Tata Power will initiate discussions with the Bangladesh government to set up two 500 megawatt gas-based power plants in the western region of the country.
A Tata delegation will visit Bangladesh for preliminary talks on the matter. The Bangladesh government and Tata Power will eventually sign a memorandum of understanding for the projects.
Tata Power Managing Director Firdose A Vandrevala told Business Standard: "The company is exploring the possibility of setting up two 500 MW power units. One will supply power to Bangladeshi utilities and the other will feed the Indian power grid."
The power plants will draw on the abundant natural gas in Bangladesh. In the 1990s, Bangladesh discovered major natural gas reserves in the western part of the country. It invited multinational companies to invest in downstream industries based on natural gas.
The Tata group has been offered a 20-year guarantee for gas supply at a price tied to an agreed formula.
The group is expected to sign a deal with Bangladesh's state-run Board of Investment for the power plants. Other projects that the group is actively looking at investing in include a 2.4 million tonne steel plant and a 1 million tonne fertiliser plant as part of the $2 billion investment package.
The visiting group team is also expected to discuss where the power, steel and fertiliser units are to be located.
The Tata group's $2 billion investment is expected to be at least five times the total foreign direct investment received by Bangladesh in the past few years.
The group's investment in the power plant will not only help Bangladesh utilise its abundant natural gas but will also help ease India's power shortage. The 500 MW power plant in western Bangladesh will feed the eastern power grid, Vandrevala pointed out.
Tata group chairman Ratan N Tata had been expected to visit Bangladesh in early September. However, those plans were given up in the wake of a fatal grenade attack that sparked national unrest.