Bangladesh: Third Public-Private Infrastructure Development Facility

Sovereign Project | 42180-016

The Third Public-Private Infrastructure Development Facility (PPIDF 3) is a continuation of the work carried out under the Public-Private Infrastructure Development Facility (PPIDF 1) and the Second Public-Private Infrastructure Development Facility (PPIDF 2) in addressing the infrastructure deficiencies in Bangladesh. Through the two earlier interventions, ADB has provided long-term debt financing and catalyzed private sector participation through the implementing agency, i.e. Infrastructure Development Company Limited (IDCOL) which substantially contributed to economic growth in the country. The design of the project serves to catalyze commercial financing for public-private partnership (PPP) projects, thereby reducing the pressure of direct financing on the public budget.

Project Details

  • Project Officer
    Al Hasan, Mohammad Rashed
    South Asia Department
    Request for information
  • Country/Economy
    Bangladesh
  • Modality
    • Loan
    • Technical Assistance
  • Sector
    • Finance
Project Name Third Public-Private Infrastructure Development Facility
Project Number 42180-016
Country / Economy Bangladesh
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
MFF Facility Concept 0100-BAN: Third Public-Private Infrastructure Development Facility
Ordinary capital resources US$ 500.00 million
Concessional ordinary capital resources lending US$ 26.00 million
TA 9344-BAN: Capacity Development in Infrastructure Development Company Limited
Financial Sector Development Partnership Special Fund US$ 750,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Partnerships
Private sector development
Sector / Subsector

Finance / Infrastructure finance and investment funds

Gender Equity and Mainstreaming Some gender elements
Description The Third Public-Private Infrastructure Development Facility (PPIDF 3) is a continuation of the work carried out under the Public-Private Infrastructure Development Facility (PPIDF 1) and the Second Public-Private Infrastructure Development Facility (PPIDF 2) in addressing the infrastructure deficiencies in Bangladesh. Through the two earlier interventions, ADB has provided long-term debt financing and catalyzed private sector participation through the implementing agency, i.e. Infrastructure Development Company Limited (IDCOL) which substantially contributed to economic growth in the country. The design of the project serves to catalyze commercial financing for public-private partnership (PPP) projects, thereby reducing the pressure of direct financing on the public budget. An additional objective of the facility is to help provide the rural population and small to medium enterprises with clean and affordable electricity either through grid-connected or off-grid energy efficiency and renewable energy solutions. Solar home systems (SHSs) will not be financed under PPIDF 3 given the market saturation and availability of funding from partner donors.
Project Rationale and Linkage to Country/Regional Strategy A key design element of the proposed Third Public-Private Infrastructure Development Facility (PPIDF 3) is the introduction of the multitranche financing facility (MFF) financial intermediary (FI) lending modality. The MFF-FI modality is particularly well suited for FI interventions which provide long-term funding to public-private partnership (PPP) infrastructure projects. These PPP interventions are typically developed in a phased manner based on project implementation requirements. The MFF modality allows the borrower, Infrastructure Development Company Limited (IDCOL), to onlend financing for subprojects based on readiness criteria including finalization of risk-sharing arrangements, readiness of engineering procurement and construction, and phased release of equity. The disbursement to a subproject can take place through multiple tranches with time-slicing given the typical characteristic of staggering of payments, and thereby providing IDCOL the flexibility to plan cost-effective disbursements of subprojects.
Impact Investments in infrastructure increased (Bangladesh Seventh Five Year Plan, FY2016-FY2020)
Project Outcome
Description of Outcome Private sector investments in infrastructure, including renewable energy leveraged
Progress Toward Outcome a) As of September 2021, under PPIDF3 Tranche 1 - a total of $231 million committed and $216 million disbursed under 7 subprojects. Total private sector investments on eligible infrastructure subprojects catalyzed under PPIDF3 is $561.7 million. b) For RE and EE subprojects, $3.6 million of private sector debt investments and $5.4 million private sector equity investments were catalyzed under PPIDF3 Tranche 1.
Implementation Progress
Description of Project Outputs

Available long-term debt financing for infrastructure projects increased

Take-out financing for infrastructure projects catalyzed

IDCOLs institutional capacity strengthened

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

Ongoing implementation. As of 30 September 2021, $226.16 million loan has been extended by utilizing the $260 million PPIDF3 Tranche 1 loan to finance a total of 9 eligible subprojects, that includes 1 medium-scale RE subproject.

