Tata Delegation Arrives on Wednesday |
Donors upbeat on Tata investment plans
May desist from pushing government on gas export
Star Business Report
The US$2 billion investment plans by the Indian Industrial heavyweight, Tata Group, have generated interest in the donor community who finds certain projects where government was seeking donors' participation to be more viable if the plans get approval.
Highly placed sources said donors may desist from pushing the government on gas export once Tata's plants get implemented as the plants will create huge domestic demand.
They said the World Bank (WB) and Asian Development Bank (ADB) officials will meet Tata chief to know about the investment plans.
The government has sought funding from donors for laying gas pipeline and setting up power transmission line in the Western region.
Donors were concerned about viability of the projects. But with the Tata proposals to set up gas-fired steel and power plants in the region, the donor community finds the proposals to worth investment now.
Tata Group Chairman Ratan Tata is set to arrive in Dhaka by his private chartered aircraft on Wednesday morning. He will sign expression of interest agreement (LoI) with Board of Investment (BoI) on its investment plans, the largest ever foreign investment in Bangladesh.
Tata Group submitted a written proposal to BoI to invest $700 million in basic steel, $700 million in power and $600 million in urea fertiliser.
The three Tata plants will initially consume 200 mmcft gas per day which will rise up to 350 mmcft when operation goes in full swing.
A WB mission on Bangladesh Energy Sector Mission, which visited Bangladesh during September 20-30, had also discussion with high government officials about Tata's investment plans.
In an aide memoire, the WB mission recommended the government to engage Petrobangla for analysing and involving in the negotiation process.
On the first day of his visit, Ratan Tata will meet Prime Minister Khaleda Zia and officials of WB and ADB. He will also meet members of the Foreign Investors Chamber of Commerce and Industry at a luncheon party.
On the second day, he will meet Finance and Planning Minister M Saifur Rahman, State Minister for Energy AKM Mosharraf Hossain, State Minister for Power Iqbal Hasan Mahmood and Principal Secretary to the prime minister Kamal Uddin Siddiqui .
Ratan Tata was due in Dhaka on September 2, 2004 but the visit was deferred following August 21 grenade attacks on an opposition rally.
Later two forward teams of Tata visited Bangladesh and held talks with high government officials to discuss investment climate and incentives in Bangladesh.
The forward teams met state ministers for energy and power and sought uninterrupted power and gas supply to the proposed investment plants. The ministers assured them but no agreement on tariff was fixed.
In view of Tata's proposals, the government has formed a high-profile committee with Industries Minister Motiur Rahman Nizami as its head to examine the pros and cons of the proposals and submit a report to the Prime Minister's Office.
State Minister for Energy AKM Mosharraf Hossain, State Minister for Power Iqbal Hasan Mahmood, Executive Chairman of BoI Mahmudur Rahman and Principal Secretary to the prime minister Kamal Uddin Siddiqui, are the other members of the committee.
According to the proposal, Tata Group will set up a $700 million basic steel industry in Ishwardi to produce Hot Rolled Coil and other basic steel items. In the first phase, the steel plant will have 1.2 million tonne capacity. Later the capacity will be doubled.
Although Bangladesh has nine medium-sized steel mills having investment worth around Tk 2,000 crore, none of them produces basic steels. Country's only state-owned basic steel mill, Chittagong Steel Mills, was shut down more than two years back.
Tata will also invest $700 million to produce 1000 megawatt power from gas. The plant is likely to be set up near Ishwardi. Tata may also export power from the plant to eastern Indian states after meeting Bangladesh's domestic demand.
Tata proposals also include investment for a $600 million fertiliser plant in Chittagong. The gas-fired plant will have a capacity of one million tonne.
Although Tata has no investment in Bangladesh until now, it has handsome trade relations with the country.
Tata Motors so far supplied 20,000 commercial vehicles and 1,700 Indica taxis to Bangladesh. Tata International outsourced leather worth $ 4,170,000 in 2003-2004 from Bangladesh.
In 2003-04 Tata Group's total turnover was 6,54,240 million rupees and exports worth 1,41,360 million rupees. Tata Group includes 80 business entities in services, materials, engineering, energy, consumer products, chemicals, communications and information systems.