(Bloomberg) -- Bangladesh has agreed to pay Russia about $300 million in yuan currency to settle payment for building a nuclear power plant near the capital city Dhaka, according to two officials familiar with the matter. 

The payment mechanism was finalized at a meeting last week, the officials said, declining to be identified citing rules. Russia initially refused to accept the payment in yuan on concerns of potential currency conversion losses and insisted on payments in ruble, the people said.

The nuclear power project is key to future energy security as Bangladesh grapples with frequent electricity shortages and rising demand from businesses and households. The $12.65 billion power plant in the central district of Pabna, some 140 kilometers west of Dhaka, is being constructed with the help of Moscow’s state-owned atomic company Rosatom and has been funded by a Russian loan. 

The non-dollar currency arrangement comes as countries across the emerging world look to cut reliance on the greenback. China and India have been among the most vocal about bolstering local currencies, especially at a time when more governments are casting US sanctions as dollar weaponization which they say is adding unneeded pressure to their own decisions.

Russia is still pushing Bangladesh for an alternative payment system for trade and business, the officials said. Bangladesh’s Finance Minister AHM Mustafa Kamal didn’t respond to calls seeking comment on the deal.

Moscow had asked Bangladesh to open a direct payment channel between their central banks to facilitate fund transfers hampered by sanctions against Moscow because of its war in Ukraine. It also proposed that Dhaka consider a variety of proposals including a currency swap agreement, the use of ruble in trade settlements and enabling Bank of Russia’s messaging system to facilitate bilateral trade and investment.

--With assistance from Michelle Jamrisko.

(Updates with context on non-dollar currency arrangements)

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