September 08, 2008

TATA urges uninterrupted gas supply for steel mill in Bangladesh

The Nation reported that TATA would not go for any investments in steel without guarantee from the Bangladesh government on uninterrupted gas supply. It made it clear as the Bangladeshi government reopened formal negotiations with it on its record USD 3 billion investment plan.

Mr Allan Rosling executive director of TATA Sons said that "It is as simple as that, if gas is not supplied on a secured basis then we would not go for steel in Bangladesh. There are a lot of other countries who have gas. Bangladesh’s current gas situation is not as we wished it to be."

He, however, did not dismiss other investment opportunities. But he said that "The new coal policy, once published, would open up new avenues for further discussions. At this stage, the meeting was useful and effective."

It may be noted that senior TATA officials led by Mr Alan Rosling met Mr Kamaluddin Ahmed executive chairman of Board of Investment nearly two years after the conglomerate postponed what would be the biggest single foreign investment in Bangladesh.

Meanwhile, Bangladesh government is yet to reply positive or negatively, as TATA said that if the government was unable to provide gas then it would not invest in steel in Bangladesh.

Mr Kamaluddin Ahmed said that they discussed the resource position of Bangladesh. He added that "We informed TATA about our demand supply situation of gas and discussed the upcoming coal policy. We neither agreed nor disagreed to provide them gas."

In 2006 TATA offered to build a steel plant, two power plants, a fertilizer plant and a coal mine, after upgrading a 2004 plan.

Mr Syed Manzer Hossain TATA's Bangladesh chief said that it is encouraged by positive indications from the Bangladesh government. He added that "Yes, there is an intention to move it forward. It is a positive development that we formally resumed discussion after two years. Lot of developments took place on both sides and we have to look at those developments."

TATA submitted a USD 2.5 billion investment proposal way back in 2005 and revised it later to around USD 3 billion to set up a 1000 MW power plant, a steel mill with an annual production capacity of 420,000 tonnes and a one million tonne fertilizer unit in Bangladesh.

Although the negotiations came to a standstill in 2006, significant progress had been made. TATA wanted a guaranteed supply of 1.25 trillion cubic feet of gas for a 15 year period and around 3 million tonnes of coal supply to TATA per annum and upgrading of gas pipeline from the current 24 inch diameter to 30 inch diameter. But the government of Bangladesh found some of the demands made by TATA were impossible to be fulfilled and the talks faced a setback.