BANGLADESH: Tata investment for whom?

BANGLADESH: Tata investment for whom?

Justice Golam Rabbani,Nuruddin Mahmud Kamal, Engr. Sheikh Muhammad Shahidullah, Prof. M. Shamsul Al

The Daily Star (Bangladesh)

20th September 2006

When the Board of Investment (BOI) turned a deaf ear to the protests against the Tata proposal, the media of Bangladesh played a positive role. Even though Tata signed their letter of 'expression of interest' for investment, on 13 October 2004, and subsequently submitted a formal investment proposal on 30 May 2005, facts continued to be held back from the main stakeholders -- the people of Bangladesh. For the past two years the imperious government had chosen the role of maestro and let the BOI act on its behalf as the master of ceremonies. Obediently, the BOI continued to hide the details of Tata's proposal in such a manner that a common man could not get access to relevant documents .This is impious.

Thanks to the media, both print and electronic, some data and analysis on the subject were available. It soon became obvious to us that the main objective of Tata, like any other investor's, was to seek the highest benefit based on the availability of cheap natural gas. They were not ashamed to offer one dollar
MCF for Bangladeshi natural gas for setting up production plants for one million ton fertilizer, 1000 megawatt power generation system, and 2.4 million tons of sponge iron /steel. Worse still is that a major portion of the products would be exported to India! The profit motive of an investor is quite understandable. There is nothing wrong in it. But, acceding to a proposal that will help plunder our natural resources is another matter. Such an ill motivated effort cannot be allowed. So the common people stood up against the unholy move. But what went wrong with the decision makers of Bangladesh has remained a mystery. Why did'nt the government publicly disclose a proposal of such national importance through the media, or otherwise?

Yet, we learned that around 3.25 Tcf, or over 50% of the proven reserve of gas ( 6.2 Tcf as per Nagorik Committee Report, November, 2002) in Bangladesh, would be needed to implement the three proposed projects of Tata. Even when this information leaked out, BOI was nonchalant. Tata was on the perch: watching. Opinions were voiced. And there was furor throughout the media. The government's first negotiating committee, led by Petrobangla, was confounded when it discovered that the price being offered for the gas was $ 1/ Mcf ! Quite understandably, the negotiation could not reach a consensus. The media reported disagreement on the gas price issue without giving any details. Chicanery on either side was not about to yield any benefit to anyone.

Having been put in an awkward position, Tata proposed an amended price, ranging between $ 1.5
Mcf and $ 4 /Mcf, with $ 1.5
Mcf in the initial 6 (six)years, and also an upgraded investment to $2.5 billion. BOI was excited and applauded Tata for the friendly gesture. Yet, the discussions did not proceed as desired. In fact, they stumbled.

After a while, negotiation with Tata's high powered delegation restarted with a handpicked Bangladeshi team. Even they were not visibly enthused by the terms and conditions. The discussions faced obstacles again. There followed a lull for several months.

Meanwhile, the people were persistently demanding transparency. Tata now changed its strategy to a cajoling mode. For the third time, Tata's offer was raised, this time to $ 3 billion. Both, Tata and the CEO of BOI, observed that this was 'the proposal of the century.' Unfortunately, every time TATA-BOI came up with a new proposal, people became more suspicious about the deal. The proponents locked-horns with the people.

The conscientious citizen's study apprehended enormous financial loss and environmental disaster, in addition to the adverse effect on the energy security of the country, if the contentious investment proposal went through . Realizing this the government hesitated to sign an agreement with Tata. Publicly, in the face of severe criticism, the company formally declared its investment proposal suspended. The interesting point is that, in spite of this declaration, Tata and the government seem to be cautiously working behind the scene for signing a contract under a new strategy. As a result of non-transparency and the ill motive so far demonstrated by the Tata-BOI axis, the people reacted by opting for public demonstrations, and writing and speaking through the media for rejecting the investment, as was undertaken four years ago in the case of a proposal for export of gas to India in 2002.

