Identifier
Created
Classification
Origin
05DHAKA3628
2005-07-28 07:15:00
CONFIDENTIAL
Embassy Dhaka
Cable title:  

CDA PAYS COURTESY CALL ON BOI EXECUTIVE CHAIRMAN

Tags:  ECON EINV ENRG ETRD PGOV BG 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L DHAKA 003628 

SIPDIS

E.O. 12958: DECL: 07/27/2015
TAGS: ECON EINV ENRG ETRD PGOV BG
SUBJECT: CDA PAYS COURTESY CALL ON BOI EXECUTIVE CHAIRMAN


Classified By: Acting Pol/Econ Counselor David Renz, reasons 1.4(d).

C O N F I D E N T I A L DHAKA 003628

SIPDIS

E.O. 12958: DECL: 07/27/2015
TAGS: ECON EINV ENRG ETRD PGOV BG
SUBJECT: CDA PAYS COURTESY CALL ON BOI EXECUTIVE CHAIRMAN


Classified By: Acting Pol/Econ Counselor David Renz, reasons 1.4(d).


1. (U) Summary: BOI Executive Chairman and Energy Ministry
Advisor Mahmudur Rahman discussed his new role in the
Ministry of Energy, Power and Natural Resources and his plans
for reforms with CDA Chammas. He also discussed large
investment deals that the BDG is currently negotiating with
Indian and U.S. investors. End Summary.


2. (U) CDA Judith Chammas met with Rahman for a courtesy call
on July 26. CDA was accompanied by EconOff as notetaker
during the hour-long meeting.


3. (C) Rahman said that he has been busy with reform plans
for the whole Ministry since taking over as advisor on June

20. Rahman is working on a three-part reform plan that he
intends to implement by January 2006. He calculates that he
only has eight months to put reforms in place before the
campaign season hits full swing. His goal: reduce system
loss in the energy sector by 50 percent and reduce accounts
receivable by 75 percent.


4. (C) He told the CDA he has been approached by the World
Bank and other donors about reforms in the archaic BDG energy
policy. He is preparing a new long-term energy policy to
protect and efficiently utilize Bangladesh's vast gas and
coal reserves. He cited recent steps that he has taken to
reverse systemic non-payment of gas and electric utility
bills by commercial and industrial customers. Recently, he
shut down the gas supply to a factory run by a prominent
ruling party member for failure to pay substantial
arrearages.


5. (C) In an attempt to address corruption within the
Ministry, Rahman transferred 178 employees accused of
corruption out of the Ministry. He also plans to implement
an e-governance program in the gas sector modeled after his
successful e-governance program at the Board of Investment.
In the oil sector, he noted that Bangladesh imports over 3.7
million tonnes of oil per year, of which 2.3 million tonnes
is diesel fuel oil. The BDG subsidizes sales of diesel fuel,
which has created a thriving resale market into India, where
prices are higher. Rahman recently gathered diesel
consumption numbers from regions of the country. Consumption
in the border regions is two to three times higher than in
other areas. He plans to crack down on the dealers in those
areas and start an inter-ministerial process to curb this
problem. He said that in his most conservative estimation,
Bangladesh would save over $200 million through this
crackdown.


6. (C) On the investment front, Rahman said that the TATA
deal is on track. There are six areas that are currently
being negotiated. He expects the issues of land rights,
duration of government gas security, and licenses for coal
mining to be resolved within a week. He pointed out,
however, that the price of gas sales to TATA and power
purchase price from TATA, together with the long list of
fiscal incentives proposed by TATA, are the three most
critical and difficult issues to resolve. Nevertheless, he
is optimistic that agreements will be concluded in time for a
November ground-breaking ceremony.


7. (C) Mahmudur Rahman praised the Embassy and U.S. investors
for their work in Bangladesh and promised continued support
for two U.S. power generation projects. He reiterated his
enthusiasm and committment to the Road Show, tentatively
scheduled for October. He told the CDA that senior BDG
officials and business leaders have shown keen interest in
the Show and are optimistic that this Road Show will help
create closer investment and trade links between the U.S. and
Bangladesh.


8. (C) Comment: BOI Executive Chairman Mahmudur Rahman was
appointed by the PM to the Energy Ministry as advisor
following the removal of the State Minster for Energy due to
corruption charges. Rampant corruption in the gas sector and
in the Ministry as a whole has led to public and investor
outcry over the Ministry's operations. Rahman's reputation
as a non-corrupt, business friendly, private sector outsider
could restore some credibility to the Ministry. His attempts
at cracking down on unpaid gas bills have grabbed significant
media attention, but will require sustained effort in the
face of powerful vested interest if they are to have any
long-term impact. End Comment.
CHAMMAS