ON September 29, 2013, the government approved the second phase of a techno-feasibility study on Rooppur Nuclear Power Project at a cost of $265 million. The first phase of the feasibility study at a cost of $45.9 million was approved in June and is already under implementation. A total of $310.9 million, out of a credit of $500 million agreed between the governments of Bangladesh and the Russian Federation last January, is already committed. The way the project is being managed, the rest of the credit may also be spent very soon.
As per terms of the agreement, the loan of $500 million is to be repaid within five years starting from March 2018 in semi-annual equal installments. The rate of interest will be 6-month LIBOR (London Inter-Bank Offered Rate) plus 1%. In addition, a commitment fee of 0.5% will be paid on the unutilised amount of the credit.
It is interesting to note that the entire amount of the credit is being spent only for a techno-feasibility study of the project, which has already been questioned. According to official estimates, a 1,000 MW nuclear reactor at Rooppur will cost $1.5 to $2 billion. If we spend $500 million for a feasibility study alone, will the rest of the estimated cost, $2.5 billion to $3.5 billion, be enough to build two 1,000 MW reactors?
According to standard practices, the repayment of a credit for a power plant starts after its completion so that the borrower can repay the loan from the revenue earned from the sale of electricity. The grace period for repayment, therefore, covers the period of construction of the plant. Will the Rooppur nuclear power plant be ready and earn any revenue by 2018?
According to available information, the feasibility report will be completed by the end of 2014. It will take at least 2 years for bid preparation and evaluation, contract negotiation, and preparation and evaluation of the Preliminary Safety Analysis Report (PSAR), and another 7 years for actual construction of the plant. The nuclear plant at Rooppur is, therefore, most unlikely to be in operation before 2023.
From what source shall we repay the loan from March 2018 when the nuclear plant will be at an early stage of construction? Obviously, we shall be obliged to pay it from our own resources. Is it desirable to take the liability to repay such a huge amount from our own resources and before we earn any revenue from the nuclear plant?
The writer is a former chief engineer of Bangladesh Atomic Energy Commission and author of “Rooppur & the Power Crisis.”