Dhaka, Oct. 13: The Tatas today took the first formal step towards what could eventually translate into the biggest foreign investment in Bangladesh, inking an expression of intent for steel, power and fertiliser projects.
Watched by Ratan Tata and a group of senior Bangladesh ministers, the document was signed today at the Bangladesh-China Friendship Center in Dhaka.
Once crucial details like gas pricing are thrashed out, the total Tata investment could touch $2 billion in Bangladesh, where the total foreign investment since independence in 1971 has been around $3 billion.
Officials said there have been broad agreements on several points: ideal locations for the plants, 20-year supply of natural gas and export incentives.
However, given the sensitive nature of Indo-Bangla relations at a time when a chill has set in, tough negotiations are expected on the pricing and supply of gas ' the resource that plays a decisive role in the viability of the projects.
While negotiating these aspects, the government will have to keep in mind the anti-India sentiments running high in some sections of domestic opinion-makers.
Finance minister M. Saifur Rahman hinted after a meeting with Tata that the government would move cautiously.
'We will have to look into how much we have in our reserve and how much we could supply smoothly for 15 to 20 years after meeting our domestic demand,' the finance minister said.
Tata also sought to address such concerns. 'We will be part of the prospects of Bangladesh. We have no intention of exploiting the resources of Bangladesh and move those to India,' he said.
The event dealt with business but the political significance was evident. Besides Rahman, foreign minister M. Morshed Khan was also present. Tomorrow, Tata is expected to call on Prime Minister Khaleda Zia.
Top officials greeted Tata as he flew into Dhaka's Zia International Airport by his private plane and drove to Pan Pacific Sonargaon, the country's top-rated hotel.
Officials of Bangladesh's Board of Investment said the Tatas may set up a $700-million basic steel plant in north-western Ishwardi. The group may also invest $700 million in two 500-mw plants near Ishwardi and $600 million in a urea plant.
Speaking to members of the Foreign Investors Chamber of Commerce and Industry (whose acronym Ficci is the same as that of the Indian trade body), Tata said: 'We want to play an important role in the development of Bangladesh. Sometimes economic prosperity is a bigger driver than politics.'