Bangladesh: Overview of the Public Private Partnership Program Md Humayun Kabir Deputy Manager PPP Office (Prime Minister s Office) Date: 03 February 2014
Road to PPP: Bangladesh Scenario Public management reforms initiatives Nationalization of SoEs Privatization of SoEs Private Sector Infrastructure Development Project (PSIDP) Infrastructure Development Company Limited (IDCOL) Infrastructure Investment Facilitation Centre (IIFC) Private Sector Infrastructure Guideline (PSIG) Private Infrastructure Committee (PICOM) PPP Policy & Strategy Guidelines 2010 PPP draft Law (2013) waiting for vetting.. 2
Sectors covered by new policy Covers almost every infrastructure and public service sector Hard infrastructure and services Social infrastructure and services 3
PPP Process in Bangladesh Process specified in government Policy and Strategy for PPP, 2010 Monitor implementation; use learning to inform policy/next projects Monitor Screen Only pick projects suitable for PPP Pre- Develop Leverage Government resources to prepare Private sector arranges finance; Govt provides info and supports to help close financing Finance CCEA Approval Support Provide professional development support backed by early stage funding Tender Prepare ALL docs and support upfront + Robust bid process 4
Investors / Lenders Project Govt Agents Oversight Rules Institutional Support Framework PPP Policy Project Coordination/Support Financial Support (4) In- Principle Approval CCEA Line Ministry / IA (5) Project Development PPP Project (3) Submit (1) Screen (2) Endorse (5) Facilitate / Monitor PMO Report PPP Office (9) Allocate (6)Propose VGF Allocate Empanelled Advisors MOF PPP Unit PPP TAF VGF Report (7) Endorse for CCEA Approval (8) Tender BIFF Private Bidders (9) Fund IDCOL IPFF Banks 5
Formal PPP Institutional Structure All of the institutions listed are in place and functioning. PPP Advisory Committee Policy Consultation Central point of PPP coordination for internal government and external investor, lender and civil society stakeholders. Screens/endorses, supports development of PPP projects, administers, TAF, tendering, negotiations, and financing process on behalf of Government, specifically sector line ministries Core of PPP Program Prime Minister PPP Office (PMO) PPP Project Proposals In-Principle and Final Project Approvals Fiscal Sanctioning of Individual PPP Projects Cabinet Committee on Economic Affairs PPP Unit (MOF) Fund Allocations Assesses fiscal viability and risk of PPP Projects Sanctions VGF, Subsidies Monitors Contingent Liabilities Creates and sanctions Annual Development Plan (ADP), which includes identification of specific development projects and associated capital budget allocation. Responsible for development of Fiveyear Plans Planning Commission Proposed development program Line Ministries Line Ministries Line Line Ministries Ministries Budget Allocation Sanctioned Projects and Expenditures in ADP Finance Division (MOF) Sanctions and Administers Budgets for: Annual Development Plan (capital expenditure budget) Non-plan Budget (annual operating budgets) Special allocations for funds, such as PPPTAF, VGF, BIFF 6
PPP financial support vehicles: PPPTAF PPP Technical Assistance Fund Used to: Help prepare projects ahead of tendering Prepare tender documentation Support government in negotiating with private parties Revolving fund: Funds recovered from awarded bidder at financial close and recycled into the Fund Capitalized with BDT100 Crore Operated by PPP Office Currently, consultants and advisors have been retained on a panel to be selected to support PPP projects using PPPTAF 7