1 (one) infrastructure subproject has been refinanced under PPDIF3 Tranche 1.IDCOL has significantly strengthened its risk management policy and manpower over the recent years and recruited a Chief Risk Officer to supervise IDCOLs overall risk management framework. IDCOL has adopted the Integrated Risk Management Guidelines for Financial Institutions (January 2016) of Bangladesh Bank. Additionally, Operational Risk Management framework is under preparation by an independent consultant and is expected to be completed by December 2021.

Treasury management framework under preparation by an independent consultant and expected to be completed by December 2021.

Required procurement is under process and this is expected to be completed by December 2021.

Safeguards capacity building plan for improving social and environmental risk mitigation and gender equality results is being prepared in-house by IDCOLs E&S officials and will be certified by an independent consultant by December 2021.

IDCOL's mid-term business and strategy plan is being developed by an independent consultant and expected to be finalized by December 2021.

Geographical Location Bangladesh
Summary of Environmental and Social Aspects
Environmental Aspects FI Category. ADB is reviewing every subproject and will determine the environment categorization accordingly. If triggering category A, the proposed subproject will not be qualified for ADB financing.
Involuntary Resettlement FI Category. ADB is reviewing every subproject and will determine the IR categorization accordingly. If triggering category A, the proposed subproject will not be qualified for ADB financing.
Indigenous Peoples FI Category. ADB is reviewing every subproject and will determine the IP categorization accordingly. If triggering category A, the proposed subproject will not be qualified for ADB financing.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation ADB reviews and monitors that every subproject ensures stakeholder communication, participation, and consultation.
Business Opportunities
Consulting Services Not applicable
Procurement The proposed Third Public- Private Infrastructure Development Facility (PPIDF 3) consists of a $526 million multitranche financing facility (MFF) which will be funded by a regular ordinary capital resources (OCR) loan of $500 million and a concessional OCR loan of $26 million. The funds under the MFF will be made available to Infrastructure Development Company Limited (IDCOL), a fully government-owned infrastructure finance company through the financial intermediary lending modality. IDCOL will use the ADB loan proceeds to provide subloans to sponsors to fund subprojects in the traditional infrastructure sectors such as energy, transport, urban, health, and education. The concessional ordinary capital resources loan will be exclusively used to finance renewable energy subprojects. There will be no direct funding for procurement of goods and services under this facility which could potentially lead to longer and complex implementation considerations.
Responsible ADB Officer Al Hasan, Mohammad Rashed
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Timetable
Concept Clearance 01 Jul 2016
Fact Finding 22 Aug 2016 to 24 Aug 2016
MRM 26 Sep 2016
Approval 18 Jul 2017
Last Review Mission -
Last PDS Update 07 Dec 2021

MFF Facility Concept 0100-BAN

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 526.26 Cumulative Contract Awards
ADB 526.00 - 0.00 0.00 %
Counterpart 0.26 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

TA 9344-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Jul 2017 12 Jul 2018 12 Jul 2018 31 Mar 2020 31 Dec 2021 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
750,000.00 0.00 0.00 0.00 0.00 0.00 750,000.00 01 Feb 2022 342,609.93

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.

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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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Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Capacity Development Technical Assistance 9344 26 Aug 2019 PRICEWATERHOUSECOOPERS PVT. LTD. (IND) (INDIA) in association with PricewaterhouseCoopers Bangladesh Private Limited (BANGLADESH) | 8-2-624/A/1, 4th Floor Hyderabad, Andhra Pradesh 500 034 India Ministry of Finance 511,820.00

Procurement Plan

None currently available.