Indian Essar renews proposal to set up $500m steel plant

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Naim-Ul-karim
Indian conglomerate Essar has renewed its plan to set up a 500 million dollars steel plant in Bangladesh, despite the government has yet to decide the fate of similar investment by Tata, officials said Tuesday.
Essar, sitting with over 11 billion dollars after it sold its Indian telecom stake to British giant Vodafone last year, said it wants to set up a hot-rolled steel plant preferably in Chittagong.
The company owned by Ruia brothers made the proposal in August last year, saying unlike Tata which in 2004 proposed to set up similar steel plant in the country, it will buy gas from the government at the market rate.
This week the group renewed its investment proposal to the Board of Investment (BoI).
"Our group senior vice president, K Subramanian, is now visiting Dhaka to follow the progress in the investment programme in Bangladesh," a senior official of the Essar Group told the FE Tuesday.
Essar Global Limited (EGL), founded over three decades ago, is a sprawling conglomerate with stakes in steel, energy, power, communication, shipping, logistics and construction.
EGL has a market value of over US $50 billion and employs 30,000 people worldwide, according to the information posted at the company's website. The company has recently made acquisitions of two steel plants in Canada and the United States.
A senior official of the Essar Group in Dhaka said the company expects a positive reply from the government, as it has not sought any concessions in the proposal.
"We told the BoI that we will buy gas and power at the market rate. We told them that we would be like any other investors. We don't want any special treatment," he said.
A BoI senior official, however, said it could not make any decision on Essar 'right at the moment.'
"We haven't made any decision on Tata and Mittal. Their investment offers are several times bigger than Essar's. So it is almost impossible for us to make a decision on the latest Essar proposal," he said.
"Besides, we are now running short of gas. So any gas-based plant will have to wait until we can ensure supply of gas to our priority projects such as power plants," he added.
Tata made a three billion dollar investment proposal for steel, power, fertiliser and coalmining in April 2006 after revising its 2004 proposal. Mittal submitted its 2.9 billion US dollar investment proposal in 2007.
Essar official said the proposed plant will have production capacity of 1.2 million tonnes of hot-rolled steel a year.
Of which, Essar would export 20-30 per cent while rest will be supplied to Bangladesh's local market.