TATA of India to Pump $2 Billion Project Investment into Bangladesh Industrial Base

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). With 15.33 trillion cubic feet of proven gas reserves, Bangladesh has been in need of a catalyst to open up the country's power and manufacturing potential. As one of the world's poorest countries, and regularly wracked by monsoon flooding, the country has struggled to find the wherewithal to bootstrap its economy out of the mire.

The TATA Group of India has proposed a $2 billion investment in the country's energy, fertilizer, and steel sectors, which could create over 8,000 jobs and provide a platform for the development of other macro investments and the subsequent downstream enterprise and job creation.

TATA submitted a proposal to the Bangladesh government in July, which envisaged setting up three gas-based and export-oriented industries. These include a basic steel mill, with an annual capacity of 1.2 million tons, a 1,000 MW gas-fuelled power plant at Iswardi, and a one-million-ton-per-annum fertilizer plant to be sited at Chittagong, in the southeast. In the plan, the steel and power projects would each be backed by $700 million investments, and the urea fertilizer plant would take $600 million

An Expression of Interest agreement between the company and the government addresses TATA's request for a guarantee for a smooth and secure gas supply over a 20-year period. A TATA official said that the talks are 100% positive.

Mahmudur Rahman, the executive chairman of the board of investment in Bangladesh, and a member of the committee charged with examining the feasibility of TATA's proposals, said, "As there is no basic steel mill in Bangladesh, such an establishment would ensure adequate supply of the basic raw material for the infrastructure development of the country." He added that the steel project would stimulate and increase demand for gas in the northern and western regions of the country. The mill, sited at Sirjgani, would help make gas transmission a viable project for the government on the far side of the River Jamuna, he said.

TATA's chairman is expected to visit the capital Dhaka shortly to further talks with the government. The government review committee is then expected to submit a positive recommendation to Prime Minister Begum Khaleda Zia. Comments from both sides of the deal have a 'fast track' feel about them.

Although there have been some doomsaying comments about TATA's proposed entry into a country where politics and corruption have maintained the poverty of the majority of the population, TATA, as the second largest industrial company in India, and with an intimate blood relationship with Bangladesh mores, stands a more than fair chance of making the country something of a greenfield project target for investors in the course of the next decade.

With a population of just under 135 million and a population density of 890 per square kilometer (higher than Singapore) Bangladesh must be a prime example of pent up demand at a low entry level.