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Fuel uncertainty: Tatas to review Bangla plan
BS Reporter in Mumbai | May 14, 2008 13:36 IST
The Tata Group may have to change fuel plan for its $3 billion projects in Bangladesh after the local government asked it to wait for its soon-to-be-announced coal policy.
The Bangladesh government said it could not spare gas for the plants of the Indian conglomerate. The announcement of the coal policy is expected soon, a government representative said.
The coal policy may help Tatas for setting up coal-based power plants in Bangladesh. As there is no guarantee for natural gas supply, the group is not likely to go ahead with its steel and fertiliser plants, said sources.
"Without the guarantee of natural gas, we can not move forward as the projects are purely gas-based," Tata Sons Executive Director Alan Rosling told Business Standard.
"Bangladesh with 13.54 trillion cubic feet of proven and recoverable gas reserves is facing at least 150 million cubic feet of gas (mmcf) shortage a day. It now supplies up to 1,738 mmcf of gas daily against a demand of 1,888 mmcf," Bangladesh media quoted government officials.
In 2003, Tatas made investment proposals worth $1.8 billion when Ratan Tata visited the country. Later, the group hiked the investments proposal to $3 billion with more projects envisaged as part of a larger effort to use Bangladesh's resources to speed up industrial development there.
In October 2004, the group signed an initial deal with Bangladesh to build a steel plant with an annual production capacity of 2.4 million tonne, a urea plant with a 1 million tonne capacity, a 500 mw coal-fired power station and a 1,000 mw gas-fired power plant.
In April 2006, Tata group suspended investment plans because of 'frustrating' delays in getting approvals from local authorities. The political scene in Bangladesh also changed.
But the government has often said the Tata deal was a major decision an elected government would be better placed to handle. After the recently failed talks, the government has not yet said anything about the next round of talks.