Bangladesh: Public-Private Partnership Program Operationalization

Sovereign Project | 44316-012

Summary

The objective of the TA program is to operationalize the comprehensive public-private partnership (PPP) framework approved in August 2010 by the Government of Bangladesh. The proposed TA is the first phase of an envisaged long-term TA program. In Phase 1, the TA will provide support to operationalize two coordinating offices: (1) Office for PPP (PPPO), and (2) the Ministry of Finance PPP unit (MOF PPP Unit).

Latest Project Documents


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Public-Private Partnership Program Operationalization
Project Number 44316-012
Country Bangladesh
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7691-BAN: Public-Private Partnership Program Operationalization
Technical Assistance Special Fund US$ 1.00 million
TA 7691-BAN: Public-Private Partnership Program Operationalization (Supplementary)
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector Education - Education sector development
Energy - Energy sector development and institutional reform
Finance - Finance sector development - Infrastructure finance and investment funds
Public sector management - Public expenditure and fiscal management
Transport - Transport policies and institutional development
Water and other urban infrastructure and services - Other urban services
Gender Equity and Mainstreaming No gender elements
Description

The objective of the TA program is to operationalize the comprehensive public-private partnership (PPP) framework approved in August 2010 by the Government of Bangladesh. The proposed TA is the first phase of an envisaged long-term TA program. In Phase 1, the TA will provide support to operationalize two coordinating offices: (1) Office for PPP (PPPO), and (2) the Ministry of Finance PPP unit (MOF PPP Unit).

PPPO: Support for the PPPO will help to operationalize a professionally-staffed entity established under the Prime Minister's Office tasked with providing lifecycle support to PPP infrastructure projects by (a) screening candidate projects promoted by line ministries for PPP eligibility, (b) undertaking preliminary development of qualifying PPP projects to prepare them for international competitive bidding, (c) developing, implementing and managing the bidding and procurement process through tendering, evaluation and selection, (d) supporting negotiations with successful bidders on behalf of line ministries and supporting projects in achieving financial close, and (e) providing guidance on project implementation monitoring, oversight, and, if necessary, support for arbitration, through construction and into operations to assure compliance with agreed concession arrangements.

MOF PPP Unit: Support to the MOF PPP Unit will create a PPP fiscal oversight office within the Ministry of Finance charged with (a) assessing the financial viability of PPP projects proposed by the PPPO; (b) approving access to a government-sponsored PPP technical assistance fund (PPPTAF) and viability gap fund (VGF) to support, respectively, preliminary project development under the auspices of the PPPO and bridging financial viability gaps for economically justified projects; and (c) quantifying, forecasting and managing risk exposures incurred by the GOB under PPP infrastructure. The TA will also specify web-enabled processing and communication tools for the PPPO and GOB in relation to PPP and specify a management information system (MIS) linking PPP development activities with the MOF PPP Unit. The work under this TA is classified as Phase 1.

Under a proposed Phase 2, the tools, processes, procedures and institutions developed under Phase 1 will be applied to 'live' PPP projects, supported by continuous engagement with professional advisors and on-going capacity development amongst PPP professionals, the PPP institutions and the sector line ministries. The currently proposed TA budget addresses Phase 1 only. Detailed scope and budget for subsequent phases is being prepared by ADB in consultation with GOB.

A supplementary grant for the TA in the amount of $225,000 was approved on 14 December 2012. The additional work to be carried out under the TA is to directly address the Government's request to ADB to provide continued support to customize implementation rules under the draft PPP law and provide guidance in application of the policies and procedures developed under the TA to the PPP institutions and the relevant implementing agencies those institutions support.

Project Rationale and Linkage to Country/Regional Strategy

Bangladesh suffers from chronic underdevelopment of key infrastructure that slows economic development and negatively impacts poverty alleviation, health and public service issues.

The public sector has traditionally been relied upon to develop, deliver and maintain infrastructure with rare exception. Lack of needed project design and preparation, inconsistent bidding processes, and poor project implementation and management compounded by chronic shortage of funding have led to under-performance against targets set under the Annual Development Plan. Tariff rates and tax and non-tax fee support is widely below cost of service across nearly all infrastructure sectors. While the Government has sought to increase the involvement of and the number of private sector participants in infrastructure sectors, the aforementioned factors raise caution amongst interested parties.

