Russia agrees to extend loan disbursement for Rooppur until 2026

Russian nuclear corporation Rosatom has agreed to extend the credit utilisation period by two years for the Rooppur Nuclear Power Plant (RNPP), a key project for strengthening Bangladesh's energy security.

During a meeting with Chief Adviser Muhammad Yunus yesterday (26 February), Rosatom Director General Alexey Likhachev agreed to revise the Intergovernmental Credit Agreement (IGCA), extending the credit utilisation period until the end of 2026.

In this regard, the two sides agreed to sign Protocol No. 2 to the agreement shortly, while complying with all the necessary formalities, said the CA's Press Wing in a press release.

According to Economic Relations Division (ERD) sources, the total cost of the Rooppur project is estimated at $12.65 billion, with 90%, or $11.38 billion, funded by a loan from the Russian government and 10% covered by Bangladesh's own financing. Under the agreement, the loan was due for disbursement by December 2024.

Bangladesh has so far received around $7.70 billion from Russia. The government could not receive the entire amount due to a slowdown in work during the Covid pandemic and later due to the impact of the Russia-Ukraine war.

Consequently, Bangladesh in June 2024 requested the Russian authorities to extend the loan disbursement period until December 2026. However, the response was delayed due to US sanctions, which had left Russian bills stuck in Bangladesh. In 2022, following Russia's involvement in Ukraine, the US imposed sanctions on Russia's bank for transactions related to the Rooppur plant, preventing Bangladesh from making payments.

Once the agreement is revised, the government will receive the remaining $3.68 billion from Russia by December 2026.

Both the chief adviser and the Rosatom director general also emphasised the importance of continued cooperation in areas such as staff training, safety protocols, and knowledge transfer to ensure the long-term success of the project, added the CA's Press Wing's statement.

CA wants to expand cooperation

Chief Adviser Yunus told Likhachev, who arrived in Bangladesh on a one-day visit to discuss the issue, that Bangladesh looks forward to expanding cooperation in nuclear energy, focusing on shared interests and advancements in peaceful nuclear technology. The Rosatom director general last toured Bangladesh in April 2024.

The meeting, held at the chief adviser's official residence Jamuna, primarily addressed the ongoing collaboration between Bangladesh and Russia in developing the former's first nuclear power plant.

During the discussions, Prof Yunus appreciated Rosatom's continued support in the construction of the plant and emphasised the timely completion of the project with a view to meeting Bangladesh's growing energy needs.

"We are looking forward to your support, which is very important for us," the chief adviser told the Rosatom director general.

Work progressing as planned

Likhachev shared updates on the Rooppur plant, emphasising that the construction work is progressing as planned, with multiple milestones already achieved. "Any choice the people of Bangladesh make is sacred for us," he said.

He informed Yunus that the dry run of the project is ongoing while the test run will commence soon.

A dry run of the power plant will involve rehearsal of a process or operation without the actual materials or resources that would be used in a real-world scenario.

A test run is a more advanced stage of testing that involves operating the systems with the actual materials or resources.

He also assured that Rosatom remains committed to facilitating the successful completion of the project, with a strong focus on safety, quality, and compliance with international standards.

Among others, Principal Secretary Siraj Uddin Mia, Senior Science and Technology Secretary Md Mokabbir Hossain, and ERD Secretary Md Shahriar Kader Siddiky were present during the meeting.

From the Russian side, Russian Ambassador to Bangladesh Alexander Khozin, Deputy Chairman of the Federal Environmental, Industrial, and Nuclear Supervision Service Alexey Feropontov, Rosatom's First Deputy Director General Andrey Petrov, and Vice President of ASE JSC and Project Director of Rooppur NPP Alexey Deriy accompanied the Rosatom director general at the meeting.

Russia's positive response

ERD Secretary Shahriar told The Business Standard, "Russia has positively responded to the proposal to extend the loan disbursement period, and we are taking steps to ensure all relevant agencies are fully operational to complete the project on time."

The Russian delegation held a preparatory meeting with the ERD on 25 February, ahead of the meeting with the chief adviser. Officials from the ERD, science and technology ministry, and the Rooppur Nuclear Power Plant were present, and discussions focused on extending both the loan disbursement and repayment periods.

According to the agreement, the first instalment of repayment is due on 15 March 2027. However, since the entire amount was not released on time, Dhaka has proposed starting repayments on 15 March 2029. The matter is expected to be finalised during the protocol signing.

Bangladesh currently owes the Russian government $750 million, including $450 million for the feasibility study of the plant, with the remainder being interest on the current loan and outstanding interest.

Unit-1 94% complete, Unit-2 76%

Senior Secretary to science and technology ministry Md Mokabbir Hossain told TBS that Unit-1 of the plant is 94% complete, and Unit-2 is 76% complete. With the loan disbursement period extended, the remaining work can now proceed quickly.

According to the Implementation Monitoring and Evaluation Division, 67.8% of the physical work of the Rooppur plant construction project was completed as of October last year, with financial progress similarly on track.

The project was scheduled for completion in December 2025. The first shipment of nuclear fuel from Russia arrived in Dhaka on 28 September 2023, and was officially handed over in a ceremony on 5 October 2023, attended virtually by Russian President Vladimir Putin and then prime minister Sheikh Hasina.

At the event, Putin said Bangladesh's Rooppur power plant would be fully operational by 2026.

With the receipt of uranium from Russia, Rooppur is now an internationally recognised nuclear facility. However, there are concerns about the plant's full operation in 2026 due to delays in the construction of a special transmission line required to supply electricity to the national grid.

Plant will add 2,400MW to national grid

Once completed, the plant will add 2,400MW to the national grid. The grid line installation was originally scheduled for completion in 2023 but was delayed, and the new target of October 2024 also went unmet.

The Power Grid Bangladesh, responsible for the installation, has now said the work will be completed by March, although project insiders believe full installation will not be finished by then.

Ambassador M Humayun Kabir, president of the Bangladesh Enterprise Institute, told TBS that Russia's decision to extend the loan disbursement period is a positive development, acknowledging Bangladesh's situation.

He described it as a challenge for Bangladesh and praised the decision as a thoughtful response. Kabir also said there are no significant activities with Russia aside from this project, and trade between the two countries is limited. Additionally, Russia is under US sanctions, and any potential for business expansion would depend on the lifting of those sanctions.

Rooppur plant Project Director Md Zahedul Hassan told TBS that the construction has been delayed due to several factors, including the pandemic, the Russia-Ukraine war, and grid line installation.

Currently, 75% of the project is complete, and it is expected to be fully operational by 2026 if all goes well.

He added that by 2025, one unit will generate electricity for the national grid. The installation of main equipment is complete, and the pipeline for electricity generation through heat was tested two days ago, with start-up and adjustment work currently underway.