A response to Tata and GoB

In my opinion, pricing is best if left to the producer of gas. However, if the producer is a government entity pricing will be faulty. The inherent nature of public ownerships is one of poor market knowledge, distrust in the market process, wastage, inefficiency, and shying away from competition under various political pretexts or development theories. Thus, a government assigning country's top economist to suggest gas pricing is of no significance.

PetroBangla, if privatised, or any private owners of gas fields, can themselves be the proper organisation if employing bright managers, highly skilled, and well paid, to determine, autonomously, prices for any large or unique buyers. However, continuous bureaucratic government management of PetroBangla depletes its potential as a producer in negotiation with a buyer. Pure private ownership of gas fields is not in consideration and unless it is, infrastructure development or FDI will remain wanting.

Government can fix the gas price today, but how will they fix the value of Taka or Dollar, or fix the cost of prerequisites that go to produce gas. Values of fiat currencies are shrinking rapidly and prices, if fixed, cannot be effective when currencies fail to hold a value permanently despite continuous attempts of central banks. Currencies that are 100 per cent reserve backed, or metal backed, and unchanging in value are no longer in vogue.

However, prices, in liberal economies, do not remain fixed and no investor may have all factors in control unless in a socialist economy. Prices fluctuate with demand and supply and enable producers, consumers, and investors, to suitably react and respond to change in prices. The material in question is only gas and not any ultra sensitive or strategic as nuclear fuel that deserves special consideration as fixed prices.

Furthermore, we erroneously perceive FDIs to bring big benefits to the country but in reality, such investments do not unless government reduces its comprehensive hold over economy. Presently, the people on whose land the investment or steel mills will be built will be least benefited. Land will be nationalised by the government with some compensation to the people. With free market in Bangladesh, each landowner or any other resource owner would become enormously wealthy by selling or renting their property, or by some other commercial arrangement directly with Tata.

Any big investor, instead of worrying about who is saying what in the media or within the power circle, would normally pledge to build schools, hospitals, or roads, and to boost the socio-economic condition of that area and to create a friendly reputation that big companies often lack. Currently, corporate social responsibility [CSR] is a common phenomenon. Tata could also offer company shares to landowners and to the people of that region for greater participation, shared ownership, and long-term profits.

At present, other than few paan and teashops, job openings as peons, chaprasis, gatekeepers, and workers, and newly erected slums and shanties for accommodation; there will be no other major gains for the common lot in Tata areas of investment. The gainers, in multiple ways, would be those having close connections with the government and hold access to the corridors of power. Rural folks do not have any access to power and suffer economically and financially due to complex rules and regulations of the government or imposed on investors.

In free market conditions, modest gas reserve situations, as in Bangladesh, would attract smaller investments from Tata with gas prices unfixed. If gas reserves increase, prices would fall and vice versa. Investments would proportionately increase or fall in relation to gas prices. The producer of gas could also hold the option to choose its currency of payment under a multiple but competitive currencies as in a free market. Only in economies where government is a commanding factor, intending investors as Tata can make demands and conditions to fix prices for a long period. Price capping in electricity or others may be in the developed world as well but only with dire consequences in production and other distortions. Unhindered market processes, if allowed, can correctly decide the nature, terms, and type of investments to everyone's satisfaction, a win-win arrangement that no expert studies by the government can achieve.

However, if government must at all be the deciding and negotiating body, let it be the regional local government in Bangladesh not Dhaka. The local bodies can always solicit expert advice from the private sector, multilateral agencies, and the like, as the central government does now.

We should not forget that the people of Bangladesh shed enough blood and endured sufferings for Bangabandhu's autonomy movement, and that struggle will continue until every region, zilla, upzilla, union, and finally the man himself is autonomous in Bangladesh.

Surely, a major signal to global or domestic investors would be a free market free of bureaucratic intervention to attract investors and build the country's poor infrastructure not a successful government negotiation with Tata.

Nizam Ahmad is a freelance contributor of The Daily Star.