The New Nation - Internet Edition

Desk Report

Indian industrial giant Tata Group yesterday formally announced to abandon its long-awaited US$ 3 billion investment plan in Bangladesh due to 'delay in the government's decision making process.

"It is clear that the government will not be in a position, in the foreseeable future, to grant the projects the natural gas commitment they would require," the Indian conglomerate said in a statement on its website.

Tata officials has also communicated its latest position on the proposed plan to relevant authorities in Bangladesh.

However, the group assured to continue developing its other interests in the country.

It said before the announcement, Christabelle Noronha, Vice President Media & Publications of Tata Sons Ltd and Manzer Hussain, Group Director Communications of Tata Steel Ltd, also communicated Tata's latest decision to the Board of Investment (BoI) executive chairman Kamal Uddin Ahmed.

After receiving a official letter from TATA, Md Kamaluddin Ahmed, executive chairman of the Board of Investment, told reporters that it was not possible for Bangladesh to supply the huge amount of gas Tata would need for its project.

"Tata has informed us that it will not pursue the proposal for gas-based projects in Bangladesh," Ahmed said.

Most of the Tata proposals were based on coal, he said. "We need to make the coal policy before having talks on the issue."

The much-publicized ambitious Tata investment offer for Bangladesh ran into trouble since the Group signed an expression of Interest with Board of Investment (BoI) in 2004 to implement its proposed 3 billion dollar investment. It includes setting up a steel mill, a fertilizer factory, a power plant and also developing a coal mine in Bangladesh.

But at one state of negotiation, when the immediate past BNP government decided that the next elected government should take the final decision, the Tata suspended its proposed project in Bangladesh in 2006.

Tata had urged the government to ensure a 20-year gas supply to its proposed projects. But they did get any assurance from Bangladesh which now itself is experiencing a nagging gas supply following a sharp rise in its demand since last year.

According to the Press release, the Tata Group first proposed four large projects in Bangladesh in 2004 and had intensive discussions with the Government of Bangladesh until 2006. At that point the Group suspended further work on the projects, as agreement on key issues with the Government was not possible, it added.

"Since then the Tata Group has had frequent enquiries on the status of the projects and the prospects for reviving negotiations with the Government," said but did not specify whether it had finally decided to close the offer.

Annisul Huq, president of the Federation of Bangladesh Chambers of Commerce and Industry, said Tata's withdrawal would taint the image of the country abroad.

He feared Tata's decision might affect investment in the country.

The FBCCI president said Tata's decision was pending for long because of political indecision.

"Foreign investment in the country is not good in the country. Tata's withdrawal might put a negative impact on investment," he added.

Zaid Bakht, research director of Bangladesh Institute of Development Studies, said it was not "unexpected".

"Bangladesh overlooked rising domestic demand for gas over the last few years which widened the gap between demand and supply," he said.

"We had long sat on the proposal. This kind of situation always discourages investors," he added.

Bakht termed Tata's withdrawal from the investment plan as a failure of the caretaker government. "It could have finalised the deal as it had the opportunity to work more dispassionately than political governments."