Take it or leave it: Tata

By agencies   |   Wednesday, 22 March 2006, 08:00 Hrs
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MUMBAI: Even as Bangladesh Prime Minister Khaleda Zia landed in New Delhi, IndiaÂ’s largest corporate, the Tata Group, is giving final touches to its $2.5 billion investment plan in the neighboring country.

The company has submitted its revised offer to the Bangladesh Government by March-end and is hopeful that all the three projects will take off as per schedule. A senior official of the Tata Group said negotiations are at a ‘‘critical stage.’’

A crucial enabler for the deal will be an Investor Protection Agreement, which is expected to be signed between the two countries during Zia’s visit. Meanwhile, in a report prepared by the Bangladesh’s Board of Investment (BoI)—an equivalent of India’s FIPB— Prof Wahiduddin Mahmud, an economist, has pointed out that gas pricing will be the key to determining what the country gains from Tata’s investment. The report saw no reason to offer any tax-breaks or other incentives to Tata group beyond what is given to other investors.

The Tatas are investing in three large projects—a steel plant, a power project and a fertilizer project. The projects are going to come up at Chittagong, Ishurdi or Bheramara and Bara Pukhuria respectively.

Tata Group Resident Director in Bangladesh Manzer Hussain said the sites of the three projects have been already identified and based on equipment and other costs, the group investment will be close to $2.5 billion.

“The gas discussion is now over and we have to give our final offer by this month-end,” he said.
During the earlier negotiations, the issue of gas price remained a sticky point between Bangladesh government and the Tatas and the latter was asked to submit a new offer. The last offer—around $1.5 per thousand cubic feet (MCF) of gas with security—was rejected.

In contrast, the Bangladesh-owned government-owned Petrobangla, asked for $2 (without security) and $3.5 (with security) per mcf of gas. The TataÂ’s new offer will be close to the prevailing market price, sources said, adding that the project will now take off as per schedule.

“The benefit from the direct investment impact will be highly sensitive to the pricing of gas,” Hussain said.

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