Bangladesh's previous PPP infrastructure development program had not delivered a significant volume of needed projects, and poor procurement performance has held back expanded use of this investment modality. Government entities have tended to take an ad hoc approach to PPP projects, often focusing solely on technical matters at the expense of equally critical commercial, legal, and financial constructs. As a result, bidding processes have suffered from lack of proper preparation compounded by skewed risk allocations in the bid documents and leading to low levels of bidder interest, inconsistent bidding outcomes, and allegations of mis-procurement. Such results can result in driving serious value-added infrastructure participants away from the market. A revised approach to development, bidding and management of PPP infrastructure is required to create a robust and dependable approach to privately-invested infrastructure development and to regain stakeholder confidence.

In 2010, GoB sought to address the identified weakness in its infrastructure development program by making PPP a national priority by passing a series of comprehensive policy and support measures:

i) Adoption of the Policy and Strategy for Public-Private Partnership (PPP), 2010 (the PPP Guidelines) governing PPP infrastructure development and procurement for small, medium and large project activities (August 2010)

ii) A decision to establish a PPP Office within the Prime Minister's Office (PMO) (September 2010)

iii) Incorporation of the Bangladesh Infrastructure Finance Fund (BIFF) Limited to provide co-financing to PPP infrastructure investments with Tk 16 billion in capital (March 2011)

iv) Allocation of significant budget amounts in the FY 2011 and FY2012 budgets to support the above activities comprised of:

a. Tk 16 billion (~US$ 200m) for BIFF (June 2010)

b. Tk 1 billion to seed a Technical Assistance Fund, under management of the PPPO

c. Tk 26 billion to establish a Viability Gap Facility under management of the MOF PPP Unit

The GOB has chosen to house the PPPO within the PMO in order to provide a higher level of impetus to implementing a sustainable operational structure for the new PPP Guidelines. This is backed with sufficient financial resources to jump-start the PPP program nationally.

To support implementation of the above elements of the GOBs PPP program, the GOB has requested ADB to provide TA support for comprehensive, holistic assistance across key government ministries and to help GOB in developing implementing the policies and procedures needed to fully operationalize the PPP program. Through operationalizing the GOBs PPP Guidelines, the envisaged TA seeks to put in place the people, policies and operating procedures that will address past shortcomings in PPP infrastructure development, promote greater development efficiency of such projects, and facilitate the broader delivery of PPP infrastructure in Bangladesh.

Impact GOBs ability to identify, structure, tender and close on privately invested and/or owned and operated infrastructure and infrastructure services is improved.
Project Outcome
Description of Outcome PPP Office and MOF PPP Unit operational
Progress Toward Outcome

Government has appointed a professionally experienced Chief Executive Officer for the PPP Office from the private sector. The PPP Office operates out of a commercial office complex located in a key commercial business district. The PPP Office has approached its full complement of staff and has begun ordinary business operations. Applying the screening criteria developed under the TA, the PPP Office has identified a number of PPP pilot projects and has received In-Principle Approval from the Cabinet Committee on Economic Affairs to pursue further development of a subset of these projects.

The MOF PPP Unit operates separately and independently from the PPP Office, fulfilling its check-and-balance' function looking after fiscal viability of PPP projects. The government has successfully sanctioned its PPP investment support vehicles Viability Gap Fund, PPP Technical Assistance Fund and Bangladesh Infrastructure Finance Fund. The Government has capitalized each of the fund vehicles with public funds. The MOF PPP Unit has transferred day-to-day operating responsibility of the PPPTAF to the PPP Office which is now being used to procure professional consultants and advisors to further develop the approved pilot PPP projects.

Implementation Progress
Description of Project Outputs

Institutional arrangements for PPP in Bangladesh agreed

Organizational arrangements for PPP agreed

PPP TA support implemented to schedule and on budget

Status of Implementation Progress (Outputs, Activities, and Issues)

The PPP Office and MOF PPP Unit have been formally constituted and are fully operational. At the Government's request, the TA project team has drafted a national PPP Law to further strengthen institutional and operational arrangements of the respective offices and the policies and processes they administer under the national PPP program. The Draft PPP Law was extensively reviewed by stakeholders, including in inter-ministerial meetings, translated into Bangla as required under GOB procedures, and has now been approved by the Cabinet. It awaits enactment by Parliament.

