Bangladesh
today signed its biggest ever contract worth $12.65 billion with a
Russia’s state-run company to build the Rooppur nuclear power plant that
would generate 2,400 megawatts of electricity.
The contract equivalent to Tk 1,01,200 crore is more than the total development budget of this fiscal year.
Engr
Md Monirul Islam, chairman of Bangladesh Atomic Energy Commission, and
Savushkin, senior vice president of Russian builder ASP, a subsidiary of
Russian state nuclear power company Rosatom, inked the contract this
evening at the Pan Pacific Sonargaon Hotel in Dhaka. The construction
part alone involves around $11 billion.
Finance
Minister AMA Muhith, Agriculture Minister Matia Chowdhury, Science and
Technology Minister Yefesh Osman, prime minister’s Energy Affairs
Adviser Tawfiq-e-Elahi Chowdhury and State Minister for Foreign Affairs
Shahriar Alam, among others, were present.
Of the $12.65 billion, the Russian government would provide 90 percent ($12 billion) as loan.
During
loan negotiations, Russia argued that the cost was not high and that
compared to nuclear power plants built by Rosatom in other countries,
Rooppur would be cheap.
Earlier
this month, the government initialled the financial contract with
Russia. This was expected to be done some time next year.
Nuclear
plants demand high upfront cost. But as its fuel cost is comparatively
low and plant life is very high, power tariff turns out to be very
cheap.
The
economic life of the plant has been estimated to be 50 years. However,
Rosatom says the Rooppur power plant would last for 60 years, three
times higher than conventional coal or gas powered plants.
The exact power tariff would be available after the construction agreement is signed.
Earlier
on Wednesday, two government committees -- the cabinet committee on
economic affairs and the cabinet committee on purchase -- approved the
proposal for general contract signing with Rosatom.
Following
the approval, Minister for Science and Technology Yefesh Osman said “It
is beyond just electricity, it's the technology. It will take
Bangladesh to a new height.”
He
said the prime minister was keen on seeing at least one of the two
units, each with 1,200MW capacity, to go into operation within 2021.
However, it takes about seven years to build such a plant, he said.
Russia
had said it might be able to meet that deadline for one unit, if the
government signed the construction agreement within this month.
Russia has agreed to take care of the fuel. It would bring in fuel and take back the spent fuel to Russia.
“I
believe $12.65 billion is a good bargain. Besides, our prime minister
believes that once this project takes off, we will learn a great deal
about the technology,” said Yefesh Osman.
According
to the proposal of the Ministry of Science and Technology, the interest
rate on the loan is 6 months' LIBOR (London Interbank Offered Rate, an
average of interest rates estimated by each of the leading banks in
London) plus 1.75 percent.
However, the interest rate cannot be more than 4 percent per annum.
The proposal said as per the existing LIBOR, the interest rate might be 2.55 percent.
The utilisation period has been estimated at seven years and the repayment period 28 years, including 10 years' grace period.
The commitment fee is 0.5 percent.
Finance Minister AMA Muhith in October told reporters that the loan was neither concessional nor commercial.
In
the case of commercial loans from the Asian Development Bank (ADB),
Bangladesh normally pays service charge of around 4 percent, with
repayment period of 20 years.
The
interest rate on commercial loans from the World Bank, ADB and JICA is
below one percent and the repayment period is 30 years to 50 years,
including grace period.
The
general contract approved yesterday has eight main components
--detailed design, equipment supply, construction and erection,
commissioning & testing, warranty operation, initial nuclear fuel
supply, equipment transportation up to construction site, and service up
to warranty operation.
Rosatom
is keen on signing the construction contract first since it takes a
long time to install equipment for a nuclear power plant, Muhith said.
According
to the proposal, the provisional takeover of the first unit is expected
to be in October, 2023, and the second one in October, 2024. The final
takeover would be in October, 2024, and October, 2025, respectively.
Preparatory work to build the plant was underway under a $500 million technical assistance from Russia.
In June, Rosatom submitted a feasibility report on the plant to Bangladesh Atomic Energy Commission.
Rosatom
would maintain the plant for the first year of its commercial operation
before handing it over to Bangladesh authorities.
