Rooppur Nuclear Power Plant: Financing, pricing and evaluation
Bangladesh signed the United Nations’ nuclear disarmament treaty outlawing nuclear weapons on 27 September 2017. The United Nations on 7 July 2017 adopted the Treaty on the Prohibition of nuclear weapons.
Meanwhile, Bangladesh signed an agreement on 30 August 2017 to send spent nuclear fuel to Russia for its ultimate management. Apparently, the two agreements would earn the country confidence of the other countries that it has no intention to enrich uranium through recycling the spent nuclear fuel to be produced from its power plant. Recycling of such spent fuel is one of the options some other countries use to develop nuclear weapons. But no doubt it is again an expensive way to earn the confidence.
Having the facilities to recycle the spent nuclear fuel could help Bangladesh to develop fuel fabrication facilities for its power plants and that could save significant amount of money in foreign currency every year and could increase level of energy security of the country.
The contract to send spent nuclear fuel to Russia also earned confidence of local critics of the nuclear power project as they had been opposing the project arguing that management of nuclear wastes was risky for a country like Bangladesh. The critics have other points including shortcomings in economic and infrastructural capabilities in developing large-scale nuclear infrastructure like the Rooppur nuclear power plant.
Financing
It has become a big question whether a country like Bangladesh could afford a $13.21 billion project under 90 per cent Russia’s supplier’s credit with 1.75 per cent interest plus LIBOR - London Interbank Offered Rate. As of an estimate prepared by the economic relations division under the finance ministry, Bangladesh would have to pay up to $8 billion in interest against the Russian credit of $11.385 billion for main construction of the power plant. The government has also started repayment of the $500 million Russian credit invested in the preparatory works to facilitate the main construction of the power plant. It signed the $500 million credit agreement on 13 January 2013 and the $11.385 billion credit agreement on 26 July 2016.
The Bangladesh government will repay the $11.385 billion Russian credit with interest in 40 equal installments beginning from March economy, as it gets 30 years with a 10-year grace period for the repayment. The country’s own investment in the power project alone would be $1.32 billion over the project’s implementation period in two phases - preparatory phase until 2017 and the construction phase until 2025 as the construction phase included provisional operation period of the two-unit power plant until final takeover scheduled for 2025.
Local experts fear that the Rooppur nuclear power project would cost high as they believe that the project implementation would be delayed significantly. The local experts’ concerns was echoed in the world nuclear industry’s status report published in September this year. All the 53 under construction nuclear reactors are behind the schedule. Advanced nations with the nuclear technology like Russia, USA, China and Japan are implementing those projects among the others. The pressure of repayment might leave the future government no options but to slash budget allocation for more fundamental projects like health, education and disaster management.
Finally, the price of electricity from the Rooppur nuclear power plant will be beyond the affordability of the power consumers. The officials related to the project, however, asserted on several occasions that the electricity price will be much less than coal-fired one. Besides, the government finds no problem in repayment of the credit as the country’s economy and the government’s financial capability would grow significantly in the next 10 years before the repayment of $11.385 billion is matured.
Pricing
The debate in financing capacity and long-term impact of heavy debt on the Bangladesh’s economy also included the potential rise in electricity price to be generated at the Rooppur nuclear power plant. Although the BAEC in 2015 estimated the price of nuclear power at Tk 3 per unit or kilowatt-hour as Levelized Tariff, later it revised the price twice as its key officials said that the price would be Tk 5-Tk 5.30 per unit and then they hinted the price at Tk 6 to Tk 7 per unit. They claimed that the nuclear power company would supply electricity at less than the price at which the companies would supply electricity from imported coal-and/or-LNG-fired power plants. The BAEC officials also said that the price of the $12.65 billion general agreement and operation and maintenance cost to be spent over the plant’s 51-year economic life were considered in estimating the price.
The price of electricity would be much higher than the latest estimates as the BAEC did not consider the costs to be spent on sending high-level radioactive nuclear wastes to Russia and that on the decommissioning cost of the Rooppur nuclear power plant. The two issues might involve several billion US dollar spending.
