Tata wants speedy decision as govt dithers

Tata wants speedy decision as govt dithers

Khawaza Main Uddin, New Age

5th July 2006

Top executives of the Tata Group are scheduled to meet the executive chairman of the Board of Investment on July 10, apparently in a last-ditch bid to make the government take a speedy decision on its $3 billion investment initiative.

The Indian corporate giant has reportedly been considering a ‘pullout option’ in case of more delay in responding to the minimum offers it made in April for commissioning four projects—steel, fertiliser and power plants and coalmine exploration—in Bangladesh.

When asked, the investment board chief, Mahmudur Rahman, told New Age on Tuesday that the government understood the frustration of the Tata authorities, ‘but they have to understand the domestic political compulsion just three months before this government leaves office’.

He said the Tata Group might have to wait six more months to sign a contract with the next elected government.

The government had been requested to make its response to the Tata proposals on gas pricing, equity partnership, floating shares, power tariff and other contentious issues within one month from the date of submitting the Tata’s minimum offers on April 30.

The group’s resident director, Manzer Hussain, however, ruled out the possibility of pullout terming media reports ‘mere speculations’.

Highly placed sources in the government said the ministers and officials involved in the process of dealing with the Tata proposals had been directed to be cautious so that the issue did not cause the ruling Bangladesh Nationalist Party an electoral debacle.

The sources added that it would also be difficult for the Tata authorities to back out of the move since they spent time and money in selecting Bangladesh for its investment.

A national committee headed by the industries minister, Motiur Rahman Nizami, assigned a secretarial-level committee to recommend measures on the Tata proposals. Noted economist Wahiduddin Mahmud has been making an independent assessment while the Asian Development Bank will also prepare a review report on the Tata investment proposals.

‘It is not the right time to enter a potentially controversial deal. The government could have settled the matter and signed an agreement with Tata in early 2005, two years before the general elections scheduled for January, 2007,’ one of the sources said.

Against this backdrop, the officials of the group, including the executive director of the mother company, Tata Sons Alan Roseling, and the group’s resident director, Manzer Hussain, have sought an appointment with the investment board executive chairman to make their latest positions clear on the investment move.

Wire service Reuters ran a story from Mumbai quoting Alan Roseling as saying that the company was in touch with government officials and reviewing alternative courses of action.

‘We’re optimistic, but we are realistic about the situation. We’ve spent a lot of time and money developing the Bangladesh project,’ he said. ‘On the one hand, we are disappointed that it is taking so long. Equally, we are used to this pace.’

The Tata Group’s proposed investment encompasses a steel plant with a capacity of producing 2.4 million tonnes annually, a 1-million-tonne-capacity urea factory and an over 500-megawatt capacity captive power plant, apart from exploration of a coalmine. It has also planned to set up another 1,000 megawatt power plant based on either gas or coal in future.