New Delhi: The Tata Group’s $3-billion investment plan, which has been lying in limbo for the past two years, may finally see the light of day in that country. The Bangaldesh government has indicated its willingness to reconsider the proposal and has said it will take a final decision on the issue on 15 July.
S. Nazrul Islam, chairman, Bangladesh Board of Investment, told the New Nation on 21 June that there would be ”no further delays” and that apart from the Tata Group’s proposals, the government would also decide on proposals forwarded by the Promod Mittal group and Asian Energy.
The Tatas had first indicated interest in investing up to $3 billion in Bangladesh’s steel, power and fertilizer sectors in 2005.
However, there was considerable opposition to the group’s plans in the country, much of which stemmed from perceptions that if approved, the proposals would pave the way for the Tatas to use Bangladesh’s natural gas reserves to make steel and fertilizers for export, leaving little gas for a country that itself is very heavily energy-dependent. Apparently, the Tatas were asking for a 20-year supply at concessional prices.
The proposals also came in for flak for their perceived inability to provide adequate employment to the local population and to establish strong backward and forward linkages. The argument here was that most of the steel would be exported to India, for use by industrial units there.
The proposals were finally shot down and a decision was deferred till general elections scheduled for 2008-end.
Peeved at the prolonged delays, the Tata Group had early this year announced the suspension of its operations in Bangladesh, saying the government would have to decide on its investment as it was scouting for opportunities in other countries as well.
According to reports, the Bangladesh government’s hard line on foreign investments has impacted inflows from abroad. Net foreign investment in the country fell 16.5% during July-March in 2006-07 fiscal to $385 million against $505 million during the corresponding period a year ago.
Other proposals that were kept on the backburner included UK-based Asian Energy’s plans for coal mining and setting up of power plant at the cost of $2 billion and the Promod Mittal-promoted Global Steel proposal to invest $2.9 billion in the country’s Bangladesh’s energy sector. Promod Mittal is the brother of steel magnate L.N. Mittal.