Tata’s Bangla plans could revive on gas guarantee

MUMBAI: The Tata group’s $3 billion investment may finally see the light of the day as the army backed government in Bangladesh is taking steps to end the long stalemate.

Negotiations between Bangladesh and the Tata group had hit a wall when the assurance was not forthcoming. But, reports from Bangladesh reveal that the government is now willing to give the Tatas an assurance of guaranteed long-term supply of natural gas.

At Bombay House, the official spokesperson said, “We are still to receive the Bangladesh government’s response. According to agency reports, the Bangladeshi government is close to a deal on the proposed $3 billion energy sector investment plan of the Tata Group. The reports quoted a senior government official.

“The negotiation period is over. We are close to an agreement, though it’s still not final,” Nazrul Islam, the executive chairman of Bangladesh Board of Investment said, without specifying a timeframe.

A long-term gas supply guarantee - a key impediment to the deal - had been ironed out and the government will likely provide a 10-year supply guarantee.

“They wanted a guarantee for the period of financing, which is about 10 years, and it looks to me to be reasonable,” the agency quoted Islam as saying.

Tata first made the investment proposal in late 2004 and had sought to build a steel manufacturing plant, a fertiliser factory, an open-pit coal mine, a coal-fired power plant and a captive power plant for its manufacturing units.

However, disagreements over gas supply guarantee, prices and political uncertainty have hindered the deal. Alan Rosling, member on the board of Tata Sons, was not available for comment.

The Tata group’s investment proposals include setting up a 2.4 million tonne steel plant, a fertiliser plant, a 475 MW gas-fired power plant and development of Barapukuria coal mine through open-cast route.

The Indian group’s proposal is the biggest Bangladesh has ever received. The proposal was mired in controversies as political sensitivity took precedence.

The then Khaleda Zia government, after more than two years’ negotiations, had told the Tata Group that the projects were best left to be decided after the general elections.

The ninth general election in the country, however, was cancelled and it is not clear when the polls would be held.