PMO finalises draft of PPP policy

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Nazmul Ahsan
The Prime Minister's Office (PMO) has finalised a draft Public-Private Partnership (PPP) policy keeping provision for promoting local investors in implementing infrastructure projects each costing up to $10 million.
Provisions for extra and special fiscal incentives have been incorporated in the policy for large PPP projects as well.
The draft policy, styled 'Bangladesh Public-Private Partnership Policy and Guidelines' will replace the existing Bangladesh Private Sector Infrastructure Guidelines (BPSIG), sources said.
The PPP policy has redefined infrastructure projects into three categories-large project (above $10 million), small project ( (above $1 million to $10 million) and very small project(up to $1 million).
The draft policy has included provisions such as direct negotiation for awarding contract for large projects, exit policy for investors, PPP budget and Annuity Payment Fund , which, according to sources, is a new concept.
At least 16 modalities have been included in the draft to implement projects under the PPP initiatives. The policy said a PPP Cell will be established in the Board of Investment, under the PMO.
The draft policy has recently been sent to the Cabinet Division for approval, sources confirmed.
According to the draft policy, line ministries and executing agencies will encourage local investors through awareness creation and motivation to participate in infrastructure projects.
'A target over the next five years is to achieve at least 10 per cent equity to be taken up by local entrepreneurs for large PPP projects and up to 100 per cent for small PPP projects,' the draft policy said.
Officials in the BOI said to attract local investors, definitions and number of projects have been changed in the PPP Policy.
The BPSIG has two types of projects-large projects each costing $25 million or above) and small projects (each costing less than $25 million).
The new PPP policy has proposed to establish a 19 member Public-Private Partnership Council to be headed by the Prime Minister. Most of the members of the council are government ministers including finance, planning, commerce and law.
The PPP policy also provides for the formation of a 11-member Public-Private Infrastructure Committee to be headed by Principal Secretary, PMO. However, only representatives from private sectors have been included in the committee.
The draft policy has included 16 modalities for implementation of PPP related projects. These are Build-Operate-Transfer, Build-Own-Operate, Build-Own-Operate-Transfer, Capitalisation, Design-Build-Finance-Operate, Securitization, Build and Transfer, Build, Lease and Transfer, Build Transfer and Operate, Lease Management Agreement, Management Contract, Rehabilitate-Operate-Transfer, Rehabilitate-Operate-Maintain, Service Contract, Supply-Operate-Transfer and Joint Venture Agreement.
The Policy has underscored the need for a strong role of the Planning Commission in identifying and promoting PPP related projects.
'A Project Fair shall be organised by the Planning Commission once in every year to promote the PPP projects. The Commission could utilize this fair to introduce PP projects in the national planning process.' The policy said.
'PC shall present these projects in the fair for the assessment of the investor's interest and will develop a list of potential PPP projects after feedback from the fair.'
Officials in the PMO said the draft PPP Policy is an unique guidelines and would attract both local and foreign investors for investing in projects under the PPP initiative.
Earlier, a Cabinet meeting, held in October 2009, rejected a proposal of the Ministry of Finance that proposed to establish PPP Cell in the Finance Division and execution of all necessary activities relating to PPP projects from the ministry. The Cabinet asked the BOI to do everything necessary towards making the PPP concept a success.