The funds from Russia for Rooppur Nuclear Power Plant (RNPP) have dwindled. At the same time, transferring money to Russia from Bangladesh as payment for equipment of the project also has stalled. In this context, the two countries have been working on way to normalise the dealings through a third country.
Top bankers of several banks involved with the dealings with Russia told Prothom Alo that the problem has arisen as the Russian banks have been expelled from the global payment system, SWIFT, due to western sanctions since the beginning of Russia-Ukraine war.
The government has been constructing a nuclear power plant with a 1200 MW power generation capacity in Rooppur of Pabna. The estimated cost of the project is US $13 billion or Tk 1.37 trillion (US $1= Tk 105). Russia has been financing the majority of the expenditure for the country’s first ever nuclear power plant, providing $11.38 billion.
As of August this year, Russia provided $4.97 billion while Bangladesh is yet to receive another $6.41 billion for the project that is supposed to be completed within 2025 starting from 2016. Power from the plant is supposed to be supplied from the plant commercially from 2024.
Russian engineering company Atomstroyexport has been constructing the Rooppur Nuclear Power Plant at the leadership of Russia’s state owned atomic energy corporation, Rosatom. The construction work has been distributed among 22 engineering companies of different countries. A large part of the expense of the project is being paid to the companies.
Russia was paying money to five construction companies through NRB Commercial Bank, a private bank of Bangladesh. NRBC Bank received only $220,000 from Russia whereas it received $6.03 million in July and $41 million in June.
As proposal has been made for payments through an alternative country, ways would be found to bring the money tooZahid Hussain, former lead economist, World Bank in Bangladesh
Speaking about this, NRB Commercial Bank’s chairman SM Parvez Tomal told Prothom Alo, “Russia is not being able to send money directly. Previously, they used to send the money through banks of other countries. But the banks of those countries are not taking money from Russia because of the risk involved. That’s why everything, including funds from Russia, is now dependent on the global situation.”
Four companies were getting money from Russia through another private bank, Premier Bank. The bank got $18 million in June and in July $20 million. But the amount had come down to $12 million in August.
Premier Bank’s managing director M Reazul Karim told Prothom Alo, “The money for the Rooppur project is coming from Russia via other countries but the amount has decreased.”
In the same way, the amount of incoming funds through private banks – The City Bank and Trust Bank and a few other banks -- has decreased.
Though the arrival of money has decreased, it has not been affecting the construction of the project, said a high official of the finance ministry wishing to remain anonymous.
The official told Prothom Alo, “A large part of the expenditure is about buying equipment for the project. These equipment are arriving from Russia. That’s why there is no problem with the construction work despite decrease in arrival of funds.”
Russia attacked Ukraine on 24 February this year. Following this, the Western countries in unison imposed various sanctions on Russia and as part of that they expelled Russia from the global payment system, SWIFT. Since then the arrival of funds has decreased. At the same time Bangladesh is also not being able to send money to Russia as payment. In this context, Russia has sent a letter to Bangladesh requesting to be able to repay the loan and interest in ruble, Russian currency.
Transferring funds also halted
The Bangladesh government spends a large share of expenses for the construction of Rooppur Nuclear Power Plant through Sonali Bank. Sonali Bank was sending a large part of that money to Russia as payment through State Corporation Bank for Development and Foreign Economic Affairs (VEB). But VEB asked Bangladesh to stop dealing with them due to the sanctions.
Sonali Bank sources said it won’t be necessary any longer to send money to Russia for the RNPP project as an account has been opened at Sonali Bank in the name of the Russian bank. The Bangladesh government has deposited money to that account.
As per the conditions, Bangladesh will have to pay the interest only until 2026. From then the country has to pay both the interests and the loan every year.
Alternative banking in discussion
Different bodies of the Bangladesh government have been holding discussion virtually with Russian sides over banking through alternative channels. Russia wants Bangladesh to pay the loan and interest through a third country that would be out of the sanctions of the Western countries. At the same time the currency through which the dealing would be done should be IMF’s reserve currency (Special Drawing Rights, SDR).
Currently, US dollar, UK’s pound sterling, euro, Japan’s yen and China’s yuan are the IMF’s reserve currency.
Bankers and economists said Bangladesh could complete the dealings through China. The Bangladesh Bank has account at a bank in China through which the dealings can be done through yuan.
As per the Russia’s proposal, Bangladesh will have to send the money to China first. In that case, US dollar would be converted into yuan and be deposited in Russian accounts. Later, China will convert the money into ruble and send that to Russia.
Speaking to Prothom Alo, World Bank’s former lead economist in Bangladesh Zahid Hussain told Prothom Alo, “As a proposal has been made for payments through an alternative country, ways would be found to bring the money too. Despite sanctions on Russia, India and China have been doing business with the country and they are not facing problem in dealing. That means, Bangladesh also won’t face any problem either.”
* The report, originally published in the print and online edition of Prothom Alo, has been rewritten in English by Shameem Reza