Bangladesh unable to guarantee gas supply to Tata

By Serajul Islam Quadir

DHAKA (Reuters) - Bangladesh has declined to guarantee an uninterrupted gas supply for 20 years to Indian conglomerate Tata, which has proposed investing $3 billion in a number of projects, a senior official said on Sunday.

The decision was conveyed to Tata on Sunday at a high-level meeting between the Indian firm and Bangladesh's state-run Board of Investment (BOI).

"We have projected the real picture of the energy sector, especially the reserves position of our natural gas, and future scenerio of the sector as a whole," the official told Reuters over telephone.

Bangladesh has been run by an army-backed interim government headed by former central bank chief Fakhruddin Ahmed since January 2007, and it has often said the Tata deal was a major decision an elected government would be better placed to handle.

Tata has spoken of running out of patience and time over its offer, one of the biggest investment proposals the south Asian country has had so far.

"Without the guarantee of natural gas we can not move forward our investment proposal as the projects are purely gas based," said Alan Rosling, executive director of Tata Sons, on Sunday. Tata Sons is a holding company of the Tata group which is controlled by the founding Tata family.

Bangladesh with 13.54 trillion cubic feet of proven and recoverable gas reserves, is facing at least 150 million cubic feet of gas (mmcf) shortages a day. It now supplies up to 1,738 mmcf of gas daily against a demand of 1,888 mmcf, officials say.

In July 2006, Tata suspended its $3 billion investment plan in Bangladesh because of "frustrating" delays by the Bangladeshi authorities in approving the project.