Saturday, October 23, 2004

Bangladesh: The anti-TATA offensive

Analysts are of the view that opposition to the Tata initiative in Bangladesh is more for political than for any sound economic reason. For example, the political parties while in opposition tend to oppose anything that the government intends to do, regardless of the party in power. But interestingly, in this case those who are known to be opposing the Tata move belong both to the ruling as well as the opposition parties. Both the ruling as well as mainstream opposition parties appear to be divided on the issue, though they overtly maintain different postures.


Whispering campaign against Tata initiative
Sayed Kamaluddin

A two-member team of legal experts from the Tata Group of India visited Dhaka earlier this week as part of a feasibility study to be conducted for their $2 billion investment package. The team, consisting of executive director A. R. Gandhi and group general counsel Bharat Vasani, met the Board of Investment (BoI) chief and also made themselves aware of legal practices here by consulting several top lawyers of the country.

The Tata legal team left after two days and is expected to return soon after preparing the necessary paperwork. Other technical experts will also visit Dhaka soon to conduct feasibility studies of all the three projects. The BoI is making necessary arrangements for helping them to do the job.

Under this investment package, the group has proposed to set up a 2.4 million tonne steel mill, two 500 megawatt power plants and a one million tonne fertilizer factory in Bangladesh. Details about the location of the plants and cost of gas, which would be required to run these plants, are to be decided through discussions. The government has so far agreed to provide them with an uninterrupted gas supply for a period of 20 years. But neither the quantity nor the price of gas has been discussed.

Ratan Tata, the Tata Group's chairman, during his discussions with the top Bangladesh officials said that he would like to retain his option to use the coal available at Phulbari coalmine instead of natural gas. But it will depend on the final feasibility report and also timely availability of coal. He is learnt to have even offered to locate both the power plants and the steel mill near the coalmine if that makes economic sense. He has an open mind but all these discussions are at a very initial stage and nobody should jump to any conclusion about anything right now.

Meanwhile, a whispering campaign of sorts is going on and spreading what appear to be white lies about the selling of gas to the Tata Group and a group of left-wing politicians have also discovered the hidden hand of international conspiracy, accusing the government leaders of selling gas to ?monopoly capitalism? in the guise of setting up gas-based industries in the country. They also opposed export of gas to India as suggested by various donor agencies including the World Bank and ADB.

They attempted to brief some newsmen selectively to suggest that the Tata Group wanted to get natural gas at a lower-than-market price and preferably at a rate enjoyed so far by the largest joint venture project with a group of multinationals, namely the Karnaphuly Fertiliser Company (KAFCO), sanctioned by former President H. M. Ershad in 1990. The BNP government, as the successor government, was forced to agree to the deal under international pressure. The allegation is totally misleading, as the question of gas price was not even discussed.

In India, some politicians belonging to both the left and the right, are also opposing the Tata initiative purely on political grounds. A section of the Indian establishment, if the Indian media reports are to be taken seriously, is also against the move. These groups in India do not seem to want anything good to happen in Bangladesh, and more so by such a huge investment by an Indian group. It is India?s internal politics, and while some of the Indian leftist parties have profound influence on a section of the marginalised left-oriented parties in Bangladesh, no one in this country has anything to do with it. But the leftist group of parties have to maintain their existence by clinging to an issue ? any issue ? and whip up popular sentiment. So it is no wonder that they have to dogmatise their obscurantism.

The Tata Group, as has been explained by its chairman Ratan Tata, has been trying to open up shop in Bangladesh as part of its global expansion plan. Ratan Tata and his group of top executives were convinced of the existence of a fast growing market in Bangladesh and decided to take the plunge. The Tata Group has been doing a substantial amount of business in Bangladesh in the last couple of decades, and it is no secret that Tata trucks dominate the Bangladesh market. The Tata automobile division has already been operating in the country through a joint venture with Nitol Motors for many years now. It is doing a roaring business.

Analysts are of the view that opposition to the Tata initiative in Bangladesh is more for political than for any sound economic reason. For example, the political parties while in opposition tend to oppose anything that the government intends to do, regardless of the party in power. But interestingly, in this case those who are known to be opposing the Tata move belong both to the ruling as well as the opposition parties. Both the ruling as well as mainstream opposition parties appear to be divided on the issue, though they overtly maintain different postures.

The committee headed by Industry Minister Motiur Rahman Nizami agreed to provide the Tata Group with uninterrupted gas supply for 20 years at competitive prices. Nizami represents the right-wing Jamaat-e-Islami and initially was suspected to hold adverse views on the Tata move, but did not resist the decision. Other members of the committee are the two state ministers for energy and power; the principal secretary to the prime minister and the executive chairman of the BoI are all known to be enthusiastic supporters. But some other Cabinet ministers are known to have expressed their views against the move.

However, one positive aspect in this otherwise confusing situation is that the prime minister appears to be firmly behind the Tata initiative, without which Finance Minister Saifur Rahman, Foreign Minister Morshed Khan, State Minister for Energy AKM Mosharraf Hossain and State Minister for Power Iqbal Hasan Mahmud would not have agreed to be seen with Ratan Tata at the Expression of Interest signing ceremony last Wednesday.

HOLIDAY 22/10/2004