Lukewarm response to a much-touted concept

This has become more of a ritual for the government to earmark a sizeable amount in the national budget for the last few years with the hope of financing projects under the so-called private-public partnership (PPP) initiatives. But realities have belied the government's expectation and the allocations have remained mostly unused.
The incumbent Finance Minister AMA Muhith in the maiden budget of the immediate past 'grand alliance' government in the first 2009-10, first kept an allocation of Tk 25 billion against PPP projects. Not a penny could be spent in that year. In each of the following financial years until the current one, the government continued keeping a budgetary allocation of Tk 30 billion against the 'PPP projects'. But the situation remained unchanged as far as its utilization is concerned.
The development must have been frustrating for the finance minister who in his budget presentation address in June, 2009 had raised high expectation about investment through the PPP concept.
The finance minister did no wrong while putting emphasis on PPP. Bangladesh does not have necessary resources to develop many important infrastructures, the lack of which has been hurting the pace of its economic growth. The PPP, not a conventional way of project implementation, remains a viable answer to that problem.
The inclusion of PPP in the budget for the fiscal 2009-10 without a guideline for its execution was an act of putting the cart before the horse. In near about four years, a few guidelines relevant to investment under the PPP have been made available. But the response from the private sector has not been encouraging.
Historically, Bangladesh has been dependent on the donors' assistance as far as execution of large and key infrastructure projects is concerned. For reasons of economic developments in major donor countries and aid utilization performance at home, not only the inflow of external aid has dwindled but also the donors have started demonstrating increased rigidity in making available all forms of assistance.
In such a situation, involvement of the private sector that has emerged as the key driver of the country's economic growth in building some major infrastructure and service sector projects is essential. A good number of countries have already successfully used the PPP concept in developing their key infrastructures.
Officials at the ministry of finance tend to list the Mayor Hanif Jatarabari-Gulistan Flyover project as a PPP project though it was not conceived originally in that way.
Though the government is yet to adopt the PPP law, it has already put in place a few guidelines facilitating investment under the concept and created a Tk 3.0 billion fund called the Viability Gap Financing (VGF). Besides, a PPP office under the control of the Prime Minister's Office (PMO) has been set up. The PPP office is entrusted with the responsibility of selecting projects and overseeing those after their completion.
Despite the fact that some prospective private sector investors do cite the absence of PPP law as reasons for poor response from the private sector to the concept, knowledgeable circles feel that the local private sector investors would not be interested in PPP projects unless they are assured of a very attractive return on their investment and removal of all the impediments they usually face while carrying out their business and investment activities.
However, it will be an important task on the part of the PPP issue to take note of the greed factor of the private parties willing to be its partner. Otherwise, the government might face problems later and could be a target of public criticism. The Mayor Hanif Flyover project remains a glaring example.
The private builder of the flyover project, implemented under BOT (Build, Operate and Transfer) concept, has been allegedly charging fees on the vehicles more than what was agreed in contract with the Dhaka South City Corporation.
The government would have to keep the interest of the citizens above everything. Just for getting a project done under the PPP concept ignoring its impact on the end-users could prove very costly for the government in the ultimate analysis.
The policymakers concerned should try to know about the experience with the PPP projects in neighbouring India. India has already implemented a number of large projects, particularly in the road sector, under the PPP. And to gather such experience the officials will not be required to go to India and any other country in the age of internet.
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