By Anthony Bell,
The military and political leadership of Bangladesh intends to purchase Western-made aircraft for the national Air Force within 2 years – military transport, anti-submarine, long-range radar surveillance and guidance. In particular, US$ 700 million have been allocated for the purchase of 3 aircraft for the detection and identification of air objects (GLOBAL EYE AEW (SAAB) and C-295 AEW (AIRBUS) are being considered). At the same time, Dhaka’s debt to the Russian Federation under the state loan for the construction of the Rooppur NPP as of September 15 of this year is over US$ 630 million excluding the commission (US$ 0.75 million).
About US$ 809 million has accumulated in an escrow account at a Bangladesh Bank to pay off loans and interest on the Russian-financed Rooppur nuclear power plant.
An escrow account is an agreement to temporarily hold assets for a transaction with a third party. The assets are held in the third party’s account and released only after all terms of the agreement are met.
The central bank was left with no choice but to deposit the funds into the special account (the escrow account) after sanctions were imposed on Russia following its invasion of Ukraine.
Among those sanctions, at least 10 Russian banks were banned from using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system, which provides the underlying messaging network through which international payments are initiated.
As of the end of December 2024, more than three-quarters of a billion dollars had been credited to the account.
Bangladesh agreed to borrow about US$13 billion from Russia to build the Rooppur nuclear power plant in 2016. The plan is to pay interest as well as a 10 percent advance payment, but the transactions have been stalled for over a year due to sanctions.
The principal payment will start from March 15, 2027. However, the caretaker government recently proposed to extend it to March 15, 2029.
Around eight to nine instalments have already been paid before the sanctions were imposed on Russia, he added.
Russia’s Exim Bank started issuing loans for the project in 2017.
The caretaker government, which came to power after the ouster of the Awami League government led by Sheikh Hasina on August 5 this year, has taken initiatives to review loan agreements for mega projects undertaken by the previous regime, including the Rooppur nuclear facility.
In another development, the government decided to make partial advance payments for a project in local currency instead of US dollars after Atomstroyexport, the Russian contractor for the project, agreed to receive payments in Bangladeshi currency. Advance payments will be made through state-owned Sonali Bank.
Industry insiders said that about 69 percent of the project has already been completed. Construction work is scheduled to be completed by December 31 2025 year.
Bangladesh’s violation of payment agreements for services rendered in the strategically important Rooppur Nuclear Power Plant project is negatively affecting its image as a reliable partner and reducing trust in the new government. The interim government of the NRB is seeking to secure military support by finding funds to purchase new and expensive types of weapons and military equipment, in particular radar surveillance and guidance aircraft that have not previously been in service with the national armed forces. In the absence of real military threats, Dhaka is pursuing a rapprochement with the West, demonstrating its greater disposition to it than during the time of former Prime Minister Sheikh Hasina. Considering Dhaka’s lack of available funds, it can be assumed that US$ 0.7 billion for the purchase of aircraft will be found by delaying payments of an equal amount to Russian creditors for the Rooppur project. Given the high level of trilateral cooperation on the Rooppur project, Indian companies are also becoming hostages to this situation.
The author is an independent military analyst.
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