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Last Updated: Wednesday, 8 February 2006, 17:46 GMT
Bangladesh power deal in balance
By Waliur Rahman
BBC News, Dhaka

Bangladeshi boy taking grass to market in Dhaka
Bangladesh is seeking increased foreign investment
One of Bangladesh's largest-ever proposed foreign investment deals is hanging in the balance.

Indian industrial giant Tata has failed to reach agreement with Bangladeshi officials about $3bn of planned investment after three days of talks.

Tata is proposing to build an electricity generating plant as well as two steel and fertilizer factories.

Disagreement over the cost of natural gas has led to a deadlock in talks, which first began back in 2004.

Political support

A spokesman for Bangladesh's energy ministry said the future of the investment now depended on government support for the deal.

Bangladeshi officials had been hoping to finalise the investment on Wednesday after months of protracted negotiations.

That level of gas price is just not feasible
Allan Roseling, Tata

However, negotiators from both sides acknowledged they were far apart over the cost of gas needed to power the three proposed plants.

Tata has said it is unwilling to pay the charges proposed by the government.

Allan Roseling, Tata's chief negotiator, said that getting agreement on the issue was crucial to ensuring the plants could be competitive.

"At that level, no one is ever going to construct a steel plant and a chemical plant because that level of gas price is just not feasible," Mr Roseling told reporters in Dhaka.

Gas security

Mahmudur Rahman, an adviser to the energy ministry, said Tata could not expect concessionary prices for gas since the ministry would be guaranteeing supplies for the long term.

"The gas security and its price are closely interrelated," he said. "If they seek gas security, they would have to pay the international price."

Tata is expected to make fresh proposals on the issue in the next two weeks to try and break the logjam in talks.

The government will then decide whether to proceed with the project.


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