Presentation to The Hon’ble Prime Minister

June 19, 2013

PPP Office, Prime Minister’s Office

Partnering with the Private

Sector

Bangladesh Experience

Dr. Md. Nasir Uddin

Director General

PPP Authority , Prime Minister’s Office

Infrastructure Financing Strategies for Sustainable Development

25 January 2017

Discussion Topics

Background: Vision of

the PPP program Why was the PPP program revised?

1

PPP Program: Key

Reforms (2009-2015)

What are the key changes introduced to PPP

program?

2

PPP Project Pipeline

Development

What is the impact of the reforms on the PPP

Pipeline?

3

Delivery of PPP Office

Role and Remit

What has the PPP Office worked on for the last 4

years?

4

Conclusions What is the long term prospects of PPP in

Bangladesh?

5

PPP

World (87%)

Africa (76%)

Asia

(98%)

Australia (79%)

Europe (98%)

North America

(73%)

South America

(92%)

Private Sector Infrastructure in the Global Context

*Source: PPP Office

research (2013)

More than 50 Multilateral &

Donor Agencies work with PPP

PPP Practicing Countries

BOT / DBFOM

BOO

BOOT Leases /

Affermage

O&M Contract

PFI / BOT Annuity

Bangladesh 7th Five Year Plan (FY2016-2020)

“Accelerating Growth, Empowering Citizens”

“To become a middle income country by 2021

and a developed country by 2041”

SDG

7.4%

6.2%

Post 2015 targets

integrated

Annual Average

Growth

Reduction of head

count poverty ratio

12.9m Additional Jobs

created

US$400b

n (approx.)

77.3% $12.5bn

Total Investment

Requirement

Private Sector

Investment

Infrastructure

Financing

(annual)

1.8%

PPP

(%of GDP)

Ta

rge

ts

En

ab

lers

History of Partnerships with Private Sector

Project Based

Initiative

Sector

Initiative

Program

Initiative

Centrally Integrated

Program Initiative

Up to 1995 1996 – 2004 2005 - 2009 2010 - On going

1996: Private

Sector Power

Generation

Policy

2004: Private

Sector

Infrastructure

Guidelines

2010: Strategy

and Policy for

PPP

Ph

as

e

Po

lic

y

2010: Special

Power Act

Pro

jec

ts

Fertilizer JV

(e.g. KAFCO)

Health

(e.g. BIRDEM,

Heart Foundation

Power Projects

(e.g. Haripur

360MW &

Meghnaghat 450

MW power plants)

Port Projects

(e.g. Teknaf Land Port)

Road Projects

(e.g. Hanif Flyover)

Power Projects

(e.g. RPCL 70MW) Multi-Sectoral

Projects

(e.g. Transport,

Port, Power,

Health, Zones,

Housing,

Tourism)

2015: PPP Law

A New Framework for Public Private Partnership in Bangladesh

Key Reforms

Project Preparation

Capacity Development

Regulatory Changes

Institutional Changes

Financial Support

Centralised

regulatory unit and

program champion

Streamlined

approval and

integrated policy

framework

Injection of targeted

and catalytic funding

support

Public and

private sector

transaction

execution

capacity

enhancement

Structured process

with expert support for

project development

Infrastructure Financing Strategy

Public Finance

Sovereign backed

G2G

Sovereign backed donor

Finance

DBFOT/ BOT/BOO/

BOOT

Public Financing PPP Financing

G2G Partnership

Joint venture /

Bidder Finance

(BTF)

[CATEGORY NAME]

[CATEGORY NAME]

[CATEGORY NAME]

Expert Project Facilitation

Promotion & Marketing

Stakeholder Engagement

Donor Agency Engagement

[CATEGORY NAME]

[CATEGORY NAME]

PPP Authority: Delivery of Roles & Remit

PPP

Authority

Role

Promotion & Marketing

Capacity Building

Donor Agency Engagement

Screened & Approved Over 45 PPP Projects

Screening & Approving Projects Monitoring and Reporting

Stakeholder Engagement

Expert Project Facilitation

Hemodialysis Centre

at NIKDU & CMCH

Dhaka Ashulia

Elev.

Expressway

2 Jetties at

Mongla Port

through PPP

Flyover from

Shantinagar to

Mawa

Upgrading

Dhaka By Pass

Road to 4 Lanes

Senior Citizen

Health Care & Hospitality

Mirpur Low Cost

Housing

Complex

Upgrading of

Hemayatpur

Singair Manikganj

Page 8 Strictly Confidential

(1)

Screen

(2)

Expert Appt.