Yet, it came to us as a surprise when we heard that our finance minister told journalists at Hyderabad (India) that the government considers the new proposal from Tata much better than the one submitted earlier in 2004 ( May 6,2006, Prothom Alo). The energy advisor, echoing the minister, said: " Now there is no further need for negotiation. It is time for taking a decision" (May, 2006, Prothom Alo). He added: "This proposal is win-win for both the parties" (May 2006, Prothom Alo). In an emotionally charged voice the BOI chief further said that this has opened up a new horizon for both of us. Élan Rosling, the Chief executive of Tata also delivered his statement of truth: "This is the proposal of the century"(Prothom Alo, May 2006). Even with sich optimism, the negotiation did not succeed. Meanwhile, an international consultant, appointed through the "The Economist" by Tata, supported the proposal in vague terms. But the government never bothered to elucidate the benefit for Bangladesh.

The irate media made some harsh comments on the proposal. Some of them, as quoted under, deserve careful scrutiny :

. "Tata's revised investment proposal is a big bluff"(3/5/06, Shamakal).[In our opinion, it is a cleverly orchestrated proposal to woo, and befool, the inexperienced public representatives of Bangladesh.]

. "Tata`s proposal is simply a carrot!"(4/5/06 Ajker Kagoj).

. "What else could be termed suicidal, as well as a subversive act, if the gas is purchased at a higher price ( $ 2.90/Mcf ) and is then supplied to Tata for 20 years at less than half the purchase price ( 28 May,2006, Janakantha) .[ Incidentally, the international market price of natural gas ranges between $ 5 and 8 /MCF]

. "We have a hunch that, since Bangladesh is the champion in corruption, some group from within our country is behind the Tata deal (The editorial of Desh Bangla 25/3/06).

. "The proposal from Tata is non-transparent; reject it "( Sangbad, 28 May 2006).

. The points made by the steel mill rerolling mill owners association include, among others, "10 lac labourers will be unemployed if Tata's steel mill is commissioned." They further added, "innumerable steel and re- rolling mills will close down for shortage of gas, while Tata is assured of long term uninterrupted gas supply" (Naya Diganta7/5/06).

.The promoters of the national committee for protection of oil, gas, mineral resources in Bangladesh have categorically stated: "The plundering of national wealth shall cross all limits in the event of signing of the contracts with Tata and Asia Energy"(12/5/06, daily Shamakal). The committee has emphatically demanded cancellation of the contract (if it had been signed) with the Asian Energy Company, and also rejection of the proposal by Tata (12/5/06, Prothom Alo). Yes, we need investment, but not at the cost of our national interest.
.Our energy security is of prime importance. The interesting point is that the energy ministry is still considering further consultation at the "expert's level." "But the irony is that those who were involved in evaluation of the first proposal have not been consulted about the revised proposal from Tata. They are somehow in the dark" (12/5/06, Janakantha).

Happily, from time to time, the media has made many valid and justifiable comments about the inappropriateness of the evaluation process of the government of such a sensitive investment proposal of national importance. Mere elucidation of some of these views will indicate to a common man what is our Achilles' heel.

The considered opinion of the round table discussions, sponsored by the Institution of Engineers of Bangladesh (IEB), has been that "the proposals from either Tata or Asia energy will not usher in any benefit to the country. Natural resources of the country needs to be utilized as raw materials for our future industrialization" (17/5/06,Prothom Alo).

A round table conference, (held on 27 May 2006) sponsored by the National Committee for protection of oil, gas, mineral resources, electricity and ports, demanded rejection of the proposal received from Tata on the ground that it will severely hamper energy security as well as create environmental hazards in Bangladesh. It was also noted in the meeting that "the amount of loss just for gas supply to the projects of Tata will be 1.5 lac crore taka (one and half lakh crore taka)." Some speakers in the meeting commented: " the government would open another losing concern like Kafco while implementing Tata's proposal. The speakers further added: "gas is as good as mother's milk for the country. If it is misused, people will agitate on the streets against those who would dare to sell that gas rendering mother nature a desert."

It is surprising that Ms. Dua Hua, ADB representative stationed in Dhaka, has been lobbying strongly in favour of Tata's proposal. This was exacerbated by an undiplomatic remark by Ms. Patricia Butenis, US Ambassador in Bangladesh. These unwarranted statements have created a ripple, no doubt, but isn't this interference in the affairs of a sovereign country? Would anyone of their status dare to utter similar comments in our neighbouring countries ?

