By Ahammad Foyez on Apr 17, 2023 Benar News
Bangladesh will use the Chinese yuan to repay a U.S. $318 million loan owed to the state-owned Russian firm Rosatom so construction can continue on a nuclear power plant in the country, a company official said.
Dhaka had been unable to make the payment in U.S. dollars since Russia’s February 2022 invasion of Ukraine because U.S. and European sanctions barred Moscow from accessing the dollar-denominated international banking system.
Moscow initially wanted Dhaka to make the payment in rubles for the $13 billion Rooppur plant, said a Rosatom official on the condition of anonymity, as the official was not allowed to speak to the media.
“Both countries agreed to make transactions through yuan,” the official told BenarNews, adding the decision was made on Thursday.
“The ruble created some complications as it is not an official currency for Bangladesh’s foreign payments.”
Mezbaul Haque, a spokesman for the nation’s central bank, Bangladesh Bank, told BenarNews that the yuan is one of five official currencies for foreign exchange. The others are the U.S. dollar, the British pound, the euro and the yen.
Uttam Kumar Karmaker, the head of the European affairs wing of the Bangladeshi Finance Ministry’s economic relations division, told The Washington Post that the transaction was yet to be completed because payment details needed to be resolved.
Russia is constructing as well as financing 90 percent of the total cost for the Rooppur Nuclear Power Plant (RNPP) in Pabna, a district in northwestern Bangladesh. In late 2017, the Russian state-run nuclear energy firm Rosatom began building the plant, which is expected to be ready in mid-2023.
‘Timely’ decision
Dhaka’s decision to make the loan repayment in yuan was a positive one, a former lead economist at the World Bank’s Dhaka office said on Monday.
“The decision is a timely one for both Dhaka and Moscow, as over 90% of the work on the project has been completed,” Zahid Hussain told BenarNews.
Observers had anticipated delays at the plant since February 2022 when the Russia-Ukraine conflict began, although Bangladesh Prime Minister Sheikh Hasina said last year that Dhaka would not stop doing business with Moscow.
Still, Bangladesh blocked a Russian ship from entering a local port just before Christmas because of U.S. sanctions on the vessel linked to Moscow’s war in Ukraine. The ship was carrying cargo for the Rooppur plant.
Then in January, Bangladesh banned the entry of nearly 70 U.S.-sanctioned Russian ships.
Russia was not happy, and a month later summoned Bangladesh’s envoy to Moscow and said the ban did not bode well for the cooperation between the two nations.
In its statement, the Russian Foreign Ministry spoke obliquely of the help it is providing Bangladesh, saying that blocking its ships “may have a negative impact on the prospects for our cooperation in various fields.”
Hasina counts Russia as one of her strongest allies. The ties between her Awami League party and the Russian state date to Bangladesh’s war of independence in 1971, which the Soviet Union supported.
Immediately after she returned to power following the 2008 election, Hasina signed a treaty with Russia to build the Rooppur nuclear power plant. The costliest infrastructure project ever undertaken in Bangladesh, it has solidified ties between the two countries.
A Rosatom official told BenarNews in February that the Russian firm planned to send some light equipment for the plant via air.
“Most of the heavy materials have already been sent to the site,” said the official in Bangladesh, who asked not be named because he was not allowed to talk to the media.
“If needed, the company would use such vessels which are out of sanctions, in the future,” the official said to BenarNews.