Rooppur power plant runs into further snag

A fresh bout of uncertainty has emerged surrounding the completion of the Rooppur nuclear power plant after its engineering, procurement and construction (EPC) contractor was included in the latest round of sanctions by the US to squeeze Russia for its war in Ukraine.

The sanctions' targets include JSC Nauchno-Issledovatelsky i Konstruktorsky Institut Montazhnoy Tekhnologii Atomstroy (NIKIMT), which was awarded the EPC contract for Bangladesh's first nuclear power plant in 2015.

NIKIMT is a subsidiary of Russian state-owned nuclear power conglomerate Rosatom, which is building the $12.65 billion nuclear power plant in Iswardi, Pabna.

In a diplomatic note, the US embassy in Dhaka informed the ministry of foreign affairs of the sanctions ahead of going public on April 12.

"One entity included in this tranche of designations, NIKIMT Atomstroy JSC (a subsidiary of the State Atomic Energy Corporation Rosatom), has transacted with Bangladesh in the past. We look forward to continuing our discussion regarding ongoing and future transactions to support the Rooppur nuclear power plant," the diplomatic note said.

The sanctions mean transactions with NIKIMT would run afoul of the US, Bangladesh's single-largest export destination.

Contacted, the US embassy declined to disclose the content of the diplomatic note.

"Nonetheless, Russia's brutal, unprovoked invasion of Ukraine is unacceptable.  Many countries, including the US, are taking action to deter President Putin from continuing his war in Ukraine and have announced strong sanctions and export controls, presenting a united front against this aggression," Sean J McIntosh, US Embassy Counsellor for Public Affairs, told The Daily Star.

Already, Bangladesh has run into difficulty servicing a $500 million loan taken in 2013 from Russia for the Rooppur project's primary work following Western sanctions on Russian banks.

While a preliminary agreement was struck to service the stalled payments in Chinese currency, that modality is unlikely to progress after the latest sanctions.

But the stuck payments pose another problem for Bangladesh: risks of being classed as a defaulter of foreign loan.

Subsequently, the Economic Relations Division, the government wing responsible for handling foreign loans, has decided to open an escrow account with the Bangladesh Bank, officials informed the visiting staff mission of the International Monetary Fund yesterday.

Payments for Rooppur would be deposited in the escrow account, which is an account where funds are held in trust while two or more parties complete a transaction.

Along with NIKIMT, the US Treasury and State departments have imposed sanctions on four entities and one individual that are part of Rosatom. 

"We are imposing these designations to constrain Rosatom, given that it uses energy exports, including in the nuclear sector, to exert political and economic pressure on its customers globally," said the US state department when announcing the sanctions on April 12.

The sanctions come after documents showed that Rosatom has been supplying the Russian arms industry with components, technology and raw materials for missile fuel, aiding Moscow's continuing onslaught on Ukraine, reported The Washington Post in January.

Russia through Rosatom dominates the global nuclear supply chain. Russia has the world's largest uranium enrichment capabilities, accounting for almost half the global capacity.

Rosatom though dismissed any fears of the commissioning of the Rooppur nuclear power plant getting delayed beyond the scheduled 2025 for the sanctions.

"Sanctions against individual enterprises within the framework of Rosatom will not affect the implementation of the Rooppur nuclear power plant project in Bangladesh. Together with the government of Bangladesh, we continue to actively prepare for the key event: the delivery of fuel to unit 1 of the Rooppur NPP," the firm told The Daily Star.