Rooppur power plant loan repayment dispute with Russia

Tension has arisen over the repayment of the loan taken from Russia for the Rooppur Nuclear Power Plant. Although Bangladesh has proposed to extend the original repayment time of the loan, there has been no progress. Russia is now very little interested in this; rather, the country wants to take the interest money through Chinese banks. However, there is no green signal from the interim government of Bangladesh. As a result, the government is in a bit of trouble with the whole situation.

Meanwhile, the interim government has taken the initiative to review loan agreements signed on major projects, including the Ruppur nuclear power plant, which was borrowed by Russia. As a result, it is feared that there may be tension between Bangladesh and Russia over overall debt. This information has been known by talking to sources, including the Economic Relations Division (ERD) of the Ministry of Finance.

The construction of the Rooppur Nuclear Power Plant, which was taken with a loan of Tk 1,13,093 crore from Russia in 2016, is scheduled to be completed on December 31, 2025. However, due to the delay in the work, it is expected to take another two years to complete the project. Russia is providing $12.65 billion for the project.

Selim Raihan, executive director of the South Asian Network on Economic Modelling (SANEM), a private research organization, said, “We should discuss repaying the loan with Russia. It’s already a big investment. Therefore, it is necessary to bargain with logic without emotion. If our situation is properly explained to Russia, the problem will be solved quickly. ’

The economy is under pressure due to COVID-19 infections and the Ukraine-Russia war. For this reason, the work of the Russian contractor of the Rooppur Nuclear Power Plant is also slow. In August, the interim government asked Russia to delay the actual repayment of the loan by two years. Russia initially agreed. As part of this program, the ERD has prepared a draft to amend the previous loan agreement and has also taken opinions from the concerned departments, including the Ministry of Science and Technology, the project’s implementing agency. But then there is no further progress.

On the other hand, Russia also proposed in August. It has been said that the interest money of the Russian loan kept in a particular account of Bangladesh Bank should be sent to Russia through a Chinese bank. Bangladesh has not yet responded.

So far, $630 million of interest has been deposited in a particular account (Squero account) of Bangladesh Bank. The United States has banned transactions in Russian banks due to the Russia-Ukraine war. For this, they asked for interest money through Chinese banks.

According to the ERD, the Russian loan’s actual repayment is expected to start on March 15, 2027, after the end of the 10-year grace period. Bangladesh requested that the new deadline for the loan’s actual repayment be fixed on March 15, 2029. No date has been fixed for a meeting to discuss this in the last month.

On August 25, Russian Ambassador in Dhaka Alexander Montitsky met with Finance and Commerce Adviser Salehuddin Ahmed. According to ERD sources, the meeting discussed the start of the installment of Russian debt repayment and in which currency it will be repaid. Russia wants to take the money deposited as interest on its loans quickly.

Bangladesh took a $12.65 billion loan from Russia’s Exim Bank for the Rooppur Nuclear Power Plant. An agreement was signed between the two sides in 2016. The loan money started coming in in 2017. The interest payment of the loan has already begun. It is supposed to pay $110 million in two installments each year. Due to international sanctions on Russia due to the war with Ukraine, this money can not be sent to the Exim Bank of that country. It is now being deposited in a special account of Bangladesh Bank.

After the 10-year grace period, the main installment (actual repayment) of the Rooppur Nuclear Power Plant loan is scheduled to start on March 15, 2027. $380 million must be paid in two installments every six months each year. It will have to pay interest of $ 11 million. However, the amount of interest and principal may vary over time.