Moscow has proposed paying for Bangladesh's Rooppur nuclear power plant in Indian rupees, a move aimed at sidestepping US sanctions that have complicated financial transactions for the project. The proposal, confirmed by sources familiar with the talks, would channel payments through India's rupee trade mechanism, avoiding the dollar-based system that Washington has targeted.
Why the proposal matters
The Rooppur plant, being built by Russia's state nuclear company Rosatom, is Bangladesh's first nuclear power station. Construction has been underway for years, but payment delays have mounted since the US imposed sanctions on Russia over its invasion of Ukraine. Western banks have grown wary of processing transactions linked to Russian entities, leaving Bangladesh struggling to settle its bills.
Using the Indian rupee offers a workaround. India and Russia have a long-standing arrangement to trade in rupees, bypassing the dollar. Bangladesh already has strong trade ties with India, making the currency swap logistically feasible. If accepted, the deal would allow Dhaka to pay for the plant in rupees, which Moscow could then use to buy Indian goods or invest in Indian assets.
How the rupee payment would work
Under the proposed plan, Bangladesh would deposit rupees into an Indian bank account designated for the transaction. Russia would then access those funds through its vostro accounts in Indian banks. The mechanism mirrors the rupee-rouble trade that India and Russia have used for decades, particularly after Western sanctions cut off dollar channels.
For Bangladesh, the benefit is clear: it avoids the risk of secondary sanctions that could come from directly paying Russia in dollars or euros. For Russia, it keeps a key energy project alive without needing to navigate the increasingly restricted global financial system. The proposal is still under discussion, and no final agreement has been reached.
Sanctions backdrop
The US and its allies have imposed sweeping sanctions on Russia since the invasion of Ukraine in February 2022. These include restrictions on transactions with Russian state-owned entities like Rosatom, though the nuclear sector has faced some exemptions. Still, banks have been cautious, and delays in payments for the Rooppur plant have been reported for months.
Bangladesh has sought to balance its foreign policy, maintaining ties with both Russia and the West. The country relies on Russia for nuclear technology but also receives significant aid and investment from the US and Europe. The rupee proposal reflects Dhaka's attempt to navigate these competing pressures.
The Rooppur plant, located in Pabna district, is expected to generate 2,400 megawatts when fully operational. Its first unit is scheduled to start producing electricity later this year, though the timeline has slipped before. Payment issues could further delay the project.
India has not publicly commented on the proposal, but its rupee trade mechanism with Russia has expanded since the war. Indian refiners have been buying Russian oil in rupees, and the two countries are exploring broader use of the currency for bilateral trade.
Whether Bangladesh accepts the rupee payment plan remains an open question. The government in Dhaka is weighing the financial and diplomatic implications. A decision is expected in the coming weeks.
