Tata wins gas supply nod for $2-billion plan

By SiliconIndia   |   Wednesday, 18 August 2004, 07:00 Hrs
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MUMBAI: Bangladesh has agreed in principle to guarantee a 20-year gas supply for a power plant, fertiliser factory and steel unit to be built by India's Tata group in what would be the single largest foreign investment in Bangladesh.

One of the world's poorest nations, Bangladesh has wooed foreign investors in a bid to lessen its dependence on international aid.

The guarantee came after the Bangladesh government studied a proposed $2 billion investment by Tata, India's second-largest conglomerate, earlier this month.

Holding company Tata Sons Ltd is the major shareholder in several blue chip firms including TISCO, India's second-largest steel maker, and truck maker Tata Motors Ltd. It also runs India's largest hotel chain and software services exporter.

"They have proposed investing $2 billion in the steel, power and fertiliser sectors," State Minister for Energy and Mineral Resources A K M Mosharraf Hossain told a news agency on Wednesday.

"They want a guarantee for smooth gas supply for at least 20 years and we have agreed, but many things still have to be addressed, such as the gas price."

Both the proposed 1 million tonne fertiliser unit and a 1000 megawatt (MW) power plant would use natural gas as a raw material, while the 2.4 million tonnes-a-year steel plant would be gas-powered.

Bangladesh has 15.33 trillion cubic feet of proven gas reserves. But it has no domestic iron ore and faces growing demand for power and fertilisers.

Officials from the unlisted Tata group are in Dhaka for talks with the government, which has set up a five-member panel to study the Tata proposal. Mosharraf sits on the panel.

State Minister of Power Iqbal Hassan Mahmood said late on Tuesday the project was a "win-win" and would create "huge employment opportunities".

The panel is scheduled to meet on Sunday, but officials have given no timeframe for a decision. Tata chairman Ratan Tata is expected to visit the Bangladeshi capital early next month for further talks with the government.

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