Presentation to The Hon’ble Prime Minister

June 19, 2013

PPP Office, Prime Minister’s Office

The Experiences of PPPs in Bangladesh

and the challenges and opportunities of

working with the private sector and

attracting private sector finance.

Linking Development Finance with the SDGs in the Asia Pacific

26-27 October, 2016. Bangkok, Thailand.

Md. Hasan SarwarDirector

PPP Authority (Prime Minister’s Office)

A Pioneering Health PPP Project

Haemodialysis

Centre at

NIKDU &

CMCH

Page 2

Discussion Topics

Background: Vision of the PPP program

Why has the PPP program been emphasised?Why was the PPP program revised?

1

PPP Program: Key Reforms (2009-2015)

When did government introduce partnership with Private Sector?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 Authority Role and Remit

What has the PPPA worked on for the last 4 years?

4

Conclusions What is the long term prospects of PPP in Bangladesh?

5

Overview of Public Private Partnership in BangladeshPage 3 Strictly Confidential

Bangladesh 7th Five Year Plan (FY2016-2020)

“Accelerating Growth, Empowering Citizens”

SDG 7.4% 6.2%

Post 2015 targets

integrated

Annual Average

Growth

Reduction of head

count poverty ratio

12.9m

Additional Jobs

created

US$400bn(approx.)

77.3% $12.5bn

Total Investment

Requirement

Private Sector

Investment

Infrastructure

Financing

(annual)

1.8%

PPP

(%of GDP)

Targ

ets

Enab

lers

“Accelerating Growth, Empowering Citizens”

“To become a

middle income country by

2021

and a

developed country by 2041”

Government of Bangladesh 7th

Five Year Plan (published Dec

2015)

PPP Review MeetingPage 4

Bangladesh: Strong Fundamentals

Page 5

Area : 147,570 km2

GDP : USD 174 billion (FY 2015)

GDP Per Capita : USD 1314 (FY 2015)

Exports : USD 31.21 billion (FY2015)

Imports : USD 37.42 billon (FY2014)

FDI (Gross) : USD 1.59 billion (CY2014)

Forex. Reserve : USD 26.2 billion (August 2015)

Rating: : Ba3/BB- stable (April/May 2015)

Bangladesh: Location of Strategic

Importance

20 10 0 10 20

0-4

15-19

30-34

45-49

60-64

75-79

Bangladesh: Country Data Bangladesh: Demographic Dividend

Benefits

33

100

50 49.7533

Ch

ina

Ind

ia

Cam

bo

dia

Ban

glad

esh

Low Unit Labor Costs

(Percent of unit labor costs )

159m

15m

54m

91mBanglades

h

Cambodia

Myanmar

Vietnam

Population: Domestic

Market

Bangladesh: UNCTAD World Investment Report 2016

Page 6

Total FDI: $ 35100 million

Growth: 33.4%

Global Contribution 2%

Bangladesh: Location of Strategic

Importance

FDI in South Asian Countries (in $ million)

Country 2014 2015

Afghanistan 5.4 5.8

Bangladesh 155.1 223.5

Bhutan 3.2 1.2

India 3458.2 4420.8

Maldives 33.3 32.4

Nepal 3.0 5.1

Pakistan 186.5 86.5

Sri Lanka 89.4 68.1

Bangladesh

The SDGs and PPP

PPP

World (87%)

Africa (76%)

Asia

(98%)

Australia (79%)

Europe (98%)

North America

(73%)

South America

(92%)

PPP in the Global Context

*Source: PPP Office

research (2013)

More than 50 Multilateral &

Donor Agencies work with PPP

PPP Practicing Countries

Source:

Dialogic (2013)

BOT / DBFOM

BOO

BOOTLeases /

Affermage

O&M Contract

PFI / BOT Annuity

Overview of Public Private Partnership in BangladeshPage 8 Strictly Confidential

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

ase

Po

licy

2010: Special

Power Act

Pro

ject

s Fertiliser 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, Civil

Accommodation,

Housing, Tourism)

2015: PPP Law

Overview of Public Private Partnership in BangladeshPage 9 Strictly Confidential

(1)

Screen

(2)

Expert Appt.

