pursuit, our government will partner with the private sector for (1) setting up Bharat Small Reactors, (2) research & development of Bharat Small Modular Reactor, and (3) research & development of newer technologies for nuclear energy. The R&D funding announced in the interim budget will be made available for this sector.” (emphasis added).

This announcement comes in the wake of Section 14(1) of the Atomic Energy Act which prohibits a direct role by the private sector in the Indian atomic energy industry.

The Government seems to have worked a way out for allowing private participation: the nuclear plant will be operated by the Nuclear Power Corporation of India (NPCIL) but the funding and the land will be provided by private players. It remains to be seen whether the private players will have a share of the revenue. These plants, it has been suggested, could replace or substitute captive power plants. A news item about this development can be accessed from here. 

Supreme Court Dismisses Challenge to Atomic Energy Act

The Supreme Court of India has dealt with an important matter of contemporary relevance: atomic energy in India. This post addresses the recent decision of the Supreme Court in Sandeep TS v. Union of India, Writ Petition(s)(Civil) No(s).564/2024: Order dt. 17.09.2024: SCI. 

A writ petition was filed early this year by one Mr. Sandeep TS, a physicist and an Indian citizen residing in the USA. The writ petition was filed under Article 32 of the Constitution of India raising a grievance against the Atomic Energy Act, 1962 (“Atomic Energy Act”) as it allegedly restricted, unduly, the involvement of private parties in licensing for nuclear energy.

The matter came up before a three judge Bench consisting of the Hon’ble Mr. Chief Justice DY Chandrachud, Hon'ble Mr. Justice J.B. Pardiwala, and Hon'ble Mr. Justice Manoj Misra. The three judge Bench referred to the Long Title of the Atomic Energy Act and Section 14 thereof.

The Long Title to the Atomic Energy Act reads: “An Act to provide for the development, control and use of atomic energy for the welfare of the people of India and for other peaceful purposes and for matters connected therewith.”

Section 2(1)(g) defines the term “prescribed substance” as “any substance including any mineral which the Central Government may, by notification, prescribe, being a substance which in its opinion is or may be used for the production or use of atomic energy or research into matters connected therewith and includes uranium, plutonium, thorium, beryllium, deuterium or any of their respective derivatives or compounds or any other materials containing any of the aforesaid substances;”

Section 14 of the said Act provided for the following:

• Central Government may make rules relating to control over production and use of atomic energy.
• Central Government may prohibit except under a licence activities prescribed in Section 14(1), including the acquisition, production, possession, use, disposal, export or import of a prescribed substance, etc.
• A licence for the acquisition, production, possession, use, disposal, export or import of any plant designed or adopted or manufactured for the production, development and use of atomic energy or for research into matters connected therewith can only be given to a Department of the Central Government or any authority or an institution or a corporation established by the Central Government, or a Government company.
• A licence granted to a Government company under Section 14(1) would stand cancelled when such company ceases to be a Government company.
• The extent of rule making power of the Central Government under this provision.

So, when the petitioner challenged the Atomic Energy Act as unduly restrictive, the Supreme Court rejected the challenge on the following grounds:

• The Parliament has introduced the Atomic Energy Act for a calibrated exploitation of atomic energy and subjected it to strict safeguards considering the adverse effects of misuse or accident.
• Hence, this Act cannot be considered as arbitrary or as interfering with the Petitioner’s fundamental rights.

Accordingly, the three Judge Bench of the Supreme Court dismissed the petition filed under Article 32 of the Constitution. 

Followers of this blog may recollect a post titled "Small Modular Nuclear reactors in India: Liberalisation of Regime & Way Forward last year where we highlighted the same issue. The Supreme Court in this case rightly dismissed the petition since this is a matter for the Legislature to take a call.

Bankers Thinking Twice about Funding the Nuclear Surge

 Oil Price published an interesting and important news report on April 14 regarding how bankers were not willing to fund the nuclear surge world over, especially the target to triple nuclear power by 2050. It appears that bankers view the sector with considerable pessimism owing to its project risks. The Vice-President of the European Investment Bank is reported to have stated that heavy state involvement is required to make projects bankable.

So what are the implications of these from a legal point of view? How could India create a legal environment for addressing these problems? If and when India opens up the nuclear sector for private players, especially for Small and Modular Reactors, the following aspects could be thought about:

• Permitting unincorporated joint ventures to build, transfer and operate nuclear power plants, similar to petroleum exploration and production, which is also a high risk venture.
• Use of standard forms such as FIDIC and other similar forms, which will take a balanced approach.
• Effective dispute resolution through conciliation, Dispute Adjudication/ Avoidance Boards, and arbitration.  
• Designing effective insurance policies to cater to risks, etc.

