Russia hints at not extending loan disbursement period for Rooppur Plant

The Russian authorities are not inclined to approve Bangladesh's proposal to extend the loan disbursement period by two years for the Rooppur Nuclear Power Plant's construction.

During a meeting at the Economic Relations Division (ERD) today, which focused on loan disbursement and interest payments for the project, the Russian side indicated that they are unwilling to extend the loan disbursement period.

The meeting was chaired by ERD Secretary Shahriar Kader Siddique and included representatives from Atomstroyexport, the Russian Exim Bank, contractor Rosatom, the Russian Embassy in Dhaka, the Ministry of Science and Technology, the Ministry of Foreign Affairs, Bangladesh Bank, Sonali Bank, and senior officials, including the project director of the power plant.

A meeting attendee told TBS, "Russia has expressed its inability to extend the loan disbursement period unless the outstanding payments are cleared."

The current loan disbursement period expires in December. If this period is not extended, Russia may halt its financial support for the project. The ERD and the science and technology ministry believe that only high-level or political discussions between the two governments can resolve this issue.

According to ERD sources, the total cost of the Rooppur project is estimated at $12.65 billion. Of this amount, $11.38 billion will be provided as a loan by Russia, while the remaining will be financed by Bangladesh.

The loan is expected to be disbursed by Russia by December 2024. As of 14 August, it has disbursed $7.33 billion to Bangladesh in 25 instalments. The remaining $4.05 billion must be disbursed by Russia or received by Bangladesh by December.

A senior project official told TBS, "Given the current progress of the project, it would be impossible to receive such a large sum of money within just three months."

To address this, a letter was sent to the Russian authorities in June, proposing to extend the loan disbursement period up to December 2026. As of September, about 70% of the project has been completed.

The official added, "During this time, the Bangladesh government has changed, and global circumstances have shifted. As a result, around $700 million in outstanding and current interest payments on the disbursed funds have not been paid to Russia.

"The Russian side is urgently seeking repayment of this amount. All these factors have created tension regarding loan disbursement and interest payments."

He noted that Russia is involved in various technical aspects of the nuclear power plant, with 5,000 Russians currently working on the project. "If Russia suddenly stops disbursing funds, there is uncertainty about what will happen to these workers and whether they will be available again in six months," he added.

Bangladesh does not believe Russia will refuse to extend the loan disbursement period. However, the ERD will update the government on Russia's position and the overall status of the project.

According to ERD sources, on 21 August, VEB.RF Bank, a representative agency of the Russian government, sent a letter requesting $630 million in outstanding and current interest on the disbursed loans for the Rooppur project by 15 September.

The letter specified that the payment should be made in US dollars or Chinese yuan at the Bank of China's Shanghai branch. But, this bank is also on the US sanctions list, making it impossible for Bangladesh to make the payment even if it wanted to.

Under the agreement, the Bangladesh government must pay interest on the distributed loan every six months. Before the Ukraine war, the government was making these interest payments as required.

However, after the war began, US sanctions on Russian banks and contracting firms made regular payments impossible. Since then, fines and penalties have accumulated along with the interest.

Sources indicate that the principal repayment of the loan is scheduled to begin in March 2027. Due to a crisis in the country's foreign currency reserves, the Bangladesh government proposed extending the repayment period by two years, starting in March 2029.

This proposal was made during an ERD meeting on 27 March. Initially, the Russian side agreed to this proposal, but they have recently rejected it.

An official from the Ministry of Science and Technology related to the project said, "The project is not progressing as expected. In particular, the construction of the transmission lines for the electricity generated from this project has not advanced properly."

There are plans to start electricity generation from one unit of the power plant in December, but this cannot happen without the installation of transmission lines. Therefore, the government is seeking additional time to secure loans from Russia.

Sonali Bank Limited is handling transactions related to this loan on behalf of the Bangladesh government. An official from the state-owned bank said, "Due to the sanctions, it is not possible to make payments to Russia. As a result, we have opened an escrow account at Bangladesh Bank to hold the outstanding amounts owed to Russia.

"Therefore, repaying the debt is not difficult. The issue is deciding which currency and which country's bank will be used to send the funds."