Rooppur payment: Govt to seek US sanction waiver

Bangladesh will be seeking permission from the US treasury to repay Russia for the Rooppur nuclear power plant project, whose dues have piled up in the Bangladesh Bank's escrow account after sanctions were levied on Russia following its invasion of Ukraine.

As much as $900 million has been on hold since 2022 in the central bank's escrow account, a third-party special deposit fund to hold the assets of a transaction temporarily. The assets are only released when all terms of the agreement have been met.

The finance ministry and the ministry of science and technology will be applying for the waiver from the US Treasury within a couple of weeks, The Daily Star has learnt from people informed with the proceedings.

A meeting will be held with the US Treasury on the sidelines of the WB-IMF spring meetings that begin today in Washington DC.

Before leaving for Washington DC, Finance Adviser Salehuddin Ahmed told reporters that the concerned officials would hold discussions with the US treasury on the Rooppur plant's payment issues.

"We are searching for alternatives," he said.

As per the loan agreements signed with Russia for the power plant, Bangladesh is to repay the loan in dollars, which became unfeasible as some of the largest banks of the Soviet nation were expelled from the SWIFT financial system, which handles the vast majority of cross-border payments.

The Bank for Development and Foreign Economic Affairs (VEB), a Russian state-owned institution handling transactions for the Rooppur project, was among those expelled.

Since getting the sanctions, Russia has been asking for the payments -- even in roubles -- almost every month.

Bangladesh has also been trying alternate options like sending payments through a bank in China. But that went nowhere as banks in China did not agree with the proposals.

Due to the pandemic, construction work for the power plant had been delayed, which resulted in penalties. Besides, due to the payment obstacles, the penalty for late payment was activated.

As a result, Bangladesh initiated a revision of the agreements and Russia agreed to waive the penalty and revise the Intergovernmental Credit Agreement (IGCA) until the end of 2026.

However, the agreement is yet to be amended as the payment issue has not been settled, a finance ministry official told The Daily Star.

In 2013, Russia provided a preparatory fund of $500 million for the Rooppur nuclear power plant and in 2016, they provided $11.38 billion for the implementation of the project.

Until the sanctions were imposed in 2022, Bangladesh paid about $1 billion as repayment on interest and advance payments.

As per the project implementation schedule, the repayment of the principal amount was supposed to commence on March 15, 2027, which later the government proposed extending it to March 15, 2029.

The first unit of the power plant would start operation in December, according to the latest progress report of the Bangladesh Power Development Board.