(3)

Feasibility

(4)

Structuring

(5)

Tender

(6)

Finance

(7)

Monitor

The PPP Process

Process applied for implementation of PPP projects

Overview of Public Private Partnership in BangladeshPage 10 Strictly Confidential

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

A New Framework for PPP: 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

Overview of Public Private Partnership in BangladeshPage 11 Strictly Confidential

Screening & Approving

Projects

Policy Development &

Enforcement

Appointing Transaction

Advisors

Expert Project Facilitation

Promotion & Marketing

Stakeholder Engagement

Donor Agency Engagement

Capacity Building

Monitoring and Reporting

PPP Authority: Delivery of Roles & Remit

PPP

Authority

Role

Promotion & Marketing

Capacity Building

Donor Agency Engagement

Screened & ApprovedOver 45 PPP Projects

Screening & Approving ProjectsMonitoring 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

Overview of Public Private Partnership in BangladeshPage 12 Strictly Confidential

PPP Awareness and Capacity Building Events: 2012 - 2016

Total

63 Events

(Covering over 4000

participants)

PPP Capacity Building

10 Events

(Approx. 300 Participants)

Tailored Training Program

20 Events

(Approx. 120 Participants)

Policy Level Consultations

10 Events

(Approx. 200 Participants)

PPP Awareness Seminar

23 Events

(Approx. 3500 Participants)

Overview of Public Private Partnership in BangladeshPage 13 Strictly Confidential

Provision of Targeted Financial Support

Overview of Public Private Partnership in BangladeshPage 14 Strictly Confidential

Technical Assistance Financing

Viability Gap Financing

Bangladesh Infrastructure

Financing FundFund

Objective

Agency

Support PPP project

development

Enhance financial viability of PPP

project

Provision of longer term

Financing

AmountTK 100 Crore

(Approx. $12m)

TK 400 Crore

(Approx. $50m)

TK 2500 Crore

(Approx. $315m)

PPP Office PPP Unit BIFFL

PPP 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*(A

ppro

x12-

18

Mo

nth

s)

* Average Targeted Timescales

Request for

Proposal

7 Months

Negotiation /

Vetting

2 Months

Final Approval

(CCEA)

2 Months

Contract Award

1 MonthSingle 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

Develo

pm

en

t*(A

ppro

x18

Month

s)

PPP Project Pipeline UpdatePage 15 1st Meeting of the Board of

Governors

PPP Project Pipeline UpdatePage 15 Round Table Discussion with

Banks

PPP Procurement Timescales Comparator

PPP Project Pipeline UpdatePage 16 1st Meeting of the Board of

Governors

Bangladesh

Single Stage Bid (target)

12Months

Two Stage Bid (target)

18Months

Kidney Dialysis

11Months

MonglaEconomic Zone

24Months

Kaliakor Hi Tec Park x 2

18Months

Dhaka Elevated Expressway

12+23Months

PPP Project Pipeline UpdatePage 16 Round Table Discussion with

Banks

Bangladesh PPP Program Summary

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

3942 44

May 12 May 13 May 14 May 15 May 16

In Principle Approval(Number of Projects) 13

109

5 5

2

PPP Projects by Sector

PPP Review MeetingPage 17

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

Mark

et

Inte

rac

tio

n

Page 18

Rights, Duties

& Obligations

Dispute

ResolutionCompensationPerformance

Guarantee

Independent

EngineerProject

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

InterfacesSurveys

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

PeriodForce Majeure TerminationChange in Law

Page 19

Mongla Jetty

Contract signed

Oboshor Health

Vetting complete

Sylhet Hi Tec Park

Vetting complete

ShoybalEntertnmt Vil.

Negotiation complete

Mirershorai EZ

Negotiation complete

Sreehatta EZ

Evaluation complete (but next steps to be

confirmed)

Air Traffic Control System

Evaluation On-going

Mirpur Housing

RFP On-going

Zakir Hussain Rd

RFP & contract finalised

Motel Upal

IFB finalised + contract drafted

Jhilmil ResidHousing

IFB + contract drafted

Dhaka By-Pass

RFP finalised + contract drafted

PPP Contract Award/Bidder Selection Target (2016/17)

Estimated project value over Tk13,000

Crore

Target10-12 PPP projects

PPP Review MeetingPage 20

Bangladesh PPP Act 2015

Completed

Procurement Guideline for PPP

Projects 2016

Complete

Guideline for Unsolicited

Proposals 2016

Complete

Office Order on VAT exemption

instructions

Complete

Standard Base TOR for TA Road

Sector

Complete

Standard Base TOR for TA

Housing Sector

Complete

MoU for PPP Financing

Partnership

To be signed

Standard Base RFQ for Private

Partners

Draft being piloted

Fiscal Incentives

SRO to be issued

Regulatory Incentives

Banking SRO to be issued

G2G Partnership Policy

Submitted for approval

National Priority Projects

Final draft to be issued

PPP Policy Update (2015-2016)

