Letter to BB to open account with People's Bank of China
The government wants to open an account with the People's Bank of China to repay the Russian loan for the Rooppur Nuclear Power Plant. The Economic Relations Division (ERD) sent a letter to Bangladesh Bank on 7 August to take steps in this regard.
According to sources of the science and technology ministry as well as ERD, the government wants to repay the Russian loan in Chinese yuan. Under this arrangement, Bangladesh will pay China in US dollars. China will convert that into rubel and pay Russia.
In the ERD letter to Bangladesh Bank regarding opening an account with the People's Bank of China, it was said that it was urgently required to open this account in order to implement the intergovernmental loan agreement amendments signed between Bangladesh and Russia. The prime minister had given her approval to the summary regarding signing the agreement. The two amendments are now ready to be signed.
In the letter signed by ERD deputy secretary Muhammad Jahangir Alam, a request was made to Bangladesh Bank to take necessary measures to open the account with the Chinese bank.
Speaking to Prothom Alo on condition of anonymity, an official of the science and technology ministry said that the loan agreement between the government and Russia regarding the Rooppur issue stated that the loan would be repaid in dollars. Now since it would be repaid in yuan, the loan agreement required amendments
Russia is providing a loan of USD 11.38 billion, equivalent to over Tk 1 lakh 23 thousand in Bangladeshi currency, for the 2400 MW Rooppur power plant. This is Bangladesh's largest infrastructure project.
After Russia launched the offensive on Ukraine in February 2022, the US and other western countries removed Russia from the global transaction system SWIFT. All sorts of sanctions were also imposed on Russia. This made it difficult for Bangladesh to repay the Rooppur loan.
ERD sources say that under the new circumstances, Russia wants the loan, including the interest, to be repaid in rubels.it sent a letter to the government in this regard in October last year. ERD responded that it would not be possible for Bangladesh to repay the load in rubels. Bangladesh is willing to pay in Chinese yuan. A virtual meeting was held in this connection between the two countries in March. Both sides agreed to the repayment to be made in yuan. It is in that context that Bangladesh has taken the decision to open an account with the People's Bank of China.
No official statement was provided by Bangladesh Bank when asked whether the account was being opened with Chinese bank. However, a concerned official on condition of anonymity said that they had received the ERD letter. However no decision had been taken about opening a bank account. Bangladesh Bank was looking into ways of sidestepping US sanctions to make the repayment.
In the meantime, not being able to repay the Russian loan in dollars, Bangladesh is depositing the interest on the Russian loan in a separate bank account. The money will be deposited in this manner until the sanctions are withdrawn. So far 30 crore dollars has been deposited in this account as two installments for the loan and interest.
ERD sources say that another amendment may be made to the Rooppur loan agreement with Russia. This entails that Bangladesh will not have to pay any fine if the Russian contractor delays in the work. So far the government has had to pay Russia Tk 780 million in fines. Another Tk 310 million in fines remains pending.