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Friday, May 06, 2005

Investors discovering third-world markets? 

I read with some surprise the news that Microsoft co-founder Paul Allen is planning to invest $1.6 billion into Bangladesh, mainly to build power and fertilizer plants. This is Bangladesh's second largest foreign investment, the largest being the $2.5 billion the Tata group is investing in the energy sector.

Vulcan will spend $900 million of Allen's $21 billion fortune building a number of gas-run power plants with a total 1,800 megawatts (MW) of capacity -- equivalent to almost half of existing national capacity. The new plants will help meet new demand that is set to double to 7,000 MW by 2007, and make up a power shortfall that already stands at between 500 MW and 700 MW. Vulcan will also build two plants with the capacity to produce 140,000 tonnes of carbon-based organic fertilizer at a cost of $200 million, and set up a $500 million project to capture methane gas for power production from coal mines.

Does anyone know what is going on in Bangladesh's power sector? It seems like it is being liberalised in a way that is attracting large amounts of FDI. What is Bangladesh doing right that India isn't?