All these require development of expertise in India and it is important for law universities and government institutions to play a crucial role in the next decade in developing that expertise.

Comment on India’s Statement at Nuclear Energy Summit Brussels 2024

On 21.03.2024, an important summit related to nuclear energy was held in Brussels. On behalf of India, Dr. Ajit Kumar Mohanty, Chairman, Atomic Energy Commission & Secretary, Department of Atomic Energy, delivered India's statement. This statement represents India's approach so far and in the near future regarding nuclear energy. This short post comments on India's statement in the summit.

India's Commitment to Net Zero and Role of Nuclear Energy

The statement noted India's commitment to Net Zero emissions by 2070. Towards this aim, the statement noted, India's has taken steps to increase the share of nuclear power capacity.  [The current share of nuclear power to total capacity is at about 1.6%, (6.7 GW- as on May 2023) as per this information of the Ministry of Power.] 

As per the statement, India aims to tiple nuclear power energy capacity by 2030 from 7.5GW presently, [that is, to 22.5 GW]. 

India's Views Towards Nuclear Power

The statement noted the Government of India's belief that nuclear power was "clean and environment-friendly" and is available 24x7 and was capable of providing energy security in the long term in a sustainable manner. 

The statement noted that it was "imperative" that the Indian nuclear power programme grew in order to ensure energy security and sustainable development.

India's Current Projects

The statement notes that India has recently added 700 MW Pressurized Heavy Water Reactors (PHWR), the Kakrapar Atomic Power Project – Unit 3 & 4 and nine more reactors are under construction. The statement also notes that the Government has accorded administrative approval for ten such reactors to be set up in fleet mode.

Recent Innovations

The statement also made mention about India's recent highlights regarding nuclear energy. It mentioned that India entered the important second stage of the three stage nuclear power programme through "Core Loading" which took place in India's first indigenous FBR, that is, Fast Breeder Reactor (500 MWe). 

The statement also made mention of  the Government's thought process that the Government is considering development of Small Modular Reactors and is in discussions with foreign companies for the expansion of India's nuclear programme. 

India's Commitment as regards Nuclear Energy

The statement records India's commitment "to full international civil nuclear cooperation" and "to  peaceful applications of nuclear technology, both in power and non-power sector, while ensuring the security of nuclear and radiological materials".

The statement concludes by stating:

"India has a robust nuclear safety culture and impeccable safety record. India will continue to support the [International Atomic Energy] Agency in its efforts to provide a robust, sustainable and visible global nuclear safety and security framework."

Comment

As regards the statement that India is in discussions with foreign companies regarding the expansion of India's nuclear programme, a recent newspaper report suggests that Rosatom, Russia's state atomic energy company, was in talks with India for development of Small Modular Reactors.

One more important aspect requires some explanation: the three stage nuclear process that India's statement refers to. India has substantial thorium resources and this programme is aimed to harness those resources.

Stage I: Use of PHWR- Pressurised Heavy Water Reactors and natural Uranium 238 (U-238), with traces of U-235, as the fisssile material. On fission, this would produce Plutonium- 239 (Pu-239) + energy.

Stage II: In stage II, Pu-239 will be used along with U-238 through Fast Breeder Reactors (FBR), which. apparently produces more nuclear fuel than it consumes. The recent core loading event at India's first indigenously built Prototype FBR in Kalpakkam (500 MWe) marks India's entry into the second phase. On fission, this would produce U-233 and more Pu-239.

Stage III: In the third stage, Pu-239 will be combined with Thorium-232 (which is in abundance in India) to produce energy + U-233.

This three stage programme was envisaged by Homi J Bhabha and presented in 1954 in the conference on "Development of Atomic Energy for Peaceful Purposes" and was later adopted by the Government in 1958.

India's statement in the Nuclear Summit can be accessed from here.

India's Planning to Attract Private Investment in Nuclear Sector to the Tune of US$ 26 Billion

In a major development, the print media reports that India is in talks with various private firms to attract investment to the tune of US$ 26 billion in the nuclear sector, in order to produce electricity from sources that do not produce carbon emissions. India plans to increase the percentage of contribution by non-fossil fuel sector in electricity generation. The current contribution of the nuclear sector and other sectors towards electricity generation is given below:

Installed Power Generation Capacity (2023)
Particulars	Installed Capacity (MW)	Percentage
Fossil Fuel	2,37,269	57%
Renewable Energy	1,73,619	41%
Nuclear Power	6,780	2%

 India now seeks to increase this 2%. News reports also suggest that the Government has been in talks with Reliance Industries, Tata Power, Adani Power and Vedanta to contribute about $ 5.30 billion each for investments in the nuclear sector. India is no exception: a substantial number of countries are looking at the nuclear option to meet their Net Zero commitments.

