Bangladesh has started the payment process for setting up its first nuclear power plant at Rooppur and has opened a Letter of Credit worth USD 11.38 for the same. The Bangladesh Atomic Energy Commission (BAEC) has opened this Letter of Credit and it would cover import of different equipment, services and expertise for the plant from Russia.
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
In terms of value, this is the largest ever single import order by Bangladesh, which has also resulted in beefing up the country’s overall import order to an all-time high of USD 16.10 billion this November. The Letter of Credit was opened through the state-run Sonali Bank in November. It was confirmed in the Bangladesh Bank’s (BB) latest official data released recently.
The import order though the biggest in the country’s history, would not put any pressure on the foreign exchange reserves. The Letter of Credit will be settled under buyers’ credit, a Financial Express report said and it was later confirmed by the Bank officials to Nuclear Asia.
Bangladesh’s import orders have never crossed USD 6 billion in a single month. In October, the total import book reached just USD 4.43 billion. Except for the Letter of Credit that was opened for the nuclear plant, the import order was just USD 4.72 billion in November.
The BAEC will settle the Letter of Credit using the loan from Russia and this would be paid in a span of three decades along with a provision of a 10 year grace period. Bangladesh will have to start repaying the loans from March 2027.
The Rooppur Nuclear Power Plant is currently under construction in Pabna district and its construction was inaugurated by Prime Minister Sheikh Hasina on November 30. The estimated project cost of the RNPP is USD 12.65 billion, 90 per cent of which will be provided by the Russian government on credit with LIBOR (London Interbank Offered Rate) plus 1.75 per cent interest. The remaining 10 per cent will be provided by the Bangladeshi government, the Financial Express report said.
The BAEC has been implementing the 2,400 MW RNPP project at an estimated cost of USD 12.65 billion. Russian nuclear agency Rosatom is working as the contractor. The first unit of this plant is likely to be in operation by the year of 2023 and the second one is to be operational by the October of 2024. Each of the units will have a capacity of generating 1,200 MW of electricity for the next whole century.