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I read with interest the
recent stories in the Bangladesh media on the ongoing discussions with the
Tata Group that apparently ended in a stalemate. Or is it hiatus? I was
neither shocked nor surprised but amused at the trend of the discussions.
According to the reports, Tata offered a price of $1 per thousand cubic feet
(MCF), while the Bangladesh expected three to four times that. It brought me
the recollections of the negotiations held in the 1980s with another group
of negotiators also with the initial “T”, that time from a European country.
People familiar with those negotiations would recall that even then, when
the international oil prices were much less compared to the current prices,
Bangladesh asked for around $4-5 per MCF, but in the end was successful in
getting a price around $1 per MCF. Then, the gas prices were related to the
international oil prices, although the eventually agreed formula left much
to be desired. This time, with very high international oil prices, experts
would say that Bangladesh is asking much less than what it should get. It is
not without reason that the Energy Adviser, who is guiding the negotiations
in his capacity as Executive Chairman of the Board of Investment, has
publicly endorsed this view. I wish the investment discussions were as
transparent as his statement.
From what I have read, Tata wants us to learn that gas is not a form of
energy, its pricing should have no relationship with the energy or oil
price, and the internationally traded gas price is much less in relation to
what Bangladesh is asking. The investment benefits should outweigh the
energy benefits. Further, Tata would move its investment to a North African
country if the negotiations are not successful.
However, in my years of international experience in the field of energy, I
have never come across such outrageous arguments. Tata’s tantrums could be
an honorable way out of the rather unpleasant negotiations. It may be that
these are negotiating tactics. It may also be likely that they have an
understanding with those who matter on the eventual price. We know it too
well that they came to Bangladesh after they were not successful in getting
cheap gas. So, we should not take their threat seriously!
I am sure most readers are familiar with the famous Tolstoy story of “How
Much Land Does a Man Need”. A similar ending to that of the farmer, who
wanted to grab all the land eyes could see but got only six feet, may befall
to this massive investment proposal. Tata would like to have almost the
entire natural gas resources committed to them rather cheaply since they
have money, but might not get any.
For once, the Bangladesh team has demonstrated that money cannot buy
everything. I, like many others in the country, fully endorse the
professional approach taken by the experts and officials participating in
the discussions, and would sincerely hope that this would prevail.
In my view, the proposition is simple: if Tata wants to get a portion of the
Bangladesh gas it should be at international energy equivalent price.
Otherwise, we would like to thank them for the interest, and would welcome
them again should they change minds.
Dr. Aminul Huq: Former Chair of the Energy Sector Network and Committee,
Asian Development Bank
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