From a legal perspective, there might be a need to modify the present regulatory structure of nuclear energy in order to attract private investments (see, for instance, here). The increased focus on nuclear energy presents important opportunities, albeit long term, for law firms. Specialisation in nuclear power regulation, contracts relating to nuclear power plants, etc. will go a long way in catering to the potential market. Likewise, legal education in India could also focus on nuclear energy law, as this post notes.

India & Pakistan Exchange List of Nuclear Installations under 1988 Agreement

 It has been widely reported in the news media (see, for instance, here and here) that India and Pakistan have exchanged a list of nuclear installations further to a Press Release by the Ministry of External Affairs, Government of India. The Press Release notes that the exchange of lists was pursuant to an agreement which was signed on 31.12.1988, which came into force on 27.01.1991. Since then, the Release notes, both countries have exchanged lists 33 times (including the present one). This short post discusses the Agreement, known as India Pakistan Non-Attack Agreement, and the title of the Agreement is "Agreement between India and Pakistan on the Prohibition of Attack Against Nuclear Installations and Facilities". The Non-Attack Agreement was signed in Islamabad, Pakistan.

The Non-Attack Agreement is a short one consisting of three articles. The Preamble to the Agreement recognises both countries' "commitment to durable peace and the development of friendly and harmonious bilateral relations; conscious of the role of confidence building measures in promoting such bilateral relations based on mutual trust and goodwill..."

Article 1(ii) defines "nuclear installation or facility" as including "nuclear power and research reactors, fuel fabrication, uranium enrichment, iso-topes separation and reprocessing facilities as well as any other installations with fresh or irradiated nuclear fuel and materials in any form and establishments storing significant quantities of radio-active materials." Thus, the definition is comprehensive where fresh or irradiated nuclear fuel or material in any form is used.

Article 1(i) contains the "Non-Attack" clause and states: "Each party shall refrain from undertaking, encouraging or participating in, directly or indirectly, any action aimed at causing the destruction of, or damage to, any nuclear installation or facility in the other country."

Article 2 is the one which has led to parties exchanging the list of such installation/ facility. It obligates India and Pakistan to exchange lists of the latitude and longitude of nuclear installations/ facilities on the 1st January of each calendar year and includes changes in the latitude/ longitude, perhaps covering extensions/ contractions of such installations/ facilities. The language used is: "Each Contracting Party shall inform the other on 1st January of each calendar year of the latitude and longitude of its nuclear installations and facilities and whenever there is any change."

Article 3 concerns ratification. It states: "This Agreement is subject to ratification. It shall come into force with effect from the date on which the Instruments of Ratification are exchanged." 

At the end of the Agreement, there is an interpretation clause. Although the Agreement is purported to be in Urdu, Hindi and English, it provides that the English text would govern in case of disputes in interpretation. It states: "Done at Islamabad on this Thirty-first day of December 1988, in, two copies each in Urdu, Hindi and English, the English text being authentic in case of any difference or dispute of interpretation."

The Non-Attack Agreement can be downloaded from here.

Should Nuclear Fusion Reactors be a part of Nuclear Fission Reactor Regulatory Regime?

Nuclear energy generators and suppliers using the plank of climate change to promote nuclear energy as the solution and economies okaying such an approach. It looks like nuclear energy is here to stay and possible contribute significantly to the energy share of many countries. Given this fillip to nuclear energy, there is also bound to be increasing technological solutions in the sector. Two of them are noteworthy: one is the small and modular reactors which allow nuclear energy generation through smaller nuclear plants. Thes operate in a relatively smaller scale than conventional nuclear plants.

The other technological development in nuclear energy sector is fusion reactors. The core idea is that unlike in nuclear fission, where atom is split, in fusion, atoms are fused together. Both these processes release considerable energy. But with fusion, there seems to be a distinct advantage: it does not produce nuclear wastes like fission does. This is extremely important becuase one of the signficant problems with fission reactors is harmful radioactive waste and its disposal. The advantage of fusion reactors vis-a-vis fission and coal energy, as noted by the International Atomic Energy Agency, is stated below: 

"Fusion could generate four times more energy per kilogram of fuel than fission (used in nuclear power plants) and nearly four million times more energy than burning oil or coal."

It appears that in fusion reactors, the chances of major industrial accidents are also minimal, as the IAEA notes. 

Given these considerations several jurisdictions are adopting regulatory measures that are more liberalised as compared to the regulation of fission reactors, as this Financial Times article notes. For instance, in USA, the Nuclear Regulatory Commission opted for a less onerous regime for regulating fusion reactors. Details of key consdierations for NRC to opt for the less burdensome regime can be accessed from here. 

However, it appears that it might take at a decade or two for fusion reactors to be used in an industrial scale like fission reactors.

