The ministry of finance has raised a string of issues including the interest rate and advance payment clauses in the draft credit agreement for US$ 12.65 billion with the Russian government to establish the Rooppur nuclear power plant.
The observations of the ministry also pointed to lack of any court reference for dispute settlement and arbitration mechanism included in the agreement.
The proposed mega nuclear plant, first of its kind in the country, will have a power generation capacity of 2400 megawatt.
A team comprising officials of economic relations division of the finance ministry and atomic energy commission has long been engaged in negotiations with their Russian counterpart Rosatom, sources said.
‘Negotiations are going on. We are expecting to seal the state credit deal on Rooppur power plant by April,’ Mohammad Shawkat Akbar, managing director, Nuclear Power Plant Company Bangladesh Ltd, told New Age on Thursday.
He, however, declined to make any comment on clauses included in the draft credit agreement, saying, ‘The issue entirely rests on ERD.’
The ministry of finance in its observations said the clause of 10 per cent of US$ 12.65 billion loan, which according to the draft agreement the Bangladesh government is liable to pay to Rosatom in advance needs to be revised, and the Russian state credit should ensure hundred per cent financing for the project.
‘If the total cost is US$ 12.65 billion, GoB will be required to pay US$ 1.26 billion in cash as an advance payment, which may create huge fiscal burden as well as pressure on forex reserve,’ reads the opinion paper of the ministry.
Furthermore, the finance ministry said LIBOR plus 1.75 interest rate or maximum four per cent rate is higher given the available resource in the global market, and stable financial rating of Bangladesh economy.
‘So, the risk premium of the interest should go down further,’ it reads.
Highlighting on the draft, the opinion also said the credit document has no clause about the maximum time limit of disbursement of each installment and amount of penalty if the creditor fails to pay the installment.
Besides, it said the terms and conditions of the credit such as moratorium/grace period, interest during construction (if any), availability period, and repayment period etc. may be stipulated clearly in full details in the credit document.
When asked, officials in the ERD said they would not disclose anything now as the negotiations were
going on.
‘We are concerned about our country’s interest, and the observations of finance ministry will be taken into consideration,’ a senior official in the ERD said.
He said the international practices on state credit for nuclear power plant never ever exceed over 90 per cent of the total cost, while capping at four per cent for determining interest rate was the lowest with regard to foreign credit.
According to Rosatom, the main construction work of the plant will start in 2017. The first unit is expected to go into production in 2022 and the second one in 2023.
Dhaka and Moscow at the end of December last year inked the general contract for the implementation of the proposed Rooppur Nuclear Power Plant Project, the biggest investment project in Pabna at a cost of US$ 12.65 billion.
Under the general contract, Russian state firm would install a two-unit nuclear power plant with 2,400MW capacity having a 50-year economic lifetime.
Source: New Age
