Construction Start at First Nuclear Power Plant in Bangladesh
WNISR, 2 December 2017
Bangladesh has started construction of its first nuclear reactor at Rooppur in Pabna District on the river Ganges, 140 km west of the country’s capital Dhaka. The first base mat concreting of the Rosatom supplied VVER-1200 began on 30 November 2017. Two of these 1200 MW reactors are planned for the site operated by the Bangladesh Atomic Energy Commission (BAEC). JSC AtomStroyExport (ASE), a subsidiary of Russian state holding Rosatom, is the general construction contractor. The Rooppur (or Ruppur) project was originally planned for the site in 1960, but Rooppur-1 is now scheduled to begin operation in 2023, with Rooppur-2 following in 2024.
The cost of electricity in Bangladesh is a critical factor for the nation’s 170 million people with only 62.5 percent having access to electricity. Yet predictably the costs for the Rooppur project have escalated in recent years. In November 2011, the Bangladesh Government’s announced it was prepared to sign a deal with the Russian Government for two 1000 MW units to be built by 2017-18 at a cost of US$1.5-2billion. These cost estimates tripled in April 2014, when a senior official at the Ministry of Science and Technology was quoted as suggesting the price was more likely to be US$6 billion. In 2015, the Bangladeshi Finance Minister was quoted as saying the project was then expected to cost US$13.5 billion.
However, even this is not likely to be the final cost with suggestions that this is not a fixed price contract, but a “cost-plus-fee” contract, and “the vendor has the right to come up with any cost escalation (plus their profit margin) to be incorporated into the contract amount” and that the eventual cost of generating power would be “at least 60 percent higher than the present retail cost” of electricity in Bangladesh.
Russia is providing 90 percent of the funds on credit at an interest rate of Libor (London Inter-Bank Offered Rate) plus 1.75 percent. Bangladesh will have to pay back the loan in 28 years with a 10-year grace period. In late May 2016, negotiations were concluded over the US$12.65 billion project, with Russia making available US$11.385 billion.
Bangladesh Prime Minister Sheikh Hasina, attending the ceremony celebrating the official construction start, stated: “This is a joyful day for us. Bangladesh enters the nuclear world with the beginning of the construction work of the main structure. It’s a pride and joy for us as a nation.” The project’s economics have been widely questioned. In 2017, a retired nuclear engineer, who had been involved in advising the BAEC, argued that the country was “paying a heavy price” for BAEC not having “undertaken a large-scale program of recruitment, and training of engineers”; he also charged that Bangladesh was buying reactors at the “unreasonable and unacceptable” price of US$5,500/kW because its “negotiators didn’t have the expertise to properly scrutinize the quoted price”.
At the current price, “nuclear electricity from Rooppur will be about three times more expensive than wind or solar electricity” in Bangladesh, for a rate of return of a little over 15 percent, as assumed by the Bangladesh Energy Regulatory Commission. If solar energy prices continue to decline the same way they have been declining in the recent past, the cost differential would be even greater by the time Rooppur comes online.
Prime Minister Sheikh Hasina, claimed: “Our government has given top priority to the issue of nuclear safety and radiological protection, while implementing the Rooppur project. We are strictly following IAEA safety standards and other relevant guidance as well as international good practices. However, within Bangladesh there is concern over the lack of information and over the impact on water use and lack of preparedness of emergency planning and possible terrorist acts against the facility.
The start of construction of Roopur-1 is the second reactor worldwide to begin construction in 2017 following the start of Kudankulam-3 in June, with uncertainety over the construction status of one additional unit in South Korea.