(3)

Feasibility

(4)

Structuring

(5)

Tender

(6)

Finance

(7)

Monitor

The PPP Process (Continues…)

Process applied for implementation of PPP projects

Pick projects

suitable for

PPP

Appoint

subject matter

experts

Ensure

technical and

commercial

viability

Ensure bankability

of bid documentation Run efficient and

transparent

bidding process

Meet

conditions

precedent for

financial close

Monitor implementation;

apply lessons learnt

CCEA

Approval

National Academy for Planning and Development

(NAPD)

PPP Process Flow

Technical Proposal Evaluation by QTEC

Financial Proposals Opening of the Eligible Bidders

Combined Evaluation and Recommendation of

Preferred Bidder by QTEC

IA Sends QTEC Evaluation Report to LM for Approval

QTEC Negotiates with Preferred Bidder

LM

Approval

YES

NO Request IA for

Clarification/Recommendation/Other

Feedback

IA Clarifies/

Acts

Accordingly

IA Issues Letter of Award

IA Signs Contract with Selected Bidder/SPV (as

applicable) The PPP Process Flow

PPP Process Flow

Actions for Improving Interaction with the Private Sector

In-Principal

Approval Advisor

Procurement

Advisor

Appointment

Preliminary

Findings

Project Listing (Website)

1 2

Project Profile (Website)

3

News

Highlight (Website)

4

Project

Pamphlet

(Website &

Distribution)

Feasibility

Report

5

Registration of

Interest

(Website,

Newspapers)

Procurement

Launch

6

RFQ and RFP

(Website,

Newspapers)

(Marketing

Sounding &

Investor

Promotion

Meetings)

(Pre-bid

Meeting)

Pro

ject

Info

rmati

on

M

ark

et

Inte

racti

on

Rights, Duties

& Obligations

Dispute

Resolution Compensation Performance

Guarantee

Independent

Engineer Project

Implementation

Actions for Creating the Conditions for Investor Confidence

Developing PPP

projects thoroughly

prior to investment

launch

Establishing a certain,

clear and transparent

framework for engaging

with Investors

Project Merits Technical

Viability

Outline Project

Design

Project

Interfaces Surveys

Land

acquisition

Resettlement

Requirements

Environmental

Impacts

Linked

Projects

Traffic

Demand

Management

Plans

Service Specs

and KPIs

Commercial

Delivery Model

Sourcing

Strategy

Market

Capacity

Financing

Sources

Payment

Mechanisms

Terms and

Conditions

Market

Sounding

Investor

Promotions

Pre-Bid

Meetings

PPP Law (Sep 2015)

Request for

Qualification

Request for

Proposal

Concession

Agreement

Land Access

Rights

Revenue

Sharing

Concession

Period Force Majeure Termination Change in Law

Page 12

Provision of Targeted Financial Support

Technical

Assistance

Financing

Viability Gap

Financing

Bangladesh

Infrastructure

Financing

Fund

Fund

Objective

Agency

Support PPP

project

development

Enhance

financial

viability of PPP

project

Provision of

longer term

Financing

Amount TK 100 Crore

(Approx. $12m)

TK 400 Crore

(Approx. $50m)

TK 2500 Crore

(Approx.

$315m)

PPP Office PPP Unit BIFFL

Procurement Process and Target Timescales

Request for

Qualification

6 Months

Request for

Proposal

7 Months

Negotiation /

Vetting

2 Months

Final Approval

(CCEA)

2 Months

Contract Award

1 Month

Pro

cu

rem

en

t*

(Appro

x 1

2-

18

Month

s)

* Average Targeted Timescales

Request for

Proposal

7 Months

Negotiation /

Vetting

2 Months

Final Approval

(CCEA)

2 Months

Contract Award

1 Month

Single Stage

Bidding

--------------

Two Stage

Bidding

Project

Screening

1 Month

In-Principal

Approval

3 Month

Request TAF

Support

2 Month

Advisor

Appointment

6 Months

Feasibility and

Bid Docs

6 Months

De

ve

lop

me

nt*

(A

ppro

x 1

8

Month

s)

PPP Awareness and Capacity Building Events: 2012 - 2016

Total

63 Events

(Covering over 4000

participants)

