Tata group pulls out of Bangladesh | business | Hindustan Times
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Tata group pulls out of Bangladesh

business Updated: Jul 31, 2008 20:32 IST

The Tata group has called off its proposed $3-billion investments in Bangladesh, citing the government’s failure to ensure natural gas supply to its projects. Tatas had planned to build two power plants, a steel mill with 2.4 million tonne capacity and a fertiliser factory, which will produce 1 million tonne of urea annually in Bangladesh.

“It is clear that the government will not be in a position, in the foreseeable future, to grant the projects the natural gas commitment they would require,” Tata Group said in a statement on Thursday. “Consequently, there is no prospect of taking these projects further.” The Tata group executive director Alan Rosling, who is currently in Bangladesh, communicated its decision to the executive chairman of the Bangladesh Board of Investment on Thursday.

The Tatas first proposed these projects in 2004. Tatas, in April 2005, formally submitted a $2.5-billion investment proposal and then revised it to around $3 billion. The group had also struck a 15-year gas and coal supply agreement with the government. The Tatas discontinued its dialogue with the government in 2006, due to delay from the part of the government on clearing the projects.

“Due to high interest costs and rising project costs coupled with government and regulatory hurdles must have prompted them to abandon the project,” said Dev Kapadia, research analyst, Lalkar Securities.

The Tatas may look at alternative destinations for these projects. And these projects could go to 14 geographies that the group had identified to expand its overseas presence. Other neighbouring countries like Pakistan and Colombo or emerging markets like Indonesia and Egypt could be the choice.