Govt right now unable to ensure gas for Tata
The government is to inform Tata that the country right now is unable to ensure required gas supply to its proposed $ 3 billion investment in steel, fertilizer and power since Bangladesh faces shortage of adequate gas, energy ministry sources said yesterday.
The Indian conglomerate and the government are to resume two-day talks on May 11 in Dhaka.
Tata's Country Director Manzer Hossain met Commerce Adviser Hossain Zillur Rahman and Board of Investment (BoI) chief Kamal Uddin Ahmed last week and settled the agenda.
An official of energy ministry said the government will ask Tata to submit revised proposals so that instead of gas it can use other raw materials in the projects.
One of the Tata Group local representatives said the conglomerate will listen to the government's new proposals and may agree to review some of the previously settled issues.
About gas consumption, the Tata representative said the Indian heavy industry giant does not need the gas right now. Tata requires gas after four years into the signing of the final investment agreement, he added.
Meanwhile, M Tamim, chief adviser's special assistant for power, energy, and mineral resources, on Monday said the government will follow a 'cautious' policy in giving new industrial gas connections in and around Dhaka and has decided not to provide any new gas connection in Chittagong region.
“It is true that the country doest not have adequate supply of gas. We will inform the matter to all potential investors who want to establish gas-based industries here,” the energy ministry official said.
BoI sources said the government wants to wrap-up the much-talked investment proposals of the Tata Group by this year.
“The government has to take immediate decision on the Tata investment proposals as many other potential investors feel shaky to start negotiation," said a BoI official.
The move is a response to an initiative by Tata's Manzer Hossain 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 fertiliser unit in Bangladesh.
Following the letter, the finance ministry instructed the BoI to invite Tata's representatives for fresh dialogue.
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 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 a coal mine for exploring around 3 million tonnes 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 the 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 date 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 in the production of a 4000 mega watt power plant in India, is going ahead to invest in a steel plant in Vietnam and will explore a coal plant in Indonesia.
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