Bangladesh: Public-Private Infrastructure Development Facility (PPIDF)

Sovereign Project | 40517-013 Status: Active

Summary

The Public-Private Infrastructure Development Facility (PPIDF) includes and $82 million loan from ADB's ordinary capital resources (OCR), an $83 million equivalent loan from ADB's special funds resources and a technical assistance grant of $500,000 for capacity building and supporting project implementation.

Component A will use ADB's OCR funds of $82 million to provide financing to the Government of Bangladesh for relending to the Infrastructure Development Company Limited (IDCOL) to finance private sector-sponsored large infrastructure subprojects with a subproject size of more than $30 million.

Component B will provide ADF support of $50 million equivalent to the Government for relending in local currency to IDCOL to finance small and medium-sized infrastructure subprojects primarily located in rural and semiurban areas, especially in the energy sector.

Latest Project Documents

Consulting Notices See also: CMS

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Procurement Documents

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Project Name Public-Private Infrastructure Development Facility (PPIDF)
Project Number 40517-013
Country Bangladesh
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2453-BAN: Public-Private Infrastructure Development Facility (PPIDF)
Asian Development Fund US$ 83.00 million
Loan 2454-BAN: Public-Private Infrastructure Development Facility (PPIDF)
Ordinary capital resources US$ 82.00 million
Loan: Public-Private Infrastructure Development Facility (PPIDF)
Islamic Development Bank US$ 100.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Finance - Infrastructure finance and investment funds

Gender Equity and Mainstreaming No gender elements
Description

The Public-Private Infrastructure Development Facility (PPIDF) includes and $82 million loan from ADB's ordinary capital resources (OCR), an $83 million equivalent loan from ADB's special funds resources and a technical assistance grant of $500,000 for capacity building and supporting project implementation.

Component A will use ADB's OCR funds of $82 million to provide financing to the Government of Bangladesh for relending to the Infrastructure Development Company Limited (IDCOL) to finance private sector-sponsored large infrastructure subprojects with a subproject size of more than $30 million.

Component B will provide ADF support of $50 million equivalent to the Government for relending in local currency to IDCOL to finance small and medium-sized infrastructure subprojects primarily located in rural and semiurban areas, especially in the energy sector.

Component C will provide ADB funding of $33 million equivalent for the purpose of promoting renewable energy systems in Bangladesh. IDCOL will finance the set-up of renewable energy systems such as solar home systems and/or biomass installations through a microfinance-based, direct sales program.

Project Rationale and Linkage to Country/Regional Strategy The PPIDF will directly support the Government's infrastructure development agenda by providing long-term funds for infrastructure financing. With ADB's assistance through the facility, IDCOL will be able to provide funds at commercial terms with maturity of more than 20 years for infrastructure subprojects, which are otherwise currently not available in the market.
Impact Improved per capita infrastructure availability

Project Outcome

Description of Outcome Enhanced private sector participation in infrastructure development
Progress Toward Outcome

1) 1 medium-sized subproject with private financing of at least $30 million each by 2013

Component B: PPIDF disbursed $3.6 million to a broadband wireless access network subproject having private financing of $43.9 million. Additionally, this component funded $1.4 million for setting up a nationwide telecommunication transmission network, with a total project cost of $14.5 million.

2) At least 200,000 solar energy home systems, 15 biomass power plants, and 100 biogas power plants installed by the private sector by 2013

PPIDF financed installation of 349,199 solar home systems (SHS) in remote off-grid rural areas of Bangladesh.

3) 3 large subprojects with private financing of at least $100 million each by 2013

ADB approved three subprojects where ADB share is $82 million (Component A):

(i) 108 MW power plant: $30 million

(ii) 108 MW power plant: $30 million

(iii) 335 MW power plant: $22 million

4) Reduction of at least 258,750 tons of CO2 emissions at the end of project period (5 years)

ADB-financed SHSs are expected to reduce carbon dioxide emissions by 161,443 tons each year. Over a five year period, the SHSs would reduce 807,214 tons of carbon dioxide emissions.

Implementation Progress
Description of Project Outputs

1. Improved lending terms of IDCOL for infrastructure subprojects

2. Improved ability of IDCOL to mobilize long-term capital

3. Enhanced governance at IDCOL

4. Enhanced capacity for application of environmental and social safeguards standards

5. Enhanced efficiency of IDCOL in developing and financing infrastructure subprojects

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

1a) Increase in tenor of available financing provided by IDCOL to 25 years by 2013

As per current lending policy of IDCOL, maximum tenor is 15 years including a maximum grace period of 3 years.

1b) Reduction in average borrowing costs by 20% for IDCOL by 2013

IDCOL reduced its weighted average borrowing cost from 3.29% in FY2011 to 2.93% in FY2015 (a reduction of 10.9%).

2a) Issuance of at least 2 debt market instruments by IDCOL by 2013

IDCOL is yet to issue debt instruments.

2b) At least 5 syndications by IDCOL for the financing of infrastructure subprojects by 2013

IDCOL has arranged syndicated loans for 8 infrastructure subprojects 4 power subprojects, 2 central effluent treatment plants, 1 land port and 1 ICT infrastructure. IDCOL co-arranged 3 additional subprojects in power and telecommunications sectors.

