Sanctions-impeded debt service on RNPP
Dhaka-Moscow meet misses consensus on back pay
Funds for accrued interest payments accumulating in BB escrow account
FHM Humayan Kabir
Published :
Oct 03, 2024 00:54
Updated :
Oct 03, 2024 00:54
Dhaka and Moscow failed to settle score on sanctions-impeded loan repayment and extension of the aid-disbursement tenure for the undisbursed credits from a US$11.38-billion commitment in a two-day meeting in Dhaka, officials said Wednesday.
A Russian delegation sat with Economic Relations Division (ERD) for a two-day discussion, Tuesday-Wednesday, in Dhaka for resolving overdue issues, including the debt servicing against the loan for Rooppur nuclear power-plant project as it has halted for more than last two years, they said.
At the meeting, presided over by ERD Secretary Shahriar Kader Siddiki, a host delegation discussed with a visiting 15-member Russian team over the two days. The Russian team was headed by Mamonov, Director, the Ministry of Finance in Russia.
Following an around two-year lapse, Bangladesh had failed to serve some US$630 million worth of debt against its outstanding loans from Moscow till the first half of this calendar year.
Bangladesh has failed to repay the Russian loan for more than two years as the USA imposed sanctions on Moscow in the international payment systems (SWIFT) after the invasion of Ukraine.
Russia confirmed an $11.38- billion loan in July 2017 for the Rooppur nuclear power project or RNPP. Dhaka started repaying the interest on the disbursed amount of the loans annually.
Meanwhile, Moscow released a total of $7.77 billion worth of the credit, including $1.295 billion till last FY2024, to Bangladesh for implementing the power project, ERD data showed.
"The issues are yet to be settled in the last two days' meetings. We will be continuing our discussions. We may sit shortly again," said a highly placed source in the government.
Earlier, Moscow put pressure for repaying the halted debt as the Russian contractor has been working to set up the 2400MW- capacity nuclear power plant in Bangladesh's Rooppur in Pabna.
Sources said VEB.RF Bank, a representative agency of the Russian government, in August sent in a letter to Bangladesh government requesting $630- million halted debt servicing on the outstanding amount by September this year.
The letter says that the repayment should be made in USD or Chinese yuan at the Bank of China's Shanghai branch. But, this bank is also on the US sanctions list, making it impossible for Bangladesh to make the payment even if it wanted to, sources said.
Meanwhile, Bangladesh government is keeping aside the funds to be required for the debt servicing in an escrow account in the central bank.
On the other hand, Bangladesh has sought extension of the loan-disbursement period for two more years up to December 2026 as the power plant- building works have been delayed.
"We have told Moscow that we are ready to repay the loan as we had kept aside the fund in a separate escrow account. Only the US sanctions on the payment gateway has created obstacles," said another senior government official.
He said, "Since the entire aid- disbursement period is going to be over in December this year, we need extension for two more years for completing the project works as well as the necessary funds."
So far, nearly 70 per cent of the Rooppur power-plant project is completed, officials said.
Russia has so far disbursed some $7.77 billion worth of loan out of its $11.38 billion commitment. The remaining $3.61 billion will be released based on the project progress and Bangladesh's demand.
Earlier, Bangladesh government borrowed two loans for installing the power plant. One was a technical assistance worth $491 million under an agreement in November 2013 and another one is the gigantic $11.38 billion in July 2016.
According to the deals, the repayment against the first $491-million loan was supposed to be completed in FY2023 as its maturity was 10 years and rate of interest was LIBOR plus 1.0 to 3.0 per cent.
For the $11.38- billion loan, Bangladesh will repay it at LIBOR plus 1.75-percent annual rate and the total interest will not cross 4.0 per cent.
The loan will have to be repaid in 30 years with a 10-year grace period. As the grace period has yet to start, the payment of the principal of the loan has not started yet.
Out of the $591 million stuck-up amount for repayment to Russia, $495 million is on account of interest while the reaming $96 million is the principal amount of the untilised loans to Bangladesh, ERD officials said.
The principal amount of $96 million is kept aside for the $491 -million loans under the first TA project while the $495 million is earmarked for serving as interest of for both the TA and investment loans for the Rooppur power-plant project.
Bangladesh Defense Forum