Faced with volleys of complaints against the investment proposal, and the indecision by the government, Mr. Élan Rosling, the executive director of Tata, in a press conference declared the suspension of their proposal, and then officially informed the Board of Investment about it. The Chairman of the Board of Investment in reply said: "You will have to wait for six months for a final decision and Tata will have to sign the contract with the next elected government." Rosling got the same message when he called on the minister for local government and the finance minister. Consequently, he also said: " We are extremely disappointed" (12/7/06, Editorial, Shangbad).

The editorial of daily Shamakal commented: "not being able to decide whether to accept or reject the proposal of Tata is a great failure for the government" (12/7/06, Shamakal).Negative propaganda led to the suspension of Tata's proposal said the energy advisor (12/7/05 ,Prothom Alo). The Bangladesh finance minister expressed his indignation and stated in the parliament: "it is difficult to take a decision on a mega project like this in a political atmosphere prior to election. This became known to Tata, a company in democratic India, for which they have suspended the proposal" (12/7/06, Prothom Alo). What an apology! One wonders whether it is a eulogy or an epitaph.

The National Committee for protection of oil, gas, and mineral resources emphatically stated that by fairly seaking about the foreign investment by Tata and Asia Energy, no wrong signal is being given. In fact, it has merely flashed the blipping-yellow light: take heed. Foreign investment that is detrimental to national development, threatens energy security, renders vast arable land to destruction, along with open pit mining, is not welcome in this country.

To recapitulate, it may be mentioned here that the discussions of the expert committee, set up by the government, on the initial proposal ended without any conclusion and Tata went back. In the said discussions, there was no indication that the government would consider a revised proposal .Yet Tata came back with a revised proposal. The reasons for breaking of the initial negotiations have not been recorded.
Interestingly, it also transpires that no minutes of the discussions had been made. The experts who contributed significantly to these meetings were conspicuously absent during consideration of the revised proposal. The committee, under the leadership of the industries minister would deal with the recommendations of the secretaries committee and frame recommendations thereon which might be placed before the cabinet of ministers for approval. Under these circumstances, the people are getting more suspicious about the real intention of the government. The rumour is that if a vicious circle within the government was not interested in gaining from corruption then there was no need to conceal the proposal of Tata from the people of the country. If there would have been adequate scope to examine the proposal, and evaluate its pros and cons, then there would have been no need for phrases like 'emergence of new horizon,' 'win-win for both the parties,' 'best proposal of the century,' and so on.

No one is apparently serious enough to encourage the policy planners of Bangladesh and Tata to work towards a course which recognizes the importance of such an investment proposal to the future of all of us -- a course which above all should propel us to seek a peaceful and just settlement of conflicting viewpoints.
The government also has failed to take the main stakeholders (the citizens of Bangladesh) into confidence but they could neither stop the debate nor blockade it to continue in an uncertain direction. Such an attitude is likely to do irrevocable and permanent damage to any investment package. Harangue cannot be harbinger for development.

Let's now review how and where the tensions have been built. BOI is apparently becoming impatient and exceedingly nervous about the complexity of the proposed investment . People are now convinced that the government had brought its energy crisis on itself by mismanagement of energy policy and it is likely now to draw the crisis to a long drawn affair. The proposed stand-alone policy on coal, highlighting export is unacceptable. Tata's investment package based on scarce natural gas of Bangladesh would hurt heavily the economy of Bangladesh. We appreciate the role of media. It has exposed the verbal battle between the people and the BOI with zeal and dedication. People, at times, found themselves awash in a tidal wave of conflicting opinions, mostly coming from the BOI. Some, however, commented that the conflicting opinions were not real but had been created by an axis for an unknown objective. Some even maintained, it had been contrived by the government to divert attention from other irresponsible policy options. Indeed, the government has not responded to the people's demands for action.

The people's movement on the subject will continue, as was done in the past to stop gas export, till the time existing investment proposal of Tata is formally respondend; export of coal, gas or any such product necessary for national need are banned through enactment of law ; and the conspiracies to handover these energy resources to the foreigners are unearthed and those involved with inappropriate dealings are stopped in their track forthwith.