Mumbai: The Tata Group, frustrated by the lackadaisical approach of the Bangladesh government, finally decided to scrap its $3 billion investment plans that included the setting up of a steel mill and power plant in that country.

''The (Bangladesh) government will not be in a position, in the foreseeable future, to grant the projects the natural gas commitment they would require,'' Tata Group said in a statement here.

Tatas said that it has communicated its decision to Bangladesh government and the Board of Investment.

The group, which waited four years trying to get requisite infrastructure support in vain, clarified that it would continue to develop its other interests in Bangladesh.

The Tata Group had initially proposed to invest $2 billion in Bangladesh in 2004 and had struck a provisional 15-year gas and coal supply agreement with the government.

The group formally submitted a $2.5 billion investment plan in April 2005 and then revised it to around $3 billion to set up a 1,000 MW power plant, a steel mill and a fertiliser unit.

Bangladesh industry and trade blamed the government's indecision for the scrapping of the offer - the biggest-ever for the country.

Bangladesh may be able to do without the proposed $3 billion investment, but the withdrawal of investment plans by Tata may reflect poorly on the country and other investors may be put off, Anisul Huq, president of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), said.

''This indecision on whether to accept the proposal or not and thereby withdrawal of a big foreign direct investment proposal will surely not give a positive signal to the industries. However, it is very difficult to predict what the economic loss for this withdrawal by Tata will be," reports quoted Haq as saying.

Bangla officials, however, tried to defend the government's stand, saying it was not possible for Bangladesh, which was facing a shortage of 150 million cubic feet of gas a day to guarantee supply of 200 million cubic feet of gas daily to the Tata project.

Bangladesh has around seven trillion cubic feet of proven gas reserves. But the country's donors and US-based MNC Unocal wanted Dhaka to export gas to offset the investments made in exploration and thereby make them profitable. 

The Tata also faced resistance from energy and environment lobbies  backed by former officials of state-run PetroBangla.