3a) Improved local credit rating of IDCOL from AA to AAA by 2009

In 2015, IDCOL has obtained AAA rating by a local credit rating agency and this rating has been sustained until now.

3b) IDCOL obtains a credit rating from an internationally accepted agency in 2010

IDCOL will consider obtaining credit rating from an internationally accepted agency once it intends to raise additional funds from the international capital market.

4a) ESSF reports from 2008 onwards

ESSF has been updated and posted on IDCOL's website since 2012.

4b) Year-on-year increase in number of subprojects assessed for compliance under ESSF by 10% annually

IDCOL has applied the ESSF for all its subprojects under PPIDF.

5a) Reduction in processing time for new proposals from 6 months to 4 months by 2010

The processing time, among other things, depends on the complexity of projects and scope of due diligence required. For the three large subprojects financed under PPIDF, the average processing time (i.e. from the date IDCOL received proposal to IDCOL Board approval) was approximately 12 months, on average. While processing time for smaller projects or projects funded using IDCOL's own resources are often within 4 months.

Geographical Location Bangladesh

Safeguard Categories

Environment FI
Involuntary Resettlement A
Indigenous Peoples A

Summary of Environmental and Social Aspects

Environmental Aspects The Project is classified as category FI (Financial Intermediaries) in accordance with ADB's Environment Policy (2002). An environmental and social safeguards framework was developed to assist in the environmental and social safeguards assessment of subprojects during implementaion of the Project and to ensure compliance with all relevant ADB policies.
Involuntary Resettlement Involuntary resettlement has significant impact. A resettlement framework has been developed as part of the environmental and social safeguards framework to guide the resettlement assessment of subprojects during the implementation of PPIDF. Based on the framework, appropriate resettlement plans were prepared for each subproject having resettlement impacts.
Indigenous Peoples Impact on indigenous peoples is also significant. A social safeguard framework covers the basic requirement of screening and planning to address any tribal (indigenous) population issues arising from any subproject. Appropriate tribal peoples development plans were prepared for each subproject having any impacts.
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultation meetings were held with the Finance Division of the Ministry of Finance (the executing agency), IDCOL (the implementing agency), Bangladesh Bank, Ministry of Finance, and the private sector. Furthermore, on-site due diligence was conducted with sponsors of large infrastructure subprojects and participating organizations under IDCOL's renewable energy program.
During Project Implementation Periodical meetings, review missions, follow-up are being carried out during project implementation. All activities under the loans have been completed.

Business Opportunities

Consulting Services n/a
Procurement

For subprojects to be financed out of component A, IDCOL will required its sub-borrowers to adopt internationally competitive bidding procedures in accordance with ADB's Procurement Guidelines as amended from time to time, and the Government's guidelines, policies, and regulations.

For subprojects to be financed out of components B and C, ADB will encourage IDCOL to require its sub-borrowers to adopt international competitive bidding procedures in accordance with ADB Procurement Guidelines as amended from time to time when the amount of the investment is unusually large and economy and efficiency can be gained by such procedures.

For procurement of goods and services to be financed by subloans out of the loan proceeds, the sub-borrower will ensure, and certify to ADB if requested, that goods and services obtained are suitable for the subloans, that the price paid is least-cost, and that account is taken of factors such as time of delivery, efficiency, and the reliability of goods.

For build-operate-transfer subprojects and variants, if the subproject sponsor or engineering, procurement, and construction contractor is selected through competitive bidding amount international entities in accordance with procedures acceptable to ADB, such subproject sponsore or contractor may apply its own procedures for procurement provided that such procurement is for goods, services, and works supplied from, or produced in, ADB member countries. Moreover, such subproject sponsors or contractors must only be nationals of ADB member countries.

Responsible Staff

Responsible ADB Officer Bidyut Saha
Responsible ADB Department South Asia Department
Responsible ADB Division Bangladesh Resident Mission
Executing Agencies
Finance Division, MOF (EA)
Bangladesh Secretariat, Dhaka-1000
Bangladesh
Ministry of Finance
Md. Aminul Islam Bhuiyan
Sher-e Bangla Nagar, Dhaka, Bangladesh

Timetable

Concept Clearance 02 May 2007
Fact Finding 22 Oct 2007 to 26 Oct 2007
MRM 22 May 2008
Approval 02 Oct 2008
Last Review Mission -
PDS Creation Date 08 Jun 2007
Last PDS Update 11 Sep 2016

Loan 2453-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Oct 2008 21 Oct 2008 24 Feb 2009 31 Dec 2013 - 21 Jul 2014
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 183.00 Cumulative Contract Awards
ADB 83.00 02 Oct 2008 81.64 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 100.00 02 Oct 2008 81.64 0.00 100%

Loan 2454-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Oct 2008 21 Oct 2008 24 Feb 2009 31 Dec 2013 31 Dec 2014 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 82.00 Cumulative Contract Awards
ADB 82.00 02 Oct 2008 82.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 02 Oct 2008 82.00 0.00 100%

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

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