RESOURCES

Nuclear Energy Requires Sovereign Guarantee

Commercial nuclear power requires long-term state financial support. This report examines why private capital alone is unlikely to finance Philippine nuclear projects, the legal framework for sovereign guarantees, and the fiscal risks created by past power-sector guarantees.

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What's Inside?

An explanation of why commercial nuclear projects depend on state credit, guarantees, long-term offtake commitments, or other forms of sovereign financial support.

A review of the Bataan Nuclear Power Plant financing experience, including its foreign-loan structure, cost overruns, and long-term burden on the Republic.

Comparative examples from the UAE, Bangladesh, Turkey, the United Kingdom, and the United States showing how governments have supported nuclear power financing.

Analysis of Philippine constitutional, debt-service, and PPP rules governing sovereign guarantees, alongside the stranded-cost legacy of earlier power-sector guarantees.

Advisory on Nuclear Project Finance and Sovereign Support

Geronimo Law advises project sponsors, lenders, investors, and government stakeholders on nuclear project finance, sovereign guarantees, PPP structures, power-sector regulation, and infrastructure financing in the Philippines.

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Frequently Asked Questions

This section addresses common concerns raised by businesses, legal teams, and finance professionals looking for clarity on complex issues and get a better understanding of key concepts.

Why do nuclear power projects require sovereign support?

Nuclear projects require enormous upfront capital, long construction periods, and financing tenors that commercial lenders typically cannot provide. The report argues that state lenders and export credit agencies generally require sovereign guarantees, government borrowing, or long-term revenue support.

Can the Philippine government legally guarantee financing for a nuclear project?

Yes. The President may contract or guarantee foreign loans on behalf of the Republic with prior Monetary Board concurrence and subject to legal limitations, although the PPP Code restricts certain government guarantees and prohibits loan-repayment guarantees for unsolicited proposals.

Why are sovereign guarantees politically sensitive in the Philippine power sector?

Earlier government-backed power contracts generated large stranded contract costs and debts that were later absorbed by the National Government, electricity consumers, and Malampaya revenues, creating a lasting aversion to new power-sector guarantees.

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