December 03, 2008

Bangladesh to restart talks with TATA for investment plans

Bangladeshi media reported that Bangladeshi government and TATA Group have agreed to restart talks over its stalled USD 3 billion power, steel and fertilizer investment proposal. The move is a response to a letter from TATA to the finance adviser in which it asked for a resumption of talks that have been on ice since August 2006.

Following the letter, the finance ministry instructed the Board of Investment to invite TATA's representatives for fresh dialogue.

A high official of union finance ministry said that "We received a letter from the TATA Group in the middle of February 2008 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." He added that the government wants to wrap up the dialogue and settle the investment deal before December 2008.

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