Summary 

  • Russia’s state-run nuclear giant, Rosatom, has managed to steer clear of any sanctions so far. 
  • Rosatom is building Bangladesh's first nuclear plant, with Russia loaning the country around $12.65bn for the construction of four 1200 MW reactors. 
  • Egypt and Turkey are two other notable examples of countries building their first nuclear reactors with Russian financing and technology. 
  • "Right now, Bangladesh is so dependent on Russia to finish the plant that they can’t take an independent stance on the Russia-Ukraine war."

On the afternoon of August 1, a Russian cargo ship docked at Bangladesh’s Mongla port for the first time since the start of the Russia-Ukraine conflict. The MV Kamilla carried 3328 tonnes of machinery to be used in the construction of a nuclear power plant in Rooppur. 

The Rooppur Power Plant (R-NPP) will be Bangladesh’s first nuclear power plant, with the first unit expected to go into operation in 2023. The plant is predicted to eventually provide 15% of the country’s electricity. 

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Construction commenced in 2017 after a deal was signed between the Bangladesh Atomic Energy Commission (BAEC) and Russia’s state-run nuclear power company, Rosatom, in December 2015. The agreement was that $12.65bn would be invested to build two 1200 megawatt (MW) nuclear power units in Rooppur, with Russia financing up to 90% of the project through credit. In addition, Rosatom will supply equipment, expendable materials and training to maintenance crews throughout the plant’s operation. 

Even in the aftermath of Russia’s invasion of Ukraine on February 24, construction continued unscathed as Rosatom escaped international sanctions against Russia. 

The Rooppur power plant is one of many emerging Russian-funded nuclear projects in the developing world. In July this year, Rosatom began work on Egypt’s first nuclear power plant, with Russia loaning the country around $12.65bn for the construction of four 1200 MW reactors. 

On September 17, Turkey and Russia resolved contracting disputes, resuming the construction of a $20bn power plant in Turkey which will be built, owned and operated by a Rosatom subsidiary. 

Escaping sanctions

Since 2014, the US and EU have led an international sanctions campaign against Russia’s energy sector. These efforts to decouple dependencies on Russian energy were accelerated following Russia’s invasion of Ukraine.

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Now, the EU has announced its plan to cut Russian natural gas imports by two-thirds by the end of 2022. By 2027, the bloc aims to completely ban Russian fossil fuels. In the US, president Joe Biden signed an executive order in March banning the import of any Russian hydrocarbons. 

Despite these aggressive measures, Russia’s state-run nuclear giant, Rosatom, has managed to steer clear of any sanctions, allowing it to continue activities in countries such as Bangladesh. 

“In comparison to natural gas and crude oil, which are commodities you can buy from virtually any place, nuclear is a much narrower market,” comments Paul Dabbar, CEO of Bohr Quantum Technology and distinguished visiting fellow at the Center on Global Energy Policy at Columbia University SIPA. 

“With nuclear energy, the supply chains are significantly more fragile and the replacement opportunities are way less. So when you sanction one country, you are effectively sanctioning the one and only company that can provide certain services,” says Mr Dabbar.

In recent decades, Russia, primarily through Rosatom, has been one of the world’s biggest exporters of nuclear reactors, according to a recent report by Columbia University’s Center on Global Energy Policy. Of the 439 nuclear power reactors in operation in 2021, 80 were either located in Russia or of the Russian VVER type located elsewhere. By the end of 2021, 15 more Russian-type reactors were being constructed in other countries. 

Russia’s core involvement in the nuclear power supply chain stretches beyond Russian-styled reactors. The country is in the top 10 producers of mined uranium globally with its close ally, Kazakhstan, taking first place. It accounted for nearly 40% of global uranium conversion services in 2020, according to Columbia University’s report. 

It is little wonder that any country willing to set in motion a nuclear programme and source foreign technology will sooner or later knock at Rosatom’s door. 

The Bangladeshi case

In 2009, the World Bank published a report outlining the significant energy challenges faced by Bangladesh’s fast-growing economy. The report identified “significant shortages of power generation capacity and natural gas”. 

“Following 2009, the government started to build (coal) power plants as a solution to the energy generation problem,” says Ijaz Hossain, dean of engineering at the Bangladesh University of Engineering and Technology. “They thought that the fuel to run these plants would come automatically. However, now gas reserves are declining and the price of oil is rising. Bangladesh is finding it very difficult to get fuel.” 

At present, Bangladesh’s energy sector is heavily dependent on fossil fuels such as coal and diesel. Hydro and renewables made up less than 1% of total net generation in 2020-21, according to a report published by Bangladesh’s Power Development Board. 

“We are a small country in terms of land. Renewable energy uses a lot of land and we use most of our land for agriculture. Pursuing renewables aggressively may compromise food security,” comments Mr Hossain. 

“One can see why nuclear energy is an elegant solution to a set of challenges that a country like Bangladesh may face,” explains Michael Bradshaw, professor of Global Energy at the Warwick Business School. 

One can see why nuclear energy is an elegant solution to a set of challenges that a country like Bangladesh may face

Michael Bradshow, Warwick Business School

For Bangladesh – a country heavily dependent on the exports of garments that has done little to contribute to the current climate crisis but is severely affected by it – nuclear power offers a promising source of low-carbon electricity. However, it does little to loosen the country’s dependence on foreign technology and financial resources to power its development. 

“If Russia is able to step in and provide this solution then so be it,” says Mr Bradshaw. “But the question is going to be: how is Bangladesh going to pay it back?” 

Debt and dependence

As much as 90% of the total cost involved in the R-NPP will be shouldered by Russia through credit. Bangladesh is to pay off this loan with an interest rate of Libor plus 1.75% in 28 years, according to World Nuclear News. 

Similarly, in February 2020, Russia awarded Egypt a $25bn loan to construct the Dabaa nuclear power plant, a project spearheaded by Rosatom subsidiary, Atomstroyexport. More recently, in September 2022, Rosatom signed a $9.1bn loan to Turkey to fund the construction of a nuclear power plant in the country. 

“It’s one thing to get a country to build a nuclear power station for you and it’s quite another thing to maintain it,” says Christopher Dent, professor of international political economy at Edge Hill University. 

According to the report by Columbia University, nuclear power plants such as those constructed in Bangladesh, Egypt and Turkey require routine maintenance in order to remain operational. By using Russian reactor technology, these power plants will be reliant upon Russia for upkeep and capital. 

This dependence also has geopolitical implications for developing countries. 

“The reliance on Russian technology and running [the power plant] does put Bangladesh in a defensive position,” comments Mr Hossain. “Right now, Bangladesh is so dependent on Russia to finish the plant that they can’t take an independent stance on the Russia-Ukraine war.” 

Right now, Bangladesh is so dependent on Russia to finish the plant that they can’t take an independent stance on the Russia-Ukraine war

Ijaz Hossain, dean of engineering at the Bangladesh University of Engineering and Technology

“Nuclear has often been used as a tool for political diplomacy,” says Antony Froggatt, energy policy consultant at Chatham House. “When the US was trying to woo India politically, it gave it nuclear power. These are big projects worth tens of billions of pounds and they happen for a combination of reasons including status and big capital gains.”

This article first appeared in the October/November 2022 print edition of fDi Intelligence.