India's Tata Group is making a renewed effort to resolve a standoff over gas pricing. The government is also considering the pros and cons of the US$3.0 billion-odd investment proposal by India's corporate giant, including its political implications.
"We must protect the interest of the country. The deal has to be fair. Otherwise, it will be politically difficult…," Finance and Planning Minister M Saifur Rahman told reporters Tuesday.
In fact, Saifur has echoed what his cabinet colleague, Mahmudur Rahman, observed in February last.
"The final decision will come from government high-ups. It needs a political decision to sign such an agreement. We will send a summary of the negotiation to the ministerial committee headed by the industries minister," Rahman said.
Saifur said Tata's investment proposal should be seen from "total perspective", not from an isolated angle.
"We've to consider Tata's proposal in totality. We should consider issues such as external shocks, export and employment benefits," Saifur explained.
But Tata Group's fresh move for materialising its huge investment in the cash-strapped Bangladesh is obvious.
"We will submit our revised package proposal to the government next week," Tata Group's Resident Director S Manzer Hossain told reporters as he came out of a meeting with the Finance Minister Tuesday. Hossain was accompanying the visiting Deputy Managing Director of Tata Steel T. Mukherjee.
On gas pricing, Saifur said prices must be "reasonable in the international context".
"Gas prices are linked to those of crude oil in the international market," Saifur told Tata officials.
In the fourth round of negotiations, Tata offered US$ 1.0 per thousand cubic feet of gas and sought a 20-year of guarantee of supply of the natural resource. The current per unit gas tariff for industries in Bangladesh is around $2.35.
Petrobangla negotiators turned down the offer, saying such a low price of gas as offered by Tata is not acceptable in view of the present trend of rising oil price.
Officials said in India and the USA, investors buy per thousand cubic feet of gas at a rate of US$3.0 to $3.5 from the governments.
Indian government is expected to raise the issue of standoff over Tata's proposed investment with Prime Minister Begum Khaleda Zia.
"I believe, Indian government will take up the Tata issue during the forthcoming visit of the prime minister," Saifur said.
Tata officials apprised the Finance Minister of the Indian company's latest position on its investment proposal.
"Everybody in Bangladesh wants an integrated steel plant to be set up here," T Mukherjee told reporters.
"Our investment will be contingent not only on gas pricing, but also on whole package," he remarked.
Tata officials also met Energy Adviser Mahmudur Rahman at his office and discussed its upcoming revised proposal.
The last round of negotiations between the government and the Tata Group ended February 07 this year, but failed to reach a common platform on the gas price issue.
The Tata Group had submitted its $3.0 billion investment proposal for setting up a 1,000 MW power station, a steel mill with an annual production capacity of 420,000 tonnes and a one million-tonne fertiliser unit in April last year.