Bangladesh: Third Public-Private Infrastructure Development Facility-Tranche 2

Sovereign Project | 42180-019

The proposed loans constitute the second tranche of a multitranche financing facility (MFF) to the People's Republic of Bangladesh for the Third Public-Private Infrastructure Development Facility (PPIDF3) which was approved on 18 July 2017 by the Asian Development Bank (ADB) Board of Directors.

Project Details

  • Project Officer
    Zhang, Dongdong
    South Asia Department
    Request for information
  • Approval Date
    23 November 2022
  • Country/Economy
    Bangladesh
  • Sector
    • Finance
Project Name Third Public-Private Infrastructure Development Facility-Tranche 2
Project Number 42180-019
Country / Economy Bangladesh
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 4254-BAN: Third Public-Private Infrastructure Development Facility-Tranche 2
Ordinary capital resources US$ 262.29 million
Loan 4255-BAN: Third Public-Private Infrastructure Development Facility-Tranche 2
Concessional ordinary capital resources lending US$ 16.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Finance / Infrastructure finance and investment funds

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The proposed loans constitute the second tranche of a multitranche financing facility (MFF) to the People's Republic of Bangladesh for the Third Public-Private Infrastructure Development Facility (PPIDF3) which was approved on 18 July 2017 by the Asian Development Bank (ADB) Board of Directors.

The tranche has two components. The first component, a $262.29 million ordinary capital resource (OCR) loan, is provided to Infrastructure Development Company Limited (IDCOL) to onlend to infrastructure projects developed under the public-private partnership (PPP) model. The project serves to provide long-term financing and catalyze private sector financing for infrastructure development, reducing pressures on public finance and enhancing value for money. The second component, a $16 million concessional OCR loan, supports investment in smaller energy efficiency, renewable energy solutions and social infrastructure projects. The project has the following two outputs: (i) available long-term debt financing for infrastructure projects increased, and (ii) take-out financing for infrastructure projects catalyzed.

The PPIDF3 is a continuation of the Public-Private Infrastructure Development Facility and the Second Public-Private Infrastructure Development Facility addressing the infrastructure deficiencies in Bangladesh. The PPIDF3 will help catalyze commercial financing through IDCOL-supported infrastructure subprojects with the value addition of supporting private sector development. The MFF is expected to catalyze $789 million in private sector investments with at least eight subprojects through regular OCR financing, and at least two renewable energy subprojects through the concessional OCR financing. The project also seeks to strengthen the institutional capacity of IDCOL to fulfill its mission as a flagship financial institution supporting PPP finance in the infrastructure sector. The tranche 1 has made great progress in these fronts, supporting eight infrastructure subprojects and two renewable and energy efficiency subprojects, and catalyzing $457 million private sector investments._Tranche 2 will continue to fund at least five infrastructure subprojects and two subprojects in the renewable energy and energy efficiency areas amounting to $278.29 million.

Project Rationale and Linkage to Country/Regional Strategy To sustain and accelerate economic growth, the Government of Bangladesh puts great emphasis on the development of infrastructure. The Seventh Five-Year Plan, FY2016-FY2020 outlined an ambitious road map for infrastructure investment programs in transport, energy, urban development, and information, and communication technology. Infrastructure development is hindered by the gap in infrastructure financing, which was estimated at 5%-6% of gross domestic product (GDP) in the Seventh Five-Year Plan. PPPs were considered a main tool to bridge that gap and to bring in private sector investment of up to 1.5% of GDP ($4.5 billion) a year to infrastructure development. The Eighth Five-Year Plan, FY2021-2025,_developed at the onset of the coronavirus disease (COVID-19 pandemic), called for further strengthening of PPP strategy in response to worsening public finance constraints, and increased social and health care infrastructure investment requirements. Furthermore, with capital market still at a nascent stage, the banking sector remains the main channel for financing, but they cannot provide needed the long term financing for the infrastructure development due to asset liability mismatch. ADB's financing will be crucial to support IDCOL to bridge the infrastructure financing gap, develop IDCOL's institutional capacity and crowd-in private sector equity and debt financing.
Impact

Investments in infrastructure increased (Bangladesh's Eighth Five-Year Plan, FY2021-FY2025)

Project Outcome
Description of Outcome

Private Sector investments in infrastructure, including the financing of renewable energy and energy efficiency facilities leveraged.

Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Available long-term debt financing for infrastructure projects increased

Take-out financing for infrastructure projects catalyzed

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects The project is classified FI for environment, involuntary resettlement, and indigenous peoples. No subproject classified category A in any of these safeguard areas will be considered for financing under the investment program. Screening and review of subprojects to be considered by IDCOL will follow the procedures indicated in the updated ESSF arrangement, which is in line with ADB's SPS. The revised ESSF will be disclosed on ADB website, as required by ADB's SPS and Access to Information Policy. IDCOL will ensure the submission of a semiannual safeguard monitoring report to ADB. Due diligence has been conducted to review the safeguard implementation performance of tranche 1 subprojects, and confirmed that tranche 1 subprojects have complied with ADB SPS requirements, including consultation, and disclosure policies.
Involuntary Resettlement The project is classified FI for environment, involuntary resettlement, and indigenous peoples. No subproject classified category A in any of these safeguard areas will be considered for financing under the investment program. Screening and review of subprojects to be considered by IDCOL will follow the procedures indicated in the updated ESSF arrangement, which is in line with ADB's SPS. The revised ESSF will be disclosed on ADB website, as required by ADB's SPS and Access to Information Policy. IDCOL will ensure the submission of a semiannual safeguard monitoring report to ADB. Due diligence has been conducted to review the safeguard implementation performance of tranche 1 subprojects, and confirmed that tranche 1 subprojects have complied with ADB SPS requirements, including consultation, and disclosure policies.
Indigenous Peoples The project is classified FI for environment, involuntary resettlement, and indigenous peoples. No subproject classified category A in any of these safeguard areas will be considered for financing under the investment program. Screening and review of subprojects to be considered by IDCOL will follow the procedures indicated in the updated ESSF arrangement, which is in line with ADB's SPS. The revised ESSF will be disclosed on ADB website, as required by ADB's SPS and Access to Information Policy. IDCOL will ensure the submission of a semiannual safeguard monitoring report to ADB. Due diligence has been conducted to review the safeguard implementation performance of tranche 1 subprojects, and confirmed that tranche 1 subprojects have complied with ADB SPS requirements, including consultation, and disclosure policies.
Stakeholder Communication, Participation, and Consultation
During Project Design Relevant stakeholders, IDCOL and the government, have been extensively consulted during project design. Their inputs have been incorporated into the design of the subprojects and the loan.
During Project Implementation ADB will continue to proactively communicate with the relevant stakeholders for the proper implementation of the loan and subprojects.
Business Opportunities
Consulting Services There will be no consulting directly financed under the project.
Procurement There will be no procurement directly financed under the project. All procurement to be financed under the MFF will be carried out following established private sector or commercial practices, following the core principles of ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time), and in a manner acceptable to ADB.
Responsible ADB Officer Zhang, Dongdong
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of Finance
Timetable
Concept Clearance -
Fact Finding -
MRM 17 May 2022
Approval 23 Nov 2022
Last Review Mission -
Last PDS Update 24 Nov 2022

Loan 4254-BAN

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 540.58 Cumulative Contract Awards
ADB 262.29 - 0.00 0.00 %
Counterpart 278.29 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

Loan 4255-BAN

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 155.15 Cumulative Contract Awards
ADB 16.00 - 0.00 0.00 %
Counterpart 139.15 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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 Access to Information Policy (AIP) 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.


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.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) 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.

Tenders

No tenders for this project were found.


Contracts Awarded

No contracts awarded for this project were found


Procurement Plan

None currently available.