Staff Correspondent:

Bangladesh has successfully got extended the Russian loan disbursement period for the Rooppur Nuclear Power Plant until 2027.

The crucial agreement, formalised as “Protocol-2,” was signed on 14 July, addressing significant delays caused by the Covid-19 pandemic and Western sanctions on Russian banks.

The revised terms, witnessed by Finance Adviser Salehuddin Ahmed, also defer the start of principal repayment by 18 months.

Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), confirmed the development stating, “A new protocol has been signed. We now expect the project to be completed within time.”

KEY REVISIONS TO THE LOAN AGREEMENT

The original intergovernmental agreement between Bangladesh and Russia stipulated a loan disbursement period from 2017 to 2024 (December), with loan repayment set to begin in March 2027 after a 10-year grace period. Under the new arrangement, repayments will now commence in September 2028.

The Rooppur project, estimated to cost $12.65 billion, sees Russia providing 90% or $11.38 billion through state credit, with Bangladesh contributing the remaining 10%. So far, $7.7 billion has been disbursed, although inflows have slowed in recent years.

SANCTIONS AND RESOLUTION

ERD officials explained that the US-led sanctions imposed on Russian banks following the Ukraine war in 2022 created a significant hurdle. These sanctions prevented Rosatom, the Russian state nuclear agency, from accessing funds deposited in its Sonali Bank account in Dhaka.

Consequently, Bangladesh was unable to make installments on both the $500 million feasibility loan and the main project loan, despite having fulfilled its domestic obligations. This led to a prolonged deadlock in renegotiating the loan terms.

The stalemate was finally resolved during a meeting in February between Chief Adviser Muhammad Yunus and Rosatom Director General Alexey Likhachev. Following this meeting, Russia sent a draft of the revised protocol in April, which was subsequently reviewed and finalised through several inter-ministerial meetings in Dhaka.

REPAYMENT SCHEDULE AND PENALTIES

While the grace period has been extended, the overall maturity of the loan remains unchanged. Previously, repayment was to be made in 40 equal biannual installments over 20 years.

Under the revised schedule, Bangladesh will now repay the principal in 38 installments, due on 15 March and 15 September each year.

The amended agreement retains a 0.5% commitment fee on the undisbursed portion of the loan, capped at $0.25 million per year, payable in the first quarter of the following year.

Crucially, Russia has also agreed to waive nearly $164 million in penalties linked to delayed payments on the feasibility loan.

Under earlier terms, any delay beyond one month would have incurred a 4.5% penalty, and Bangladesh risked accumulating over $164 million in fines between 15 March 2022 and 15 March 2025. These penalty provisions have now been dropped.

However, the new protocol introduces a strict condition: any repayment delayed by more than 30 days going forward will be deemed “overdue” and subject to daily interest at an annualised rate of 150%.