Russia is pressuring Bangladesh to allow the establishment of a Russian bank branch in Dhaka to facilitate the transfer of loan repayment funds from the Rooppur Nuclear Power Plant project either directly to Russia or under its control.

Over the past three months, Russian Ambassador to Bangladesh Aleksandr Mantytsky has engaged in discussions with senior Bangladeshi officials, including the chief and finance advisers, to advocate for this request and address other related matters.

Due to sanctions imposed on Russian banks and their exclusion from the SWIFT system following the Russia-Ukraine conflict, Bangladesh can no longer remit loan repayments for the Rooppur project to Moscow. Instead, the funds, totaling $630 million in loan interest payments so far, are held in an escrow account with the Bangladesh Bank.

In August, Moscow proposed transferring the funds to a Chinese bank, but Dhaka did not respond. Subsequently, Russia urged Bangladeshi policymakers to permit the establishment of a Russian bank branch in Dhaka. Under the loan agreement for the Rooppur Nuclear Power Plant project, Bangladesh is required to allow this, and Moscow is now pressing to implement the clause.

The Rooppur project, valued at Tk 1.14 trillion, includes a $12.65 billion loan from Russia. Although the initial deadline for project completion was December 31, 2024, delays caused by the COVID-19 pandemic and the Russia-Ukraine war have extended the timeline by at least two years.

Compounding the issue, a government committee reviewing the loan agreement, expenditure, and implementation of the project has caused concern in Moscow. In August, Dhaka requested a two-year extension for the loan repayment period, prompting Moscow to counter with demands, including transferring repayment funds to a Chinese bank. With Bangladesh unwilling to agree, Russia is now focusing on establishing its bank branch locally.

Earlier in August we had reported that Bangladesh had decided to back off from the loan offered by China. On July 16 China announced a financial assistance of 1 billion yuan or $137 million loan to Bangladesh after Former PM Sheikh Hasina’s July 8-10 visit to China. The loan was to be paid back in yuan. Latest reports claim interim of Bangladesh Govt has decided to back off from this loan.