Tata suspends $3 bn project in Bangladesh

Disappointed and frustrated over the delay by the Bangladesh government in approving its $3 billion investment in steel, power and coal sectors, Tata Group on Monday announced the suspension of the plan until the general elections next year in the country.

"We are extremely disappointed and frustrated (over the delay in clearing the plan).We thought the projects were good for the country's economy, for the people and the balance of payment," Alan Rosling, executive director of Tata Sons, said.

Rosling, who held talks over the weekend with Bangladeshi ministers and officials on the implementation of the plan, said "we are suspending the proposed $3 billion investment plan".

He hinted at going to another destination. The planned investment might be spent on projects elsewhere, he said.

Rosling, who had met Finance and Planning Minister M Saifur Rehman, Industries Minister Matiur Rehman Nizami and Principal Secretary to the Prime Minister on Sunday said that "if the government does not make a decision we can't wait. We have been waiting for ten weeks to the government response.

Under the investment plan, the group had offered to set up a 2.4 million tonne steel plant, two power plants, a coal mine and a fertiliser plant.

Manzer Husain, resident director, Tata in Dhaka, told PTI after the meeting with Mahmmudur Rahman, chief of Bangladesh's Board of Investment, that "we are suspending and will be no further work on the plan ... we have put in resources here though and so we will wait for the new government to come" after the polls in 2007.

After the new government comes after eight to nine months we will then assess our position and decide," Husain said adding "the ball is mostly with the government now but it has been frustrating as it has been a long wait."

Asked if Tata would move to a new location following uncertainty here, Husain said, "We are constantly looking for possible new opportunities."

Tata had earlier set a May 31 deadline for a decision by the Dhaka government. Sources said Tata officials wanted to know the government's mind after a lengthy study and revised submission of plans over natural gas pricing as well as other issues.

Government leaders have said a consensus was needed among the country's political parties for approving such a plan. If the plan finally goes through it will be the single largest direct foreign investment for Bangladesh since its birth in 1971.