Infrastructure projects funded by ADB
What types of private sector infrastructure projects does ADB support? And how can they reduce poverty in developing nations? Check out these brief case studies as examples.
Phy My 2.2 Power Project (2002)
Features of the Phy My 2.2 Power Project
- A 715-megawatt gas-fired combined cycle power plant and part of Viet Nam's least cost power development plan.
- Viet Nam's first privately sponsored power project awarded on a build-operate-transfer (BOT) and an international competitive bidding basis.
- Located in a five-plant power generation complex about 75 kilometers from
Ho Chi Minh City.
- Presents an environmentally friendly solution to electrification.
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The Phy My 2.2 Power Project is ADB's first private sector power project in
Viet Nam and involves ADB's first use of the political risk guarantee with ADB
serving as guarantor of record. The project is expected to improve governance
in the power sector through promotion of best practices and effective mnagement
of public-private partnerships. It won "Project Finance Deal of the Year 2002"
from five prestigious international publications.
Cost: $480 million
ADB assistance: US$50 million loan without government guarantee
US$25
million political risk guarantee cover
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North Luzon Expressway Rehabilitation and Expansion (2000)
Features of the North Luzon Expressway Project
- Will upgrade 84 narrow, neglected, congested kilometers.
- Location: the North Luzon Expressway, one of the Philippines' main road arteries.
- Spurs development of central and northern Luzon.
- Helps decentralize economic activities from Metro Manila.
- Supports the government thrust to develop the national road network.
- Structured as a public-private partnership.
- In 2030, expressway will be transferred to the government without cost.
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The Project is being undertaken by the Manila North Tollways Corporation (MNTC) on a rehabilitate-operate-transfer basis. MNTC is a limited liability company with three joint owners:
- the First Philippine Infrastructure Development Corporation, a major private infrastructure development firm
- Egis Projects, a unit of the largest French tollway operator
- Philippine National Construction Corporation, a government controlled company that held the original franchise to construct and operate the expressway.
Cost: US$377 million
ADB assistance: US$45 million loan without government guarantee;
US$25 million complementary financing scheme.
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Meghnaghat Power Project (2000)
Features of the Meghnaghat Power Project
- A 450-MW gas-fired combined-cycle power plant, the largest in Bangladesh.
- Site: northern bank of the Meghna River, 20 kilometers from the capital city of Dhaka.
- More reliable power supply to agriculture and industry, reducing power shortages.
- Cheaper electricity for the people.
- ADB provided technical assistance for feasibility study and engineering design.
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The Meghnaghat Power Project is the first power-generating plant to be financed by the private sector in Bangladesh. Sponsorship of this BOT project was won by AES Corporation, a leading independent power producer based in the United States. ADB played a lead role in the international competitive bidding process.
Cost: US$300 million
ADB assistance: US$50 million loan without government guarantee;
US$70 million political risk guarantee cover; US$20 million complementary financing scheme.
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Kelanitissa Power Project (2000)
Features of the Kelanitissa Power Project
- A 163 MW diesel-based combined cycle power generating plant, located within Ceylon Electricity Board's existing Kelanitissa power station premises in Colombo, Sri Lanka.
- Build, own and operate for 20-year concession period.
- Will be transferred to the Government of Sri Lanka after 20-year concession period.
- International competitive bidding produced a reasonable tariff of 6.07 cents/kWh.
- The state-owned Ceylon Petroleum Corporation will supply diesel oil to the plant.
- Will increase Sri Lanka's power supply and minimize cost of power shortages.
- Will minimize Sri Lanka's reliance on hydropower (and variable rainfall).
- Will rapidly expand consumer access to reliable and affordable power.
- Will improve the power sector's governance in Sri Lanka.
- Frees government funds to meet financing requirements in the social sectors.
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Sri Lanka's power system has been stretched to its limits, causing widespread power shortages. The new plant will immediately generate a significant new amount of energy to the Ceylon Energy Board system and minimize the cost of power shortages. Reduced costs will increase both production and industrial employment.
Cost: US$104 million
ADB Assistance: US$26.0 million loan without government guarantee;
US$52.0 million political risk guarantee.
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Chengdu Water Project (1999)
Features of ADB's model finance deal
- As the first BOT water supply project in the PRC, the project serves as a model for future replication.
- The basic elements of transparent bidding were observed.
- The lowest feasible tariff was obtained.
- Project fundamentals, such as tariff increases to enable cost recovery, were put in place.
- Showed that BOT structure can be implemented at the municipal level.
- Showed that BOTs can be funded externally without any central government guarantee.
- We gave technical assistance to the Chengdu Municipal Government.
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The Chengdu Water Project will provide bulk supply of treated water to the capital city of Sichuan Province in the People's Republic of China (PRC). Chengdu is the second largest city in southwest PRC, and has serious water shortages. With an 18 year contract, Vivendi from France and Marubeni Corporation from Japan will jointly construct a water treatment plant with:
- a capacity of 400,000 cubic meters per day
- two water intakes
- a 27-kilometer transmission pipeline to the city.
The Chengdu water plant in construction.
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Finance deal of the year
This project won three awards for excellence in project finance in 1999:
- "Infrastructure Deal of the Year" by the London-based Project Finance International
- "Project Finance Deal of the Year" by the Hong Kong-based Financial Intelligence Agency
- "Project Finance Deal of the Year" by the International Financial Law Review
ADB took the lead in creating an innovative financing structure. This allowed international lenders to take long-term municipal risk in the People's Republic of China for the first time.
Cost: US$106.5 million
ADB Assistance:US$26.5 million loan without government guarantee;
US$21.5 million complementary financing scheme.
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GrameenPhone Project (1998)
This project created a nationwide cellular telephone system and village pay telephone network in the rural areas. It's a joint venture between a Norwegian telephone operator and a telecommunications company controlled by Grameen Bank of Bangladesh.
A state-of-the-art 1,800 kilometers fibre-optic transmission system is leased from the Bangladesh Railways. The network covers almost the entire country.
The key innovative aspect of the Project is the inclusion of village pay telephones (VPTs). This allowed many villagers to have access to telephone services for the first time, providing a sound business opportunity, particularly for women entrepreneurs.
Village pay phones provide business opportunities, particularly for women entrepreneurs.
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University of Bonn findings: phones empower the poor
sample: 50 villages surrounding Dhaka city
- Each of the 3,000 operational Village Pay Telephones (VPTs) served 1,500-2,000 people.
- About half a million people had access to telephone services for the first time.
- 15 percent of the users are poor. The poor made 25 percent of the VPT calls.
- 10 percent of VPT calls were seeking health services.
- 35 percent of the VPT calls sampled were for family and personal purposes.
- VPTs use increased real income, through higher productivity and fair commodity pricing.
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Cost: US$167 million.
ADB Assistance: US$16.7 million loan without government guarantee;
US$1.6 million equity investment.
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