Fresh move in $3b Tata investment plan

Fresh move in $3b Tata investment plan

Govr, Tata agree to resume dialogue

Jasim Uddin Khan

The government and Tata have agreed to restart talks over the Indian conglomerate's stalled US$3 billion, power, steel and fertilizer investment proposal.

The move is a response to a letter from Tata to the finance adviser in which Tata asked for a resumption of talks that have been on ice since August 2006.

In 2005 the Tata Group initially proposed setting up a 1,000MW power plant, a steel mill with an annual production capacity of 420,000 tonne and a one million tonne capacity fertilizer unit in Bangladesh.

Following the letter, the finance ministry instructed the Board of Investment (BoI) to invite Tata's representatives for fresh dialogue.

“We received a letter from the Tata Group in the middle of February where they sought a fresh dialogue to settle the multi billion dollar investment proposal. Following the letter the ministry, after consulting with the government policy makers, decided to resume the dialogue,” a high official of the Finance Ministry said, preferring anonymity.

He said the government wants to wrap up the dialogue and settle the investment deal before December 2008.

Following the letter a low profile meeting was held last week between a representative from Tata and the BoI chairman Kamal Uddin Ahmed. The meeting is a precondition to more extensive and high level contacts between Tata and the government, sources said.

“A representative from Tata's Bangladesh office met with the BoI chairman to settle the date, venue and agenda of the proposed meeting,” a high official of BoI said.

Yesterday Kamal Uddin Ahmed refused to comment.

Tata representative Mohammad Reaz said they had received a letter from the BoI where the agency invited them to launch fresh dialogue.

Although the negotiations reached stalemate in 2006 significant progress had been made. Both sides provisionally agreed on a 15-year guarantee of 1.25 trillion cubic feet (TCF) gas and around 3 million tonnes of coal supply to Tata annually and upgrading of gas pipeline from the current 24-inch diameter to 30-inch diameter. The Asian Development Bank (ADB) agreed to provide financial support for development of the gas pipeline.

During the year long series of negotiations it was also agreed to allow Tata a 10-year tax holiday facility, and guarantee uninterrupted gas supply. The two sides then agreed on awarding of a coal mine for exploring around 3 million tons of coal a year to Tata in the middle of Phulbari and Barapukuria coal fields. However the decisions were never approved at ministry level.

The previous BNP-led government was unwilling to make a decision before the scheduled general election, while the present caretaker government has said it has other priorities.

In the meantime, Tata has launched major investment projects in other parts of the world.

During the period from April 2006 to today Tata Group bought the largest steel maker in Europe 'Corus' at a cost of around US$ 13 billion along with a soda ash plant in the US at a cost of $ 1 billion.

The group also invested for the production of a 4000 mega watt power plant in India, is going ahead to invest in a steel plant in Vietnam and going to explore a coal plant in Indonesia.

Tata's country director S Manzer Hossain left the country in March. Before going he said Bangladesh has always been at the top of the group's priority list, but of late Tata had to divert its attention to some other locations.

jasim@thedailystar.net