Bangladesh seeks time from Tatas

The Bangladesh Government has asked for more time from the Tata group to revert on the latter's $ 3 billion-investment proposal.

The government was supposed to get back to the Indian major by May 31 on the revised proposal, submitted by the company a month earlier.

"We have been informed that the Government of Bangladesh will require more time to revert on our proposal," said Alan Rosling, executive director, Tata Sons.

According to media reports from the neighbouring country, the government was expected to announce a decision within two weeks.

However, Rosling added, "Due to the budget this week, I think it will take them longer than just two weeks as the secretaries will not meet again until next week.

"Then it needs to go to the Ministerial Committee, and maybe the Cabinet," he said declining to reveal when the government is expected to revert.

The proposed $3 billion investment by the Tatas, the largest ever in Bangladesh, includes a 2.4-million-tonne-per-annum steel plant, a urea factory with a one-million-tonne capacity and a 1,000-MW gas-fired power plant.

In an attempt to break the impasse over the investment, the Tata group had submitted a revised proposal that included an offer to buy natural gas in Bangladesh at $3.10 per thousand cubic feet, more than double the previous offer.

The revised proposal also offered a joint venture with the Bangladesh government and the listing of Tata's business ventures in the country's stock exchanges. The overall investment plan increased from $ 2.5 billion to $ 3billion.

But the proposal has been facing opposition from the country's two prominent steel industry associations - Bangladesh Steel Mills Owners' Association and Bangladesh Re-rolling Mills Association - who jointly staged a mass rally on May 29 in protest of the Indian major's plans. The two associations claim to represent 100 steel and 300 re-rolling mills across the country.

The local steel players contend that if the Tata group is given guaranteed supply of gas for a long-term period, it will be disastrous for their companies in terms of energy security.

Moreover, they fear that Tata's steel plant will produce cold rolled steel, which is their primary produce. But the Indian group has been saying it will produce only hot rolled coil, which will not harm local steelmakers.