$800m repayment to Russia in limbo
About $809 million has piled up in a Bangladesh Bank escrow account to repay loans and interest for the Russia-funded Rooppur Nuclear Power Plant.
Escrow is an arrangement for a third party to hold the assets of a transaction temporarily. The assets are kept in a third-party account and are only released when all terms of the agreement have been met.
For all latest news, follow The Daily Star's Google News channel. The central bank was left with little choice but to deposit funds into the special account (escrow) after sanctions were levied on Russia following its invasion of Ukraine.
Among these sanctions, at least 10 Russian banks were barred from using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which provides the main messaging network through which international payments are initiated.
As of Thursday, over three-quarters of a billion dollars had been deposited in the account. It will be paid in the future, The Daily Star learned from officials of the central bank who are directly involved with the matter.
Bangladesh agreed to borrow around $13 billion from Russia for the construction of the nuclear plant in Rooppur in 2016.
It is scheduled to pay interest as well as a ten percent advance payment, but transactions have stagnated for over a year because of the sanctions.
The repayment of the principal amount will commence from March 15, 2027. However, the interim government recently proposed extending it to March 15, 2029.
Seeking anonymity, a senior central bank official told The Daily Star that government stakeholders, including from the Economic Relations Division (ERD) and the Bangladesh Bank, are continuing to arrange meetings to discuss how payments can be made to Russia.
"We are trying to find out how to settle the issue. The central bank is also keeping an eye out for alternative channels.
"Over the past year, we have tried to find a risk- and hassle-free process to make payments. But the issue is yet to be finalised."
The official added that they would feel comfortable if the tenure for repayment of the principal amount was extended.
Around eight to nine instalments were already paid before sanctions on Russia were imposed, he added.
The EXIM Bank of Russia began to disburse loans for the project in 2017.
The interim government, which took office following the ouster of the Sheikh Hasina-led Awami League government on August 5 this year, has taken initiatives to review loan agreements for mega projects made by the previous regime, including the nuclear facility in Rooppur.
ERD officials told The Daily Star that Russia proposed to send payments through a bank in China, but it had not yet been evaluated.
In another development, the government decided to make partial advance payments for the project in the local currency instead of US dollars after Atomstroyexport, the Russian contractor for the project, agreed to receive payments in Bangladeshi currency.
The advance payments will be made through the state-run Sonali Bank.
Industry insiders said that about 69 percent of the project has already been implemented.
Construction work is scheduled to be completed on December 31 next year.
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