PPP Review MeetingPage 21

PPP Contacts Signed

PPP Projects

(1) Mayor Mohammad Hanif Flyover*

(* Developed under PSIG 2004)

(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 StartCommercial Operation

June 2005 June 2010

January 2015

October 2013

August 2015November 2016

(forecast)

June 2015

January 2015 August 2015November 2016

(forecast)

December 2013 (revised)

August 20152018

(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 Review MeetingPage 22

PPP Projects in Procurement

PPP Projects Sector Stage

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

(2) Sylhet Hi Tec Park ZoneEvaluation Complete and vetting complete

(3) Mirshorai Economic Zone Zone Evaluation and negotiation complete

(4) Entertainment Village at Shoybal TourismEvaluation and negotiation complete

(5) Kaliakor Hi Tec Part (Lot 4) ZoneEvaluation stage

(6) Affordable Housing at Mirpur

Civil Accom.Request for Proposal issued

(7) Air Traffic Control Systemat HSIA

TransportRequest for proposal evaluation on-going

(8) Mohakhali Hi Tec Park ZoneProcurement stage

(9) Srihatta Economic Zone Zone Evaluation complete – but discussion on next steps on-going

(10) Zakir Hussain Road Hotel TourismShortlisting of bidders of completed

(11 Dhaka Bypass (Joydebpurto Madanpur)

TransportShortlisting of bidders completed

PPP Review MeetingPage 23

* Based on information collated from implementing agencies and line ministries

PPP Projects Development: 2015 – 2016 (Indicative Timelines)

PPP Projects Sector

(1) Shantinagar Mawa Flyover Transport

(2) Chittagong Railway Station Commercial Development

Civil Accomod.

(3) Motel Upal Tourism

(4) Khanpur Inland River Port Transport

(5) Khulna Railway Station Commercial Development

Civil Accomod.

(6) Chittagong Railway Hospital Health

(7) Laldia Bulk Terminal Transport

(8) Dhaka Chittagong Access Controlled Highway

Transport

(9) Jhilil residential area Housing

(10) 5 Star standard hotel at Motel Sylhet

Tourism

(11) GEC MoreCivil Accomod.

(12) Jamalpur Zone Zone

Jul 15 Jan 16 Jul 16

Development

Development

Development

Development

Development

Development

Development

Development

Development

Development

Development

Development

PPP Review MeetingPage 24

PPP Regulatory Environment

Bangladesh PPP

LawSeptember 2015

TAF GuidelineJuly 2012

Procurement

Guidelines for PPPMay 2016

Guidelines for

PPP Projects

(repealed)August 2010

VGF GuidelineJuly 2012

PPP Screening

Manual

Standard PPP

Forms

(Project, TAF,

VGF)

Guide to PPP in

BangladeshCitizens CharterFund Operating

ProcedureMay 2016

Unsolicited

Proposals

GuidelineMay 2016

PPP Authority

OrganogramMay 2016

PPP Review MeetingPage 25

PPP: Targeted Outcomes and Benefits

Win-Win-Win Benefits:

a) Consumer: delivery of a services that people want and would not have access to at the same price, in a business as usual situation.

b) Government: fulfillment of a political need, social obligation, development imperative.

c) Private Sector: generate a profitable revenue stream and expand market access.

Targeted Outcomes:

1. Accelerating investments

2. Improved quality

3. Timely delivery

4. Reduced costs

5. Innovative solutions

The use of PPP for essential social and economic infrastructure will enhance the quality of

services and relieve the strain on the government budget

Overview of Public Private Partnership in BangladeshPage 26 Strictly Confidential

Challenges of working with the private sector

1. Assurance for safe investment.

2. Total tax and VAT exemption.

3. Public Finance.

4. All types of Clearance from one window.

5. Hassle free working environment

6. Availability of all types of logistics support.

Overview of Public Private Partnership in BangladeshPage 27

Opportunities of working with the private sector

1. Innovative.

2. More experience about project implementation.

3. Partners from around the world show interests.

Overview of Public Private Partnership in BangladeshPage 28

ধন্যবাদ

Bangladesh is growing, be a part of it.