PPP financial support vehicles: VGF Viability Gap Financing Buys-down cost of economically advantageous but financially challenged PPP projects Specific criteria applied by MOF PPP Unit to assure Value for money Minimized use of funds Financial sustainability of proposed projects Maximum support: 30% of total project cost, but actual amount subject to viability assessment and competitive bid Allocated BDT400 Crore Managed by Ministry of Finance PPP Unit 8
PPP financial support vehicles: BIFFL Bangladesh Infrastructure Finance Fund Limited An alternative savings and investment vehicle Provides alternative to bank deposits or stock market Open to retail, institutional investors Targeted to provide a variety of capital products to PPP projects Long-term debt Short-term construction capital Equity (future) Capitalized with BDT1600 Crore, with provision for a further BDT2500 Crore to be provided where required To be operated by an independent, professional fund manager Established as a limited company, run by a professional management and oversight on board by Ministry of Finance 9
Other financial support vehicles: IPFF Program Investment Promotion and Financing Facility IPFF is a facility to finance private infrastructure projects based on PPP. Private investors can approach the PFIs in order to access the funds allocated under the IPFF Program General Features IDA credit- US $307 million GOB co-finance-us $ 60 million Technical Assistance of US $ 7 million Implementing Agency- Bangladesh Bank Operates through 19 Participating Financial Institutions (PFI) 10
Other financial support vehicles: IDCOL Infrastructure Development Company Limited Targets specifically private sector investments in infrastructure Oldest non-bank financial institution targeting infrastructure Established 1997 Lent to flagship projects (e.g. Meghnaghat) Also supports medium sized and renewables projects Professional management and staffing High quality credit screening and due diligence, to international standard Capitalized by Asian Development Bank and World Bank 11
PPP financing vehicles: working together Equity Participation Construction Finance Long-term Debt Take-out Financing Refinance / Securitization PPP Office MOF PPP Unit BIFFL Bangladesh Infrastructure Finance Fund Criteria Criteria Criteria PPPTAF PPP Technical Assistance Fund VGF Viability Gap Fund Independent Fund Manager Advisor/ Consultant Pool Development Capital Economic Enhancement Skills GOB PPP Program Screen, Develop Construction Operations Line Ministry Pipeline of Investment Candidates PPP Projects IPFF/IDCOL 12
PPP Screening Framework Applicability of PPP Sector Coverage Adequate endorsement Legally possible Output driven Sufficient size Affordable Marketable Bankable Implementable Ten Conditions
PPP Procurement Process Overview LM / IA PPP Office Others Approvals Identify PPP Project (Pre-FS) Project Screening In-principle approval CCEA (Large / Medium) LM (Small) Prepare DFS, RFQ, RFP with consultant support Consultant appoint Oversight / review VGF Approval (MoF) Procurement process RFQ/RFP bidder selection Document review Contract Negotiation with consultant support Review of contract and financial docs Contract Vetting Final project approval Recommendation Final Approval CCEA (large), MoF (Medium), LM (Small) 14
PPP Pipeline Development Number of PPP Projects PPP Pipeline Trend Analysis 2012-2014 60 55 50 40 30 30 35 30 20 10 10 7 17 4 14 2 6 20 0 PPP Screening CCEA In-Principle Approval Advisor Appointment/DFS Procurement May-12 May-13 May 2014 (Forecast) Note: (1) Figures are based on data available on 26 May 2013 (2) Projects no longer current have been omitted for comparison purposes 15
