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Tata expects gas pricing issue to be resolved soon
FE Report
3/23/2006
 

          Tata group hopes to resolve the issue of natural gas prices for its proposed $2.5 billion investment in Bangladesh shortly.
"I expect the gas pricing issue to be resolved soon," an India media reported quoting B. Muthuraman, managing director of Tata Steel Ltd., as saying Wednesday.
The advisor to the Ministry of Energy of the Government of Bangladesh, Mahmudur Rahman, said the energy ministry would follow the suggestions of the country's noted economist, Wahiduddin Mahmud, who was assigned to carry out an economic impact assessment of Tata's investment proposal.
"We will take decision about the gas price when we get the revised proposal package from Tata," Mahmud told newsmen Wednesday.
Wahiduddin Mahmood in his report suggested that pricing of gas for Tata's projects should not be fixed below the rate offered to domestic industrial users.
The current per unit gas price for domestic industrial consumers is US$2.35.
The Tata group is proposing projects in power, steel, fertiliser and coal, which would constitute the largest single foreign investment ever in Bangladesh. But talks with Dhaka stalled last month because of differences over the price of natural gas for the projects.
A top Tata official said in New Delhi that the group would submit a new proposal by March-end but would not offer a higher price for gas supplied by Bangladesh.
Bangladeshi officials said at the time they were not willing to sell natural gas at a lower price but were ready to discuss other incentives such as tax concessions.
The proposed investment by Tata Group and Bangladesh's concerns about an imbalance in bilateral trade with India, which stands at over $1.0 billion annually in India's favour, are among issues which have been discussed during the New Delhi visit of the prime minister of Bangladesh.
The Tata plans to invest in three large projects-a steel plant, a power project and a fertiliser project. The three sites have been already selected for the project with fertiliser plant at Chittagong, steel plant either in Ishurdi or Bheramara and the power and coal project in Barapukuria.
During the earlier negotiations, the issue of gas price remained a sticky point between Bangladesh government and the Tata Group and the latter was asked to submit a new offer. The last offer-around $1.5 per thousand cubic feet (mcf) of gas with security-was rejected.
In contrast, the Bangladesh government-owned Petrobangla asked for $2.0 (without security) and $3.5 (with security) per mcf of gas. The Tata's new offer will be close to the prevailing market price, sources said, adding that the project will now take off as per schedule.
Reuters adds from New Delhi: Bangladesh will take months to resolve a dispute over natural gas prices with the Tata group, Bangladeshi Finance Minister M. Saifur Rahman said Wednesday, signalling more delay for a $2.5-billion investment plan.
"It will take months of deliberations and discussions," Rahman told reporters in New Delhi, where he is accompanying Bangladesh Prime Minister Khaleda Zia on a visit to the Indian capital.
The minister's comments came hours after a top Tata group official told Reuters the company expected resolution of the issue soon.

 

 
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