Finance Div, not BoI, to oversee PPP projects
Sunday, 25 April 2010
FE Report
The government has decided to assign the Finance Division instead of the Board of Investment (BoI) with the task of overseeing the projects taken under the public-private partnership (PPP), officials said Saturday.
"We believe Finance Division is well-placed to carry out the task, whereas BoI lacks capacity," a Finance Ministry official said.
The official said the state investment promotion agency has so far failed to deliver its role efficiently as the lead agency for driving the PPP initiative.
The decision came after an allocation of Tk 25 billion in the current budget for financing large PPP projects has remained idle, threatening to mar the future of the initiative.
The government's position paper on the PPPs identified seven mega infrastructure projects to be executed under the new concept. Six of these seven projects would cost a total of US$13.85 billion.
The projects include: Dhaka-Chittagong Express Highway, Dhaka Metropolitan Sky-rail, Dhaka Metropolitan Elevated Expressway, Dhaka Metropolitan Underground Railway and Dhaka-Narayanganj-Gazipur Elevated Expressway. Other projects proposed include four coal-fired power plants and a deep-seaport at Chittagong.
Officials said earlier the Cabinet had rejected the Finance Ministry's proposal to allow the Finance Division to take the lead in the process, but it has now realised that BoI is not the "right agency" to drive the complicated PPP projects, which require careful assessment.
Finance Division officials also said they are in a discussion with the Infrastructure Development Company Limited (IDCOL), the state-owned infrastructure lender, to provide Tk 16 billion in credit to the PPP projects.
"Only medium and large projects will be considered for financing," an official said.
Terms and conditions of the lending to be channelled to IDCOL, including the rate, are yet to be fixed, and officials said the IDCOL would have to decide on whether it would lend directly or through banks.
Officials said, already the Prime Minister's Office (PMO) has finalised the draft PPP policy, allowing the local investors to participate in an infrastructure project that costs up to $10 million.
The draft policy, titled 'Bangladesh Public-Private Partnership Policy and Guidelines' will replace the existing Bangladesh Private Sector Infrastructure Guidelines (BPSIG).
The PPP policy has redefined infrastructure projects into three categories: large project (above $10 million), small project (above $1.o million to $10 million) and very small project (up to $1.0 million).
The new PPP policy has proposed to establish a 19 member Public-Private Partnership Council to be headed by the Prime Minister. Members of the council include finance, planning, commerce and law ministers.
The PPP policy also has the provision for formation of an 11-member Public-Private Infrastructure Committee to be headed by the Principal Secretary. However, only representatives from the private sector have been included in the committee.
The draft policy has included 16 modalities for implementation of the PPP related projects. These are build-operate-transfer, build-own-operate, build-own-operate-transfer, capitalisation, design-build-finance-operate, securitisation, build and transfer, build, lease and transfer, build-transfer-operate, lease management agreement, management contract, rehabilitate-operate-transfer, rehabilitate-operate-maintain, service contract, supply-operate-transfer and joint venture agreement.
The government has decided to assign the Finance Division instead of the Board of Investment (BoI) with the task of overseeing the projects taken under the public-private partnership (PPP), officials said Saturday.
"We believe Finance Division is well-placed to carry out the task, whereas BoI lacks capacity," a Finance Ministry official said.
The official said the state investment promotion agency has so far failed to deliver its role efficiently as the lead agency for driving the PPP initiative.
The decision came after an allocation of Tk 25 billion in the current budget for financing large PPP projects has remained idle, threatening to mar the future of the initiative.
The government's position paper on the PPPs identified seven mega infrastructure projects to be executed under the new concept. Six of these seven projects would cost a total of US$13.85 billion.
The projects include: Dhaka-Chittagong Express Highway, Dhaka Metropolitan Sky-rail, Dhaka Metropolitan Elevated Expressway, Dhaka Metropolitan Underground Railway and Dhaka-Narayanganj-Gazipur Elevated Expressway. Other projects proposed include four coal-fired power plants and a deep-seaport at Chittagong.
Officials said earlier the Cabinet had rejected the Finance Ministry's proposal to allow the Finance Division to take the lead in the process, but it has now realised that BoI is not the "right agency" to drive the complicated PPP projects, which require careful assessment.
Finance Division officials also said they are in a discussion with the Infrastructure Development Company Limited (IDCOL), the state-owned infrastructure lender, to provide Tk 16 billion in credit to the PPP projects.
"Only medium and large projects will be considered for financing," an official said.
Terms and conditions of the lending to be channelled to IDCOL, including the rate, are yet to be fixed, and officials said the IDCOL would have to decide on whether it would lend directly or through banks.
Officials said, already the Prime Minister's Office (PMO) has finalised the draft PPP policy, allowing the local investors to participate in an infrastructure project that costs up to $10 million.
The draft policy, titled 'Bangladesh Public-Private Partnership Policy and Guidelines' will replace the existing Bangladesh Private Sector Infrastructure Guidelines (BPSIG).
The PPP policy has redefined infrastructure projects into three categories: large project (above $10 million), small project (above $1.o million to $10 million) and very small project (up to $1.0 million).
The new PPP policy has proposed to establish a 19 member Public-Private Partnership Council to be headed by the Prime Minister. Members of the council include finance, planning, commerce and law ministers.
The PPP policy also has the provision for formation of an 11-member Public-Private Infrastructure Committee to be headed by the Principal Secretary. However, only representatives from the private sector have been included in the committee.
The draft policy has included 16 modalities for implementation of the PPP related projects. These are build-operate-transfer, build-own-operate, build-own-operate-transfer, capitalisation, design-build-finance-operate, securitisation, build and transfer, build, lease and transfer, build-transfer-operate, lease management agreement, management contract, rehabilitate-operate-transfer, rehabilitate-operate-maintain, service contract, supply-operate-transfer and joint venture agreement.