PPPA secures $5.0b deals to develop infrastructure

74 projects up for investment, its CEO tells the FE

FHM Humayan Kabir | Saturday, 14 December 2019

The Public Private Partnership Authority (PPPA) has signed 16 contracts worth $5.0 billion with local and foreign investors to develop Bangladesh's infrastructure and social services.
"We have lined up 74 projects involving $25.0 billion for investment under PPP arrangement. Among them, 16 contracts worth $5.0 billion have already been inked," said Chief Executive Officer (CEO) of PPP Authority Muhammad Alkama Siddiqui.
In an interview with the FE, Mr Siddiqui also said they had opened the door with lucrative facilities for local and overseas private-sector companies to invest together with the government of Bangladesh.
"We are trying our best to address all the challenges facing the private parties who want to invest with the government in Bangladesh for developing infrastructure and improving social services here," he added.
The PPPA CEO said they had provided all-out cooperation to the private-sector investors so that they could get long-term financing from any internal lenders.
"We will help the investors get all documents and papers. And we will also provide them with security of returns on their investments. The government in the national budget allocated a huge amount of viability gap fund for securing investment returns," he added.
"Any of local and overseas companies is welcome to discuss any of their investment proposals. My door is open for them," he told the FE.
The CEO said the PPPA had also created opportunities for lending partners of investors to sit with them for discussion on security of investments in Bangladesh.
The PPP office in Bangladesh started its journey in 2010 and become an Authority in 2015 under an act.
The PPP Authority is trying to promote opportunities for investments through the PPP paradigm as Bangladesh needs to develop its infrastructure and improve health, education and other social services.
When asked about the necessity of the PPP model in Bangladesh, Mr Siddiqui said: "Bangladesh is a developing country. It still lacks funds for developing all necessary infrastructures and social services. So, PPP is one of the best options for the country."
"For example, if we appoint a private company for constructing a road, it will mobilise necessary funds for executing the project. The government will also have equity as it will provide lands and other facilities to the private company."
"When road construction will be completed, the private party will have operating authority. It will collect road toll from the vehicles for getting its financial returns. After a certain period, it will hand over the entire road to the government. Then, it will be a fully public property," he added.
When asked about the challenges facing the PPP Authority, the CEO replied that most of the challenges and obstacles had already been removed. "But there are still some challenges for us."
The lack of capacity within the government agencies and their unwillingness to utilise the PPP framework are still key challenges, he said.
Besides, Bangladesh's poor credit rating and ranking at the World Bank's "Ease of Doing Business Index" were also setbacks in attracting private investments from overseas companies, he said.
Since the country's credit rating was not up to the mark, loans from the international market for the investors become costly which had a negative impact on the growth of the PPP project implementation, he added.
He had also identified absence of bond market and advanced insurance product as some other factors standing in the way to the expansion of the PPP investment paradigm in Bangladesh.
Mr Siddiqui, however, said they were trying to overcome the challenges through bilateral discussion, motivation, and advocacy among different parties, including aspirant investors and government agencies.
"As the government agencies are the main party from the government side for any of the projects, they have to be convinced first about returns on the investment with the private sector."
He added: "We were arranging different workshops, discussions with several ministries and agencies of the government to inform them about best practices and outcomes from the PPP model."
The PPPA CEO said, "You see, many countries in the world, including India, Malaysia, China, USA, and some European nations implemented a lot of projects and programmes through PPP model. They are now getting better benefits."
Mr Siddiqui said Bangladesh needs huge investments for achieving the targets of Vision 2021 and Vision 2041.
The PPP model was one of the best options for achieving our targets to become a developed nation by 2041 as well as attaining Sustainable Development Goals (SDGs) by 2030, he added.
According to the CEO, construction of Dhaka Elevated Expressway, Jhilmil township, Hi-Tech park development (blocks 2 & 5), Hi-Tech park development (block 3) and Mongla port jetty are going on under PPP arrangements.
Kidney dialysis centres at the National Institute of Kidney Diseases and Urology (NIKDU), Dhaka and at Chattogram Medical College Hospital have already been set up under PPP arrangement, he mentioned.
Some other big projects, including MRT line 2, Payra Port container terminal, Payra port coal terminal, 2nd Padma Bridge, outer ring road around Dhaka city, inland container terminal at Dhirassram, Dhaka-Chattogram expressway, Mongla economic zone, Mirsarai economic zone and Cox's Bazar entertainment village are in the pipeline for implementation under PPP arrangements.
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