Bangladesh PPP Programme: Infrastructure investment opportunities

Syed Afsor H. UddinCEO, PPP Authority

Prime Minister’s Office

20th April 2018Brussels

BIDA-DBCCI Investment and Trade Delegation-2018

Bangladesh Macro-Economic Overview

Mobilizing Private Sector for Development- BangladeshPage 2

▪ Area : 147,570 km2

▪ GDP : USD 249 billion (FY 2017)

▪ GDP Per Capita : USD 1544 (FY2017)

▪ GDP Growth : 7.28% (FY2017)

▪ Inflation : 5.7% (Dec 17, 12 month average)

▪ Forex. Reserve : USD 33 billion (Dec 2017)

▪ Rating: : Ba3/BB- stable (April/May 2017)

▪ Debt to GDP ratio: 27.2% (2016))

Bangladesh: Country Data

CDP-SAIS Workshop Feb 2018

Rapidly Increasing Foreign Exchange

Reserves

(2009-17)

Improving Debt to GDP ratio (2007-16)

Bangladesh 7th Five Year Plan (FY2016-2020)

7.4% $3.5bn 1.8%(GDP)

Annual average

growth

Public spending

on Infrastructure

ADP allocation on

Infrastructure

1.8%(GDP)

Target PPP

Targ

ets

Accelerating the Implementation of the PPP ProgrammePage 3 Secretaries & Agency Heads Seminar

$12.5bn

Target

Infrastructure

investment

3.8%(GDP)

Target ADP allocation

on Infrastructure

“To become a

middle income country by

2021

and a

developed country by 2041”

Building the Foundations for PPP (2012-2017)

Regulatory Environment

Institutional Framework

Capacity Enhancement

Project Bankability

Key Pillars to Delivering a PPP Program

Long term Financing

Bangladesh PPP

LawSeptember 2015

PPP Authority

Role

Investment Opportunities through PPP in BangladeshPage 4 Saudi Bangladesh Delegation

PPP Projects Pipeline

Procurement Contract Signed

* Estimated ** Approximately (Data as at Mar 2018) (excludes power sector PPP projects)

13 Projects

(US$2.0bn*)

11 Projects

(US$3bn**)

(including 1 project

under PSIG)

Project Development

11 Projects

(US$3.2bn*)

In Principle Approval

48 Projects

(US$15bn*)

7

17

3942 44 45

May 12 May 13 May 14 May 15 May 16 May 17

In Principle Approval(Number of Projects) 14

9

6

9

5

2

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PPP Projects by Sector (Number of Projects)

Accelerating the Implementation of the PPP ProgrammePage 5 Secretaries & Agency Heads Seminar

Meeting the PPP Investment Challenge

• Road Sector

• Port Sector

• Economic Zone

• Health Sector

• Road Sector

• Township

• Tourism Sector

• Health Sector

2015-16 2017 2018 2019 2020

$1.3bn(8 Projects)

$1.8bn (7 Projects)

• Road Sector

• Township

• Tourism Sector

• Health Sector

• Port Sector

• Industrial Sector

• Road Sector

• Port Sector

• Utilities

• Airport

• Health Sector

• ICT Sector

$1.6bn(13 Projects)

$3.6bn(10 Projects)

Forecast PPP Pipeline Contract Award

Accelerating the Implementation of the PPP ProgrammePage 6 Secretaries & Agency Heads Seminar

Meeting the PPP Investment Challenge – Power Generation Plan

2016 2017 2018 2019 2020

$0.5bn(27%)

$0.5bn(25%)

$2.2bn(50%)

$3.5bn(58%)

$4.2bn(61%)

5,200 MW

5,600 MW

7,000 MW

9,000 MW

11,000 MW

Private Sector Financing (% of total financing needs)

Private Sector Power Generation

12,500 MW

15,000 MW

18,000 MW

21,000 MW

24,500 MW

Total Installed Capacity

Mobilizing Private Sector for Development- BangladeshPage 7 CDP-SAIS Workshop Feb 2018