PPP Capacity Building

12 Events

(Approx. 300 Participants)

Tailored Training Program

22 Events

(Approx.160 Participants)

Policy Level Consultations

14 Events

(Approx. 400 Participants)

PPP Awareness Seminar

26 Events

(Approx. 3400 Participants)

Page 15 Strictly Confidential

Structured PPP Pipeline

Procurement Contract Signed

* Estimated ** Approximately (Data as at May 2016) (excludes power sector PPP projects)

11 Projects

(US$1bn*)

8 Projects

(US$1.5bn**)

(including 1 project

under PSIG)

Project Development

12 Projects

(US$5bn*)

In Principle Approval

44 Projects

(US$14bn*)

7

17

39 42 44

May 12 May 13 May 14 May 15 May 16

In Principle Approval (Number of Projects) 13

10 9

5 5

2

PPP Projects by Sector

PPP Contacts Signed

PPP Projects

(1) Mayor Mohammad Hanif

Flyover

(2) Dhaka Elevated Expressway

(3) Haemodialysis Centre at

NIKDU

(4) Haemodialysis Centre at

CMCH

(5) Kaliakor Hi-Tec Park (Lot 2 &

5)

(6) Kaliakor Hi-Tec Park (Lot 3)

(7) Mongla Economic Zone

(8) Mongla Jetty Project

Contract Signed Construction Start Commercial Operation

June 2005 June 2010

January 2015

October 2013

August 2015 Nov. 2016

June 2015

January 2015 August 2015 Nov/Dec 2016

(forecast)

December 2013 (revised) August 2015

2018

(forecast initial

tranche)

August 2015

Mayor Mohammad Hanif Flyover Dhaka Elevated Expressway Haemodialysis CMCH

February 2016

October 2015

February 2016

August 2016

Detail design on-

going

PPP Projects in Procurement

PPP Projects Sector Stage

(1) Oboshor Health Care for Elderly Health Evaluation and legal vetting complete

(2) Sylhet Hi Tec Park Zone Evaluation complete

(3) Mirshorai Economic Zone Zone Evaluation and negotiation complete

(4) Entertainment Village at Shoybal Tourism Evaluation and negotiation complete

(5) Kaliakor Hi Tec Part (Lot 4) Zone Evaluation stage

(6) Affordable Housing at Mirpur

Civil Accom. Request for Proposal issued

(7) Air Traffic Control System at HSIA

Transport Request for proposal evaluation on-going

(8) Mohakhali Hi Tec Park Zone Discussion on next steps on-going

(9) Srihatta Economic Zone Zone Discussion on next steps on-going

(10) Zakir Hussain Road Hotel Tourism Shortlisting of bidders of completed

(11) Dhaka Bypass (Joydebpur to Madanpur)

Transport Shortlisting of bidders completed

* Based on information collated from implementing agencies and line ministries

Roundtable Discussion with Senior Government Officials and Private Sector Leaders Page 18

PPP Projects Development: 2015 – 2016 (Indicative Timelines)

PPP Projects Sector

(1) Dhaka Chittagong Access Controlled Highway

Transport

(2) Shantinagar Mawa Flyover Transport

(3) Khulna Railway Station Commercial Development

Civil Accomod.

(4) Chittagong Railway Station Commercial Development

Civil Accomod.

(5) Khanpur Inland River Port Trasnport

(6) Chittagong Railway Hospital Health

(7) Laldia Bulk Terminal Transport

(8) Motel Upal Tourism

(9) Sabrang Tourism Zone Zone.

Jan 15 July 15 Jan 16 July 16

Development

Development

Development

Development

Development

Development

Development

Development

PPP Project Pipeline Update Page 19 1st Meeting of the Board of

Governors

Development

PPP Project Pipeline Update Page 19 Round Table Discussion with

Banks

Development of a long term infrastructure investment market

Issue

Description

Potential Impact

Long term

private sector

funding

capacity

PPP projects are lumpy

investments with need for long

term funding sources to match

the long term project cashflows.

Failure to minimise these risks,

such as forex risks, interest rate

risk, inflation risk ,tenor risk,

refinancing risk, increase

bankability risks of projects.

•Lack of long term

financing market will

prevent project delivery

•Extensive delays in

reaching financial closure

•Projects may become

commercially unviable

due to high risk margins

Context in Bangladesh

A Pioneering Health PPP Project

Haemodialysis

Centre at

NIKDU & CMCH

Thank You