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Tuesday, October 10th, 2006
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The secretary-level government negotiation committee on Tata’s $ 3 billion investment proposal has finalised its report.
The committee yesterday held its wrap-up meeting with the ministerial committee headed by Industries Minister Matiur Rahman Nizami at his office.

Member Secretary of the ministerial committee and Board of Investment (BoI) Executive Chairman Mahmudur Rahman, State Minister for Power and Land Ukil Abdus Sattar, head of the government negotiation committee and Communication Secretary Shafiqul Islam and other members of the committee were present at the meeting.

After the meeting, Mahmudur Rahman, who is also energy advisor, told reporters that the committee has successfully completed its report.

He said as per decision of the meeting, the negotiation committee will formally submit the report to the ministerial committee next week which will later send it to the cabinet for a final decision to be taken by the next elected government.

Rahman said the report will in the meantime remain in the custody of the BoI, which had invited Tata to invest in the country.

He said the secretary level negotiation committee made a number of concrete suggestions for the government on Tata’s revised investment proposal that was submitted three months ago

About the guaranteed gas supply sought by Tata, the committee suggested for a 10-year tenure against the Indian company’s demand for 10 to 14 years.

Mahmudur Rahman said the committee suggested a ring-fencing formula in supplying gas to Tata, which means Petrobangla will supply gas to Tata from a dedicated gas field at its convenience.

According to a suggestion, the gas price will not have any upper limit and will be fixed on the basis of price fluctuation of the steel and fertiliser in the international market.

Under the formula, as per present market rates of fertiliser, the price of gas per unit will be $ 3.70 for fertiliser plant while about $ 3.30 for steel plant. But price of gas for steel will be paid in local currency.

In this case there will be no upper limit for the gas prices, but there will always remain to lower ceiling.

First, the gas price will never go down below the gazetted prices for the local industries and secondly, the price will never be below the government’s average purchase rate of gas from the international oil companies (IOCs).

Earlier, in its revised proposal submitted to the government on April 30, the Tata Group had offered a variable gas price ranging from $ 2 to $ 4 per unit having linked with the prices of steel and fertiliser in the international market.

Under its own formula, taking the prices of steel and fertiliser, Tata proposed the gas price at $ 2.6 for steel plant and 3.10 for fertiliser plant.

The committee has successfully proved its negotiation skills and capability all through the talks with Tata, Rahman said.

Mahmudur Rahman said the negotiation committee suggested the government to ask the Tata to pay $ 250 million for the Barapukuria coal mine project as such amount has already been spent on the project.

Subsequently, the committee suggested that Tata should give 10 per cent equity share of the project free of cost to the government.

About the fiscal incentives sought by Tata, the committee, instead of making any specific suggestion, referred it to the cabinet for a decision.

On July 10, The Tata Group suspended its investment plans in Bangladesh on the plea of the government’s delay in taking a decision.


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