Tatas Cool to Mittal's Bangla deal

Tatas Cool to Mittal's Bangla deal

The Telegraph, India

12th June 2007

Mumbai, June 11: The Tatas aren't battening down their investment hatch in Dhaka and seem to be unfazed by the PK Mittal group signing a memorandum of understanding with the interim authorities to invest about $3 billion in that country.

Agency reports said that Global Oil and Energy Company, the holding company of P.K. Mittal's Ispat Industries, today signed an agreement with Bangladesh to invest $2.9 billion in the country's energy sector. The Telegraph had reported yesterday that the deal would be signed today.

The Tatas have been pursuing plans to invest in Bangladesh since 2004. Early last year, they cranked up their plans and offered to invest $3 billion in a power plant, steel mill and a fertiliser unit. The Tatas have been waiting for clearances from the Bangladesh government and the entry by the Mittals creates a piquant situation but they won't admit it.

Sources in the Tata group told The Telegraph that while they have "not given up" on their plans, they are waiting for the government to decide. "We will be ready to go forward after that .... There is no change in our plans," the source added. The indications are that the Tatas will not have to wait for long. Reports emanating from Bangladesh, which quote the new executive chairman of the Board of Investment, say the interim government will sign a deal with the Tatas shortly.

In May, Nazrul Islam, chairman of the Bangladesh Board of Investment, said a decision on the Tata proposal would be taken soon after the coal policy in the country was finalised. Islam had said the proposals from the Tata group were "complex" since it covered the four areas of power, steel, coal and fertiliser. The previous government had been unable to take a decision because the elections were looming.

The United News of Bangladesh quoted Nazrul as saying that there was no assurance of uninterrupted gas supply to the Indian conglomerate for 25 years. Only 10 years of gas supply would be guaranteed. It may be recalled that last year, the Tata group decided to halt investment in Bangladesh after facing a lot of delays and both sides could not agree on terms of natural gas supply and its pricing.

Senior officials from the group had then said that their investment in the country, which was the largest FDI there, was only in a pause mode and that it stands committed with the proposed investment. Global Steel Holdings, which is owned by Pramod Mittal, seems to have stolen a march on the Tatas.