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Executive Summary
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Finally it would be said that Public Private Partnership present a framework that while
engaging the private sector-acknowledge and structure the role for government in ensuring
that social obligations are met and successful sector reforms and public investment achieved.
PPPs present a number of recognized advantages for the public sector to exploit. These
include the ability to raise additional finance in an environment of budgetary restrictions,
make the best use of private sector operational efficiencies to reduce cost and increase quality
to the public and the ability to speed up infrastructure development.
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1. Introduction
PPP is a contractual agreement formed between a public agency and private sector
entity. PPP allows greater private sector participation in the delivery of services,
where public sector maintains an oversight and quality assessment role and private
sector is involved in delivery of service or project. PPP allows the public agencies to
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tap private sector technical, management and financial resources to achieve certain
public agency objectives such as greater cost and schedule certainty, supplementing
in-house staff, innovative technology applications, specialized expertise or access to
private capital.
In PPP Risks, Rewards and Responsibilities (the 3Rs) are shared judiciously,
according to their competence, by both public and private sectors.
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3. Scope
The scope of this study is limited to investigate number of key issues influencing successful
Public-Private Partnership program and PPP readiness in Bangladesh. Due to time
constraints, comprehensive study will not be conducted. Responses from consultation with
different actors from the public and private sectors are limited to experts across Bangladesh.
Review of secondary documents and exposure to other developed country experiences on
PPP will be the prominent source for information for conducting this study. This study
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focuses on key issues necessary to ensure successful and effective projects and PPP readiness
for project implementation.
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4. Methodology
This article has been prepared on the basis of primary as well as secondary data. Primary data
was gathered through face to face conversation and interview with government officials of
Bangladesh. The pertinent secondary information was accumulated from relevant articles,
newspapers, different position papers and action plans of the government, and relevant
websites.
As we all know, Bangladesh has been one of fifty least developed countries (LDCs) since 1975.Its
economy lacked momentum until democracy was restored in 1991.The other major cause was lack of
investment in infrastructure, especially power and energy, port and communication, sanitation and
health-care, supply of purified drinking water, education, tourism, information technology, housing
etc. The present government has the promise to raise the GDP growth rate to 8% by 2013 and to the
magical double digit growth of 10% by 2017 (Vision 2021 of Bangladesh Awami League). To touch
this higher notch, many things need to be done. However, investment in infrastructure and service
should always be the necessary first step in this front. Achieving GDP growth of 8-10% demands
increasing the rate of investment from the present 24-25 percent to 35-40 percent. It is far from an
easy task for the government amid the present national and global economic situation to manage such
huge amount of own resource. Among the 16 core population, only around 7 lacs pay income tax
(National Board of Revenue). So within the country, government has scarcity of own resources.
Globally speaking, prospect of receiving foreign assistance has diminished like never before due to
recent global melt-down. Government also lacks skilled man-power and deserving institutional
framework to undertake mega infrastructure projects on its own. Under these circumstances,
government desires momentum in revenue collection as well as success in delivering public goods
and services by draining in resources and investments from sources other than government savings.
Among the possible alternatives, government would like to encourage private investments of money
and expertise, skills and technology. With this end in view, the government of Bangladesh has
formulated the Public-Private Partnership (PPP) budget in 2009- 2010 fiscal as a new alternative, an
alternative which is first of its kind in Bangladesh.
6. Literature Review
J.A. Gmez
-
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Ibez and J.R. Meyer (1993) found that Countries worldwide with PPP experience include Australia,
Germany, Hungary, Italy, Japan, Korea, Spain, the USA, and the UK. Between 1985 and 2004, there
were a total of 2,096 PPP projects worldwide with a total capital value of nearly US $887 billion
(AECOM Consultant Inc.2005). The trend started in the 1970s as British governments sporadically
sought private funding in infrastructure sector. However, the practice of private participation gota firm
basis in 1992 when the Conservative government of John Major in the UK first took Private Finance Page | 5
Initiative (PFI). The journey got a momentum when the subsequent Labor government of Tony Blair
also embraced the idea with due importance. Afterwards, countries allover the world greeted the
concept and now that it has found its implocations. Britain has used this Public-Private Partnership
(PPP) concept in building schools, hospitals, capital projects like channel tunnel rail link, national air
traffic services, improving the London underground, and for defense contracts. During 2003 and
2004, the UK was the country with the largest PPP investments (OECD,2006). But Public-Private
Partnership (PPP) conveys a different meaning in Canada. In Canadian context, it relates to the
provision of public services or infrastructure and necessity ates the transfer of risk between partners.
In Bangladesh, it all started from February 15-17, 2008, while there had been a three day conference
in Dhaka jointly arranged by the Build-Operate-Transfer Group (BOT Group) of the United Nations
Economic Commission of Europe and the Board of Investment (BOI) of the Government of
Bangladesh. However, the first ever public-private business forum in Bangladesh was formed on
September 06, 2007 in the form of Bangladesh Better Business Forum (BBBF), predominantly
designed to improve interaction between the business-community and the Government high-up. It is
an unparalleled organizational tool for partnership between public and private sectors in Bangladesh.
