The negotiators did not agree on gas price, sovereign guarantee for gas supply and committing certain gas fields for Tata, among many issues.

Sources however said these differences are not the hindrances. "There is a lack of political will in the negotiations," said one source.

The only consensus reached at the two-day negotiation is that the government will provide gas field reserve certificates to Tata.

Tata Sons Executive Director Alan Rosling said in the light of the differences in the last six months of negotiation, Tata will send a revised proposal package to the negotiators in the next 15 days.

"We will then forward the Tata proposal in details to the policymakers for their decision," said Energy Adviser Mahmudur Rahman at a joint press briefing at Sonargaon Hotel yesterday.

"Finally, it will be up to the policymakers to decide whether the investment will be made or not."

When contacted, a policymaker said the top tier of the government is unwilling to accept Tata's gas price offer of less than one dollar per thousand cubic feet and a 20-year sovereign guarantee for gas supply.

Tata's conditions carry political risks in the context of the next general election, which is less than a year away. In the past, the Kafco agreement was signed giving the Japanese investors undue low gas price and it triggered cases at the High Court. Besides, the country does not yet have adequate infrastructure to instantly reciprocate many aspects of Tata's proposals, the policymaker pointed out.

"If Tata wants to invest in Bangladesh, it has to consider the realities so that we can take a positive decision." he said.

Mahmudur Rahman said the government firmly believes secure gas supply issue is not separate from the price issue. "Both parties should consider this matter. If Tata needs secure gas supply security, they have to pay higher price. If they exclude this issue, we will set a reasonable price for our gas."

The government team negotiated as per suggestions of consultants of the Asian Development Bank (ADB), he mentioned.

"The ADB had earlier suggested the government should set a price protecting the interest of the country. And we negotiated accordingly," the energy adviser said, appreciating professionalism of the government negotiators.

Alan Rosling however said Tata has already proposed a competitive price for gas.

"We came to Bangladesh already knowing that gas price will be higher. We offered a price 60 percent higher than that in the Middle East. Now, the gap between Tata and Petrobangla (on gas price) is very significant. We hope Petrobangla will come down (on price issue)."

The Tata executive said foreign investors have to make money. "That means they have to be competitive with other international competitors. And steel plants and fertiliser plants across the world have some sort of economics, which we need to match. And that means we need gas price at a certain level which is competitive."

Rosling said, "If the government rejects our proposal, we will depart as friends." Tata's relationship with Bangladesh is very old as the company markets trucks, cars, tea and telecom services here. Investment through those products will continue, he added.

At yesterday's meeting, Tata negotiators referred to Iran's gas price of 42 cents per thousand cubic feet and said while gas is very cheap in the Middle East, they are not seeking such low price in Bangladesh.

A source in the government side noted, "Iran's gas reserve is somewhere between 900 trillion cubic feet (tcf) and 950 tcf. Most of the middle-eastern countries have high gas reserves. In contrast, what we have is below 15 tcf. How can we be compared to those countries?"

The government negotiators told Tata that gas price is related to sovereign guarantee. If they ease the guarantee issue, the government will reduce gas price accordingly. Again, in case of the guarantee, the price will be calculated against the international oil price. The government is also willing to provide a guarantee for a shorter period to help Tata obtain loans from international financiers.

They also told Tata it could proceed with its investment plan in phases. "Tata may start with power and steel plants, and the government will provide gas. The company may proceed with fertiliser plant later on. But Tata did not agree," one source said quoting a negotiator.

The government did not accept Tata's proposal to dedicate some gas fields exclusively for its establishments.

On April 20 last year, Tata submitted its $2.5 billion investment proposal for setting up a 1,000 MW power station, a steel mill with an annual production capacity of 420,000 tonnes and a fertiliser unit with a production capacity of one million tonnes a year.

To run these establishments, Tata needs 200 million cubic feet per day (mmcfd) gas for 20 to 30 years.

Later on May 9, the government and Tata agreed to begin negotiation from May 25, conclude it by August 31 and sign agreements before November 30 the same year.