Russia wants to keep loan repayment money in its custody

Russia is exerting pressure on Bangladesh to open a branch of a Russian bank in Dhaka in order to send the loan instalment money from the Rooppur Nuclear Power Plant project to the home country or at least keep it in their custody.

Russian ambassador to Bangladesh Aleksandr Mantytsky met the high officials of the Bangladesh government including the chief adviser and the finance adviser over the past three months where Russia sought permission to open a bank branch in addition to placing other issues.

Since banks in Russia face sanctions and are forced out of the SWIFT system following the Russia-Ukraine war, Dhaka can no longer send the loan repayment money from the Rooppur Nuclear Power Plant project to Moscow.

Bangladesh keeps the fund in an escrow account of the Bangladesh Bank as an alternative, depositing USD 630 million from loan interests so far.

As Russia became desperate to get the money, Moscow proposed to Dhaka last August to send the funds to a certain bank in China, to which Dhaka did not respond. Later, Moscow requested the government policymakers in Dhaka to allow the former to have a bank branch here.

As per the agreement on loan to the Rooppur Nuclear Power Plant project, Dhaka will permit Moscow to open a bank branch here, and the lending country is seeking it now.

Former lead economist of the World Bank in Dhaka, Zahid Hussain, told Prothom Alo opening of the branch of the Russian banks facing sanctions of US and UK directly or indirectly will create problems. If Russia proposes to open a branch of a certain bank, then the matter of approval by Bangladesh also comes up.

Zahid Hussain, however, opined anyone would want to take the repayment money of the loans into their custody as soon as possible.

The Rooppur Nuclear Power Plant project is being implemented at a cost of Tk 1.14 trillion, and Russia is lending USD 12.65 billion for the project. The project deadline is 31 December 2024, but it will take two more years to complete the project.

Meanwhile, the committee on the preparation for the ‘White Paper on the State of Bangladesh Economy’ formed by the government is reviewing the loan agreement, expenditure and implementation, causing discomfort for Moscow.

A senior official at the Economic Relations Division (ERD) Dhaka is ready to repay the loan whenever they want it and wherever the money will be deposited there, but the process must be legally binding and convenient internationally for both parties.

Work of the Russian contractor firm slows at the Rooppur Nuclear Power Plant project because of the coronavirus pandemic and the Russia-Ukraine war. Last August, Dhaka requested Moscow to extend the repayment period of capital for two years.

In response, Moscow placed a list of demands that mainly included transferring the repayment money to a Chinese bank. As Bangladesh disagreed, Russia wants to open a branch of the Russian bank here.

Meanwhile, Dhaka readied the draft of the amended loan agreement on the extension of the repayment period of capital.

Bangladesh borrowed USD 12.65 billion from the EXIM Bank of Russia for the Rooppur Nuclear Power Plant project. Both counties signed an agreement on it in 2016. Russia started releasing the funds in 2017.

Payment of loan capital will start on 15 March 2027 after a grace period of 10 years. Dhaka will pay USD 380 million in two instalments for capital and USD 110 million in interest annually. Payment of capital and interest might fluctuate from time to time.

*This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna