This video defines State-Owned Enterprises (SOEs) and guides borrowers on how to assess their viability to participate as bidders under ADB funded projects.
How can a state-owned enterprise be eligible to bid for ADB projects?
A state-owned enterprise, or SOE, is an entity in which a state or government exercises ownership or control.
To become eligible, an SOE must be able to prove (i) that it can operate as a commercial entity, (ii) that it is legally and financially autonomous, and (iii) that it is not a dependent agency of the borrower.
How can borrowers secure ADB approval for SOEs?
Proper assessment of an SOE’s eligibility helps ensure a level playing field with private sector bidders, in line with ADB’s principles of Fairness and Transparency.
If the borrower determines that an SOE bidder meets these criteria, it must secure a no-objection from ADB regardless of the contract value or whether prior review or post review (sampling) is being applied.
How are SOE bidders different from private sector bidders?
An SOE may have an unfair advantage through access to information not available to private sector bidders, or due to direct or indirect subsidies, grants, or other benefits.
It is important to verify eligibility as there could be potential for conflict of interest if the state has direct ownership or control of an SOE.
ADB’s guidance note describes in more detail the requirements to establish the eligibility of SOEs to participate in the bidding for goods, works, consulting services, and non-consulting services funded through ADB’s sovereign lending operations.