Criticisms about Financing and Pricing:
Hesitant stances of the government in determining the technology with construction cost escalation drew sever criticism from conscious citizens. The government has so far shifted its position twice between 2007 and 2014 with significant rises in investment costs. In 2007, the BAEC prepared its proposal with an old version of VVER- 1,000 reactor or equivalent technology developed by other supplier countries. The project cost was estimated at a range from $0.9 billion to $2 billion. In 2010, the BAEC responded positively to a Russian proposal to install the two-unit power plant with AES- 92 or VVER- 1,000 reactors. After Fukushima accident on 11 March 2011, issues of additional safety measures were surfaced. At that time, Bangladesh had three options of choosing reactor model with passive safety measures for physical protection of the nuclear reactor from natural disasters and attacks by terrorists or any foreign force. The options included VVER- 1,000 reactors with the passive safety measures, VVER- 1,200 reactors and VVER-TOI reactors with 1,300MW capacity each. Russia was reportedly pursuing for supplying its latest technology, the VVER-TOI, for Ruppur nuclear power plant. But the proposal was rejected citing the grounds that there was no reference plant that used VVER-TOY and the IAEA Guidelines recommends that a beginner country should implement nuclear power project following the footsteps of a reference plant using the technology.
Finally in 2014, Atomic Energy Power Corporation, AEP, of Russia announced that they will supply and install two units of AES-2006 with a version of its V- 392M reactors and its Novovoronezh unit-II in Russia would be the reference plant. On 25 December 2015, the BAEC and the Atomstroyexport signed $12.65 billion general contract for the construction of the two-unit Rooppur NPP with a total of 2,400MW power generation capacity. Under the contract, the Russian authorities will educate and train 1,950 individuals mainly for operation and maintenance of the power plant.
Significance and future in Bangladesh
In the developed countries, their Education system, power grid system or national security arrangements have been beefed up with their economic growth as well as growth of living standard which made it easy to develop and cope with the large-scale nuclear infrastructures like power plants. Now questions arose that whether a country like Bangladesh should have adopted the nuclear program after the development of the sectors. The government bypassed the process and adopted a short-cut method for the sectors’ development. First, it set an ambitious target of building the nuclear infrastructures with a tight schedule and then it started developing the sectors necessary to cope the power plant. The critics compared it as an act of ‘putting the cart before the horse.’ They find it as a huge risky venture for Bangladesh which could severely affect the current economic growth. The government, however, took a firm stand about the project that had made the progress to current stage of marking the FCP for the first reactor.
The government expects Rooppur nuclear power plant’s due time commissioning as well as commencement of its safe and optimum operation would open a new window for energy hungry Bangladesh. It will help bringing fuel diversity in power generation as well as will supply electricity without carbon emission. Although the Power System Masterplan (PSMP)- 2016 recommended for a total of six units of nuclear reactors to be installed by 2041 to have a power generation capacity of 7,200MW, the success might encourage the government to think of doubling the capacity double to generate electricity until 2041. The Government thinking, a success story with Rooppur NPP would encourage the future generation to take more ventures with advanced technologies.
Beside all these issues, the 100-year assets will play vital roles in formulation and implementation of future energy sector reforms. The government expects developing its own capacity to operate and maintain the power plant in three to four years after its commissioning scheduled for 2022 for first unit and 2023 for the second unit of the plant. The prospects of the use of nuclear technology in electricity generation would however be determined by how fast the country develops its human resources for operation and maintenance of nuclear power plants and negotiating contractors’ appointments for new nuclear units as well as carrying out regulatory functions. But above all, a nuclear program needs to integrate the entire nation which the government is needed to earn as soon as possible.
(This is an excerpt of a keynote paper presented at a seminar in the RC Majumder Auditorium, University of Dhaka arranged by ARB recently)
Written by Rokan Uddin, a senior correspondent at NTV