PPP Project Pipeline SL. Sectors Name of the Project PPP Office CCEA/LM Endorsem Approval ent Advisor Appointm ent DFS Request for Qualificatio n (RFQ) 1 Road Dhaka-Elevated Expressway $ 1,088 N/A 1 2 Port 2 Jetties at Mongla Port through PPP $ 50 N/A 2 3 Health 40 beds Hemodialysis Centre at Chittagong Medical College Hosipital $ 2 N/A 3 4 Health Hemodialysis Centre at National Institute of Kidney Diseases and Urology (NIKDU) $ 1 N/A 3 5 Road Dhaka-Ashulia Elevated Expressway $ 1,471 N/A 4 2 6 Social Care Oboshor: Senior Citizen Health Care and Hospitality Complex $ 6 2 7 Road 8 Fisheries and Livestock 9 Road Flyover from Santinagar to Mawa Road via 4th (New) Bridge over Buriganga River $ 313 4 5 Fisheries and Livestocks PPP Projects $ 4 6 2 Upgrading of Dhaka Bypass to 4 Lane (Joydevpur-Debogram-Bhulta- Madanpur) $ 117 2 10 Housing NHA Housing Satellite Project at Mirpur $ 58 2 11 Road Hemayetpur-Singair-Manikganj PPP Road $ 86 2 12 Road Jatrabari-Sultana Kamal Bridge-Tarabo PPP Road $ 45 2 13 Road Dhaka-Chittagong Access Controlled Highway $ 1,625 N/A 2 14 Port Construction of Laldia Bulk Terminal $ 60 2 15 Health Medical College & Nursing Institute and Modernization Railway Hospital of Kamlapur $ 100 2 16 Health Medical College and Modernization of Railway Hospital at CRB in Chittagong $ 75 2 17 Health Medical College and Modernization of Railway Hospital at Saidpur in Nilphamary $ 75 2 18 Health Medical College and Modernization of Railway Hospital at Paksey in Pabna $ 75 2 19 Health New Modern Medical College & Hospital of 250 beds on the unused land in Khulna Estimated Project Cost in Million US$ Approvals $ 100 2 20 Property Dev Construction of BSS Bhaban under PPP $ 6 2 Project Development Procurement Request for Proposal Negotiatio n Contract Signed
PPP Project Pipeline SL. Sectors Name of the Project Estimated Project Cost in Million US$ Approvals PPP Office CCEA/LM Endorsem Approval ent Project Development Advisor Appointm ent DFS Request for Qualificatio n (RFQ) Procurement Request for Proposal Negotiatio n Contract Signed 21 Rail Depot Construction of a New Inland Container Depot (ICD) near Dhirasram Railway St $ 205 2 22 Rail Bridge Fulchhari Bahadurabad MG Railway Bridge $ 1,435 7 23 Rail Bridge Dual gauge Double line Bangabandhu Bridge $ 1,025 7 24 Airport Multi Mode Surveillance System (Radar,etc.) at Hazrat Shahjalal International Airport $ 24 2 25 Tourism Development of Tourism and Entertainment Village $ 150 2 26 Tourism 5 Star Hotel at Zakir Hossen Road, Chittagong $ 106 27 Port Construction & Operation of Inland Container Terminal (ICT) at Khanpur $ 32 28 Bridge 2nd Padma Multipurpose Bridge at Paturia-Goalundo $ 1,640 N/A 29 Port 3rd Sea Port $ 1,200 N/A 30 Property Dev Shopping Mall with Hotel-cum-Guest House on the unused Railway land in Comilla $ 37 31 Property Dev Shopping Mall with Hotel-cum-Guest House on the unused land in Chittagong $ 12 32 LPG / Energy LPG Bottling Plant at Kumira (Jetty, Pipelines & Storage Tank) $ 31 33 Housing High Rise Apartment Construction Project at Purbachal New Town (1st Phase) $ 1,199 34 Housing High Rise Apartment Construction Project at Jhilmil Residential Area $ 683 35 Property Dev Mongla Port Tower $ 10 Total $ 13,144 35 31 25 9 5 2 1 1 PPP Projects Pipeline (Version 26-01-2014) Note: 1 Revised Contract to be signed 2 Process on-going 3 Ministry approval awaited 4 Advisor appointed for feasiblity only 5 Feasiblity Study completed (to be updated) 6 In-house Consultants 7 Technical Advisor appointed `
Contacts Public Private Partnership Office (Prime Minister's Office) Address: Green Delta AIMS Tower, Level # 13 51-52, Mohakhali, Dhaka-1212, Bangladesh Phone: +88-02-9898531 Fax: +88-02-8885111 E-mail: info@pppo.gov.bd Website: www.pppo.gov.bd 18
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