Staff Correspondent:

Russia has agreed to ease loan conditions, relieving Bangladesh from a $164 million penalty for delayed instalments on a $500 million loan used for the feasibility study of the Rooppur Nuclear Power Plant.

Additionally, Moscow has responded to Dhaka’s request by extending the tenure of an $11.38 billion Russian state loan for the main nuclear power project by two years, postponing the start of repayments by 1.5 years. According to sources at the Economic Relations Division (ERD), citing a draft of the amended protocols sent from Moscow, repayments can now be made in Russian rubles alongside US dollars.

Previously, Bangladesh was required to pay a 4.5% penalty if loan payments were delayed by a month. Had missed payments on the feasibility study loan between 15 March 2022 and 15 March 2025 been considered arrears, Bangladesh would have owed $164.17 million in penalties. However, the revised protocol states that this amount “shall not be paid by Bangladesh”, as the applicable provisions have been removed.

ERD officials clarified that the payment delays were beyond Bangladesh’s control, as funds had been deposited into Rosatom’s account at Sonali Bank but could not be transferred due to US sanctions on Russian banks following the Ukraine war.

The ERD has sought feedback from relevant agencies on the proposed revisions to two agreements with Russia: the 2013 feasibility study loan of $500 million and the 2016 main project loan of $11.38 billion.

On 20 April 2024, Bangladesh and Russia signed one protocol under each agreement. They are now preparing to sign two new protocols, incorporating amendments to various clauses.

Under the existing agreements, repayments were to be made in US dollars or any mutually agreed currency via Russia’s Bank for Development and Foreign Economic Affairs. Chinese yuan was later added as an alternative currency. Now, the draft protocol allows payments in Russian rubles or any other agreed currency through any chosen bank, offering Bangladesh greater flexibility in settling dues.

LOAN DISBURSEMENT AND PROJECT DELAYS

The total estimated cost of the Rooppur project is $12.65 billion, with 90% – or $11.38 billion – funded by Russia and the remaining 10% covered by Bangladesh. Bangladesh has so far received around $7.70 billion, but disbursement faced delays due to the Covid-19 pandemic and the Russia-Ukraine war. If the draft protocol is signed, the remaining $3.68 billion will be disbursed by December 2026.

EXTENSION OF LOAN TENURE, REPAYMENT SCHEDULE

According to the draft protocol sent by Russia, the loan tenure, originally set from 2017 to December 2024, will be extended by two years as Bangladesh could not complete the project on time. During a meeting with Chief Adviser Muhammad Yunus on 26 February, Rosatom Director General Alexey Likhachev agreed to amend the Intergovernmental Credit Agreement. Following the meeting, the Chief Adviser’s Office issued a press release stating that both sides had agreed to finalise the amendments soon.

Bangladesh was initially set to begin repaying the principal plus interest from March 2027. However, the government proposed deferring the repayment start to March 2029. The revised protocol sets 15 September 2028 as the new repayment commencement date, with instalments spread over 20 years in two equal payments per year.

The draft protocol specifies that Bangladesh must repay the loan in 40 equal instalments – on 15 March and 15 September annually – over the 20-year period. It also states that Bangladesh will pay a commitment fee of 0.5% on the unutilised loan amount, capped at $0.25 million annually, with payments required in the first quarter of the following year.

Regarding overdue payments, the revised terms state that if an instalment remains unpaid for over 30 days, it will be considered overdue, and daily interest will be charged at an annual rate of 150%.

Additionally, arrears accrued between 15 March 2022 and 15 September 2024, amounting to approximately $3.63 billion, will be due if Bangladesh fails to meet future payment deadlines.