Regulatory Framework for PPPs

Bangladesh PPP

LawSeptember 2015

• Establishes separate regulatory framework for PPPs

• PPP Authority reports to Board of Governors headed by Hon Prime Minister

• Special incentives for PPPs permitted;

• Rights and obligations of investors governed by PPP Contracts

• Enables charging of levy for delivery of project services

• Dispute resolution clause encourages for out of court resolution

• Application of International laws and 3rd country venue permitted for arbitration

• Power to make rules, regulations, policies, guidelines etc. embedded

Mobilizing Private Sector for Development- BangladeshPage 8 CDP-SAIS Workshop Feb 2018

Procurement Guidelines for PPP

Feb 2018

Unsolicited Proposals Guideline

Feb 2018

TAF GuidelineJuly 2012

VGF GuidelineJuly 2012

G2G Partnership Policy

June 2017

Private Sector Power Gen. Policy

Oct 1996

Land Acquisition

Resettlement

Detailed Feasibility Study

Linked Project Delivery

Viability Gap

Financing Subsidy

Incentive Package

Long Term Financing Access

Investor Protection

Centralised Monitoring

PPP Authority Governance ArrangementGovernment Support for PPP Projects

PPP Program

Government will identify land requirement and acquire at own cost

Full technical, commercial and financial studies

carried out by internationally

appointed consultants to ensure

viability and bankability

Resettlement (if required ) will be done by Government after due consultation and necessary compensation

All linked projects (e.g. utilities shifting) will be

carried out by government at its own cost

PPP projects are centrally monitored to ensure constraints are pro-actively

addressed

Key clauses to protect investment

included in PPP Contracts

Access to financing from dedicated

Government owned banks

Incentives Package developed covering

financial benefits and regulatory support

(Where required) Government can provide additional financial subsidy

Investment Opportunities through PPP in BangladeshPage 9 Saudi Bangladesh Delegation

Unsolicited PPP Projects

Submit proposal (for bonus marks) & respond to

Authority’s invitation for bids

Sponsor/Investor (equity/mezzanine), Developer, Construction/ O&M Contractor,

Lender (debt, mezzanine)

Awarded PPP Projects

Direct negotiation with selected bidder / awarded

private partner

Investor (equity/ mezzanine), Lender (debt, mezzanine),

(Potentially - Construction/ O&M Sub-Contractor)

PPP projects under G2G Partnership

Policy

Appointed by G2G partner country to negotiate with

Authority

Sponsor/Investor (equity/mezzanine), Developer, Construction/ O&M Contractor,

Lender (debt, mezzanine)

Infrastructure Investment Vehicles

Funding agreements with State-owned Financial

institutions

Lender to Investment Vehicles(debt) – open portfolio or ring-fenced projects

Infrastructure Investment Opportunities

Mobilizing Private Sector for Development- BangladeshPage 10 CDP-SAIS Workshop Feb 2018

Solicited PPP Projects

Respond to Authority’s invitation for bids

Sponsor/Investor (equity/mezzanine), Developer, Construction/ O&M Contractor,

Lender (debt, mezzanine)

Modality Process Opportunity

• Bridge over Golachipariver

• Bridge of Arial Khan river• Road Expressway network

Selected List of Potential Projects

Railway

• High rise apartments at Purbachal

• Commercial development at Mohakhali

• Mirpur Integrated township• Textile mill re-development

Real estate and

townships

• Bay multipurpose terminal

• Payra port multipurpose terminal

• Core port infrastructure, Payra Port

Ports

• Kutubdia tourism park, Chittagong

• Re-development of Motel Upal, Cox’s Bazar

• Marine aquarium complex, Cox’s Bazar

Tourism and

hospitality

Road and

Bridges

• Railway hospital and college, Saidpur

• Railway hospital and college at Paksey, Pabna

• Health facilities, PayraPort

HealthOther areas …

Inland

waterway

Power and

energy

Logistics

Developing infrastructure in Partnership with SingaporePage 11

Contact Details:

PPP Authority (Prime Minister’s Office)

1st Floor,

NGO Bureau Building, Agargoan

Dhaka , Bangladesh

Tel: +88 02 5500 7413

Email: info@pppo.gov.bd