Bangladesh : Third Public-Private Infrastructure Development Facility-Tranche 2
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 |
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| Project Status | Approved | ||||||||
| Project Type / Modality of Assistance | Loan |
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| Source of Funding / Amount |
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| Operational Priorities | OP1: Addressing remaining poverty and reducing inequalities OP2: Accelerating progress in gender equality OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability OP6: Strengthening governance and institutional capacity |
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| Strategic Agendas | Environmentally sustainable growth Inclusive economic growth |
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| Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development Partnerships Private sector development |
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| Sector / Subsector | Finance / Infrastructure finance and investment funds |
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| 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. |
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| 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) |
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| Project Outcome | |
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| 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 | |
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| Environment | FI |
| Involuntary Resettlement | FI |
| Indigenous Peoples | FI |
| Summary of Environmental and Social Aspects | |
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| 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 | |
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| 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 |
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