The FT articles notes that developments in UK on this: it appears that UK might opt for regulation of fusion industry not by the nuclear energy regulator but by the Environment regulator! To provide clarity of the regulatory regime, the (UK) Energy Act, 2023 notes that the the Nuclear Installations Act 1965 would not apply to fusion reactors. Section 156 of the said law covers these aspects.

Earlier, in 2021, the European Union published a study on the regulation of fusion energy, which also proposed a separate regulatory regime for nuclear fusion.

It would be interesting to see how India plans to regulate nuclear fusion.

Climate Change, the Nuclear Turn & Legal Education in India

 In a surprising development post-Fukushima, the world has shunned its anti-nuclear energy image and has sought to encourage efforts at increase the share of nuclear power, in the background of mounting pressure to acheive Net Zero by 2050.

The COP (the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) (COP) saw significant calls for substantially increasing nuclear power, especially from nuclear energy generators and the International Atomic Energy Agency, which stated in COP28:

"Studies confirm that the goal of global net zero carbon emissions can only be reached by 2050 with swift, sustained and significant investment in nuclear energy. The International Atomic Energy Agency (IAEA) and the Intergovernmental Panel on Climate Change see nuclear as important part of the solution to climate change and energy insecurity."

While there are several countries such as Germany, Australia, Austria, Denmark, New Zealand, Norway, etc., that are markedly anti-nuclear, many other major countries such as India, China, USA, France, Russia, South Korea, Canada, etc. which produce nuclear power and many of them are establishing new nuclear plants. 

The idea of Small Modular Reactors has also emerged throughout the world. 

Considering these developments, it would be important for Indian legal education to undertake the following:

• Commence legal education in nuclear energy law, both domestic and international;
• Organise awareness programmes, conferences and credit courses on nuclear energy law;
• Devote specific journal issues on nuclear energy law.
• Devote signifcant resources for cutting edge research in nuclear energy law.

There are many areas of law that are required to be explored vis-a-vis nuclear energy. These include climate change law, environmental law, contract law, insurance law, taxation, etc. Law and other Universities need to take up this issue in a major way.

Small Modular Nuclear reactors in India: Liberalisation of Regime & Way Forward

In the recent past, there has been substantial developments in exploring the potential of Small Modular Nuclear reactors (SMR) in India. NITI Aayog came up with a detailed publication in May 2023 about SMRs in India titled "The Role of Small Modular Reactors in the Energy Transition" (download the study from here).

The first and the most important regulatory stumbling block is the Atomic Energy Act, 1962, which prohibits the private sector from commissioning nuclear reactors. Section 14(1) of the 1962 Act states:

“(1) The Central Government may, subject to such rules as may be made in this behalf, by order prohibit except under a licence granted by it—

(i) the working of any mine or minerals specified in the order, being a mine or minerals from which in the opinion of the Central Government any of the prescribed substances can be obtained;

(ii) the acquisition, production, possession, use, disposal, export or import—

(a) of any of the prescribed substances; or

(b) of any minerals or other substances specified in the rules, from which in the opinion of the Central Government any of the prescribed substances can be obtained; or

(c) of any plant designed or adopted or manufactured for the production, development and use of atomic energy or for research into matters connected therewith; or

(d) of any prescribed equipment.”

A perusal of Section 14(1)(ii)(c) seems to suggest that the Central Government could grant licence for the acquisition, production, possession, use, disposal, export or import of any of any plant designed or adopted or manufactured for the production, development and use of atomic energy or for research. But this provision has to be read together with Section 14(1A), which states:

“[(1A) No licence under sub-clause (c) of clause (ii) of sub-section (1) shall be granted to a person other than a Department of the Central Government or any authority or an institution or a corporation established by the Central Government, or a Government company.”

In other words, the Central Government is barred from granting a licence to a person other than a Central Government entity for this purpose.

NITI Aayog has recommended in its Report:

“With the advent of clean energy transition, there has been a great thrust towards adopting cleaner energy options to move towards the net zero emissions scenario by the respective countries. Many nations have already declared their net zero emissions targets. Apart from Renewable Energy (RE), nuclear is also being explored as a clean energy option to help the nations in achieving their decarbonization goals…" (p. 2)

SMR industry needs to find its way through early challenges of technology demonstration, special material availability, special manufacturing techniques, project funding requirements and regulatory harmonization. Given such challenges and the need to grow SMR industry for achieving long-term Net-zero goals, it is essential to establish SMR ecosystem.” (p. 5).

About fifteen years back, there were news reports that India would open up nuclear energy for private participation in producing nuclear power. See, for example, here.  Somehow, that did not happen. See, here.

But for these to happen now as envisaged in the NITI Aayog report, the first step would be to amend these provisions to allow participation of private players in SMRs.