What will be the benefit to Bangladesh?

Tax holiday, financial incentives, etc
Tata's investment also involves a long tax holiday request, financial incentives, participation of Tata in the capital market, purchase of huge land (about 3000 acres including 20 kilometer long corridor (!) perhaps upto border) and infrastructure. Nothing has been stated in the proposal about the price per unit of electricity or the price of steel or fertilizer to be supplied by Tata to Bangladesh. Many local steel/re-rolling industrialists feel threatened due to the likely arrival of Tata in this field. They apprehend that the local steel industry will be adversely affected although Tata indicated that they will manufacture only flat steel as opposed to long products manufactured by the re-rolling mills in the country. One other very important issue that may need to be considered is the location plan of 1 (one) million ton fertiliser plant. The most deserving location should be in the Rajshahi Division and not in the Chittagong Division for obvious reason.

Employments and energy security
Tata claims that due to its investments in Bangladesh some 24,000 direct employment and 100,000 indirect employment opportunities will be created. However, these are mere statements and needs to be supported with evidence and facts.

In the face of rising oil prices, energy security is soon expected to become a number one issue of energy supply in Bangladesh. Even though Bangladesh's crude oil and petroleum products import are almost one fourth of the total commercial energy use, it is still significant because almost the entire transport sector is dependent on imported oil, in addition to generation of power and operation of a substantial number of agricultural pumps. Bangladesh is already severely handicapped by a huge gap between its imports and exports. The current fiscal year would spend about US$1.4 billion for import of 3.7 million tons of oil, while a large import saving is taking place due to the large gas use in the domestic sector. Some 11.5 million tons of energy substitution is taking place by gas use in FY 2005-06 and thereby a foreign exchange saving of US$4.5 billion would commence. Therefore, there is ample justification for domestic gas use by own companies, not Tata.

Constitutional provision
The constitution of the People's Republic of Bangladesh in its article 7(1) provides that: "All powers in the Republic belong to the people, and their exercise on behalf of the people shall be effected only under, and by the authority of the Constitution." Article 143(1) states that "there shall vest in the Republic in addition to any other land or property lawfully vested -- (a) All minerals and other things of value underlying any land in Bangladesh; (b) All lands, minerals and other things of value underlying the ocean within the territorial waters, or the ocean over the continental shelf, of Bangladesh; and (c) Any property located in Bangladesh that has no legal owner. It is a pity that the BOI and the Ministry of Energy are carefully avoiding the provisions of the Constitution in so far it is related to article 7, 143 and 145a. The government must take adequate preparations to process the issue related to Tata's investment through the people of Bangladesh.

Export of gas and coal
Export of a commodity takes place only when it is in surplus or not needed by the country itself. Since gas and coal are not yet in exportable surplus in Bangladesh, there cannot be any argument made now for allowing these to be exported, either directly or indirectly. The export of gas issue has been settled in the recent past and any attempt to export in kind must be discouraged with equal force as was done in the past since there has been no change in the reserve volume of gas in the country. In the very recent past a draft coal policy has been formulated with fictitious figures on reserves. Unlike gas demand-supply forecasts, the draft coal policy is silent on demand forecast, which is rather intriguing. But the draft coal policy indicates that substantial amount of coal will be exported, which should be vehemently protested too. The question is whether any exercise has been made by either Tata or the government about the billion dollar benefits (?) that would accrue from the investments by Tata to the exchequer of Bangladesh. No, there is a great deal of ignorance in this respect. Yet the Energy Advisor has extended his lip service to argue about the benefits without any supporting information and data. These so-called benefits in monetary form must be made public, if these at all exist, before any deal is inked with any one. This issue is of paramount importance to the people of the country. No amount of vocal expressions either from the bureaucrats or from self styled politicians would be of importance unless it is established that Tata's investment is beneficial for the people and for the country.

The latest proposal
The 30th April 2006's proposal from Tata includes, among others, a three-tier pricing for gas and 10 percent equity share for the government. If one considers Tata's equity in the investment proposal as US$ 3 billion, Bangladesh's equity is many times over, say, US$ 12 to 15 billion as raw material (2.14 Tcf gas and 6 million ton coal), land and associated infrastructure not to speak of other tangible and intangible assets. Consequently the government's equity may be considered as over 60 percent and accordingly one formula could be the joint venture for the proposed investment. Tata's investment may then be considered a profit sharing on an equitable basis.

The value addition to the gas or coal resources are very important factors in the value chain under the proposed projects and must be considered sine qua non based on which any gas or coal based exportable commodity project need to be evaluated.

Officials and politicians who are associated with the evaluation of Tata's proposal must appreciate that US$75 a barrel of crude may increase to US$100 a barrel. And committing Bangladesh gas for future at the prevailing benchmark of crude oil price may be identified as an action against the interest of the people of Bangladesh and the country itself. And those who are responsible for such criminal acts shall be exposed to heavy penalty in due course.

A threat to energy security
The country's energy experts, engineers, geologists and economists cautioned the government in a roundtable dialogue held at the Press Club on 28th May 2006 and argued not to accept Tata's investment proposal. They clearly observed that it would severely diminish the country's energy security. Heavily criticising the government for maintaining non-transparency about Tata's investment proposal, the experts maintained, as local industries are now facing serious gas and power shortages, how the government can sell gas to the Indian company at subsidised price? Many a power plant will be closed down between 2011 and 2016, as the present gas reserve will be depleted before 2016. Similar opinions were expressed in a conference held at the Department of Geology, University of Dhaka on 29th May 2006 attended by engineers, geologists, economists and students of the university where the participants reiterated the views that under the adverse circumstances, Tata's proposal should be discarded forthwith.

(Concluded)

Golam Rabbani is retired justice of the Supreme Court, Nuruddin Mahmud Kamal is former Chairman, Power Development Board, SKM Abdullah is former Chairman, Petrobangla, Engr. Sheikh Mohammad Shahidullah is Convener, Oil Gas Coal and Port Protection Committee, Shamsul Alam is Professor, BIT Chittagong, Anu Mohammad is Professor, Jahangirnagar University, MM Akash is Professor, Dhaka University and Hossain Mansoor is Professor, Dhaka University.