The US sanctions on Russia have created complications for the Bangladeshi government’s plan to pay off its $330 million debt to Russia for the Ruppur Nuclear Power Plant using the Chinese yuan. The US sanctions, imposed on various targets including the engineering, procurement, and construction contractor of the power plant, have raised concerns for Bangladesh Bank officials regarding the risks of making payments to a sanctioned entity via SWIFT. The officials have expressed their reluctance to engage in a prohibited or underhand transaction that could potentially conflict with US regulations.
Currently, the dues for the power plant are held in an escrow account, and Bangladesh is in communication with the Bank of China regarding the payment. The discussions on payment options took place during a meeting with a Russian delegation where it was agreed that payments in Russian rubles were not feasible. Bangladesh has proposed using the yuan as the preferred option for payments, and Russia has accepted the proposition. The exchange rate applied for payments will be based on the USD/CNY Central Parity Rate quoted by the China Foreign Exchange Trade System. Additionally, other matters such as the commitment fee and interest rate for the Russian loan were settled during the meeting. The commitment fee was capped at $0.25 million, and the interest rate was capped at 4 percent, despite the current six-month term SOFR rate being around 5.3 percent.
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