Soft drink maker Coca-Cola has agreed to pay $16 million to Tabani Beverage to end a decades-old bottling agreement with the state-run company.
Coca-Cola made the offer after a government panel suggested closing the deal upon the payment of the sum which Tabani will use to clear its liabilities.
The liberation war affairs ministry, the owner of Tabani, last week sent a proposal to the Cabinet Committee on Economic Affairs in this regard.
Finance Minister AMA Muhith has also given his consent to the move, which will clear ways for the soft drink maker to invest $50 million to set up a manufacturing plant in Bangladesh, according to the proposal.
The ministry placed the proposal to policymakers based on recommendation from a committee, headed by Mashiur Rahman, the former economic affairs adviser to the prime minister.
Coca-Cola's offer of investing $50 million in a new plant came a year after the soft drink maker had declined to renew the bottling agreement with Tabani, which could not set up a PET (polyethylene terephthalate) bottling plant due to delays by the government.
Tabani was engaged in bottling and marketing of Coca-Cola products in Dhaka and Rajshahi.
Coca-Cola, after registering its investment proposal with the Board of Investment, informed the government that it wanted to go for fresh investment by closing the deal.
Coca-Cola in a letter to the ministry said it was ready to pay the money to settle 'all outstanding issues' with Tabani.
The company also proposed signing a 'settlement and release agreement' between the parties at the time of the payment.
Coca-Cola is the second biggest player after Pepsico in the domestic soft drink market worth more than Tk 2,000 crore a year.
Coca-Cola Far East Ltd markets Coke products in Dhaka and Rajshahi by bottling through Pran, while Abdul Monem Ltd, another bottler of Coca-Cola, distributes the products in other parts of the country.