The organizational structure for both implementing agencies has been agreed and adopted by government. The processes, procedures and policies governing MOF PPP Unit operations have been drafted, approved and adopted.

The processes, procedures and policies governing the PPP Office, and, by extension, the operations of the national PPP program have been finalized and have been presented to the Cabinet Committee on Economic Affairs for sanctioning. These measures, however, are already being applied under the gazetted authorities of the PPP Offices.

The deliverables under the PPP TA project were delivered according to the elapsed time schedule envisioned and under budget.

The Government requested ADB to extend its support under TA-7691 to 31 December 2013 in order to receive needed support to evolve practical implementing rules for selected processes under the PPP policy.

Activities have been initiated to financially close the TA.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The TA team has consulted with the following entities specifically in preparation of this proposal:

- Prime Minister's Office - scope of work and specifications for PPP Office

- Ministry of Finance, Finance Division - scope of work and specifications for MOF PPP Unit, BIFF

- Bangladesh Bank - scope and nature of BIFF

- Economic Relations Division - review of entire TA program

- Infrastructure Investment Facilitation Center - role in supporting operating PPP Office

- RSA Capital - consultations on BIFF

The Team has held informal discussions with the following government entities regarding projects they have designed and sought to implement, challenges they have encountered, and desires for the future:

- Bangladesh Bridge Authority

- Ministry of Communications

- Ministry of Local Government

- Power Division, Ministry of Power, Energy and Mineral Resources

The Team has also held informal discussions with the following regarding their experience with and their assessment of the conditions of private sector initiatives in infrastructure within Bangladesh. contacts in the private sector, with particular focus amongst prospective project developers

- Dhaka Chamber of Commerce and Industry

- Foreign Investors' Chamber of Commerce and Industry

- American Chamber of Commerce in Bangladesh

- Asia Foundation, Bangladesh

- The World Bank, Bangladesh country office

- Project developers in power and transportation (preferred to remain anonymous)

During Project Implementation

At the Implementing Agencies' request, the TA team launched a comprehensive stakeholder outreach program designed to solicit the maximum feedback and input from concerned stakeholders. To date, more than 30 Government ministries and departments have been consulted, including both senior and subordinate members of those government bodies.

Consultations with the private sector have also been conducted, including five domestic chambers of commerce and industry and five bilateral foreign chambers of commerce as well as individual financial institutions, domestic and foreign companies. The PPP Office and ADB have supported dialogue on the PPP program through participation in chamber of commerce events, media releases and focus group consultations. In December 2012, a Global PPP Investors' Forum was held in Dhaka, chaired by the Honorable Prime Minister. Pilot PPP projects were debuted to investors during the event. The event attracted over 650 public and private participants and built a global profile for the Bangladesh PPP program.

Through coordination with ADB, outreach has been maintained to ADB development partners of multilateral and bilateral development agencies active in Bangladesh.

Business Opportunities
Consulting Services

International expertise (four consultants, 21 person-months) will be required in the areas of PPP commercial and/or financial advisory, legal, technical, environmental, and social safeguards. The national consultants (five for 23 person-months) will have expertise in finance, infrastructure policy, legal, and information technology. ADB will engage the consultants in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time).

Under the enhanced scope of the TA, 2 international consultants and 3 national consultants, will be recruited on an individual basis, totaling 13 person-months of consulting services.

Responsible ADB Officer Lise Weidner
Responsible ADB Department South Asia Department
Responsible ADB Division Office of the Director General, SARD
Executing Agencies
Prime Minister's OfficeBangladesh
Timetable
Concept Clearance 22 Nov 2010
Fact Finding 06 Dec 2010 to 09 Dec 2010
MRM -
Approval 06 Dec 2010
Last Review Mission -
Last PDS Update 25 Mar 2014

TA 7691-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
06 Dec 2010 21 Dec 2010 21 Dec 2010 30 Jun 2011 31 Dec 2013 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,225,000.00 0.00 200,000.00 0.00 0.00 0.00 1,425,000.00 06 Dec 2010 988,490.30

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.