But Bangladesh is not the only one in this part of the globe to introduce Public-Private Partnership
(PPP). Neighbors like India, Cambodia, Vietnam, and the Philippines have already undertaken this
program in developing infrastructure, tourism, energy and have started reaping its outputs.
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For the above reasons PPP is needed for a country. Because public sector may suffer shortage
of capital, but if private sector assists with the public sector then they will be able to establish
new business organizations without any shortage of capital.
8. Theoretical Analysis
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The implementation of the project is difficult with the financial resources or expertise
of the government alone;
Private investment would increase the quality or level of service or reduce the time to
implement then the government could accomplish on its own;
Private investment in public service provides an opportunity for innovation; and
There are no regulatory or legislative restrictions in taking private investment in the Page | 8
delivery of public service.
Exploration, production, transmission, and distribution of oil, gas, coal and other
mineral resources (ISIC 05-09);
Oil refinery, and production of LPG (ISIC 19);
Production of fertilizer (ISIC 20);
Power generation, transmission, distribution and services (ISIC 35);
Airports, terminals and related aviation facilities (ISIC 42 and 51);
Water supply and distribution, sewerage and drainage, effluent treatment plans
(ISIC 36-39);
Land reclamation, dredging of rivers, canals, wetlands, lakes and other related
facilities (ISIC 42);
Highways and expressways including mass-transit, bridges, tunnels, flyovers,
interchanges, city roads, bus terminals, commercial car parking etc. (ISIC 42 and
49);
Port development (sea, river and land) including inland container terminals,
inland container depot and other services (ISIC 52);
Deep sea port development (ISIC 52);
Telecommunication systems, networks and services including information and
communication technology (ICT) (ISIC 60-63);
Environmental, industrial and solid waste management projects; (ISIC 38-39)
railway systems, rolling stock, equipment and facilities (ISIC 49);
Tourism industry (ISIC 79);
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Economic zone, industrial estates and parks, city and property development,
including services to support commercial and noncommercial activities (ISIC
81-82);
Social infrastructure e.g. health, education, human resource development,
research and development, and cultural facilities, (ISIC 85-88);
E-service delivery to citizens (ISIC 85); Page | 9
Poverty Alleviation Projects (ISIC 84);
Pourashava and village water supply (ISIC 36);
Rural Internet projects (ISIC 61);
Rural health services and hospital (ISIC 86);
Irrigation and other agricultural services (ISIC 36);
Other urban, municipal and rural projects that the Government undertakes to support economic
development activities.
9.1 Structure
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For the first time in the country, the Government through its national budget FY 2009-10
introduced the concept of PPP budget. This is a very strong statement and commitment for
the development of PPP in the country. In addition, the Government issued a position paper
on PPP, titled, Invigorating Investment
Initiative through Public-Private Partnership dated June 2009. The PPP Budget aims to
provide support for upfront development of PPP projects, create a mechanism for targeted
subsidies and set long term financing of PPP projects.
The government has taken a two-pronged strategy for building public-private partnership:
one is to attract investment for projects, where building new infrastructure and expanding
existing infrastructure is the major component; the second is to attract innovation and
sustainability of public service delivery to the citizens. While the government is committed to
launch public-private partnership in a big scale, the essential ingredient to that Endeavour is
to set up a forward-looking strategy and a framework for operationalization of public-private
partnership as well as clear-cut procedural guidelines for the sake of ensuring transparency
and building confidence among the private sector players.
A wide spectrum of PPP arrangements exists, differing in purpose, service scope, legal
structure and risk sharing. The choice of the PPP arrangement for a particular project will
depend on social and economic importance and potential value for money to be generated
under such arrangement.
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PPP fosters economic growth by developing new commercial opportunities and increasing
competition in the provision of public services, thus encouraging crowding-in of private
investment. Successful application of PPP concept through this policy and Strategy
document is likely to open up the doors for increased flow of investment from both local and
foreigninvestors.
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10.2 How are PPPs regulated in Bangladesh?
The Policy and Strategy for Public Private Partnership (PPP) 2010 and the Guidelines for
Formulation, Appraisal and Approval of Large Projects, Medium Projects and Small Projects,
2010; all gazette on August 2010 establish the PPP Policy Framework for Bangladesh. These
documents are updated and supplemented from time to time by specific PPP guidelines
providing further details (for e.g. the Guidelines for Viability Gap Financing 2012).
Three government organizations are involved in the project implementation by the private
sector under the PPP initiative. So far the direct assistance of these organizations have
enabled implementation of 27 projects of which 18 projects are in the power and energy
sector, 6 projects in telecommunication sector, 2 projects in the port infrastructure sector and
1 project in the information technology sector (Annex 1). The contribution of the three
organizations involved in PPP project implementation is summarized below:
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a. IDCOL through this government sponsored company PPP project finance and financial
intermediation are conducted. Till date, BDT 13 billion has been financed by IDCOL in 22
projects implemented under PPP.
b. IPFF this project financed 5 power sector projects under the PPP initiative, generating
178 megawatt power. Three projects have started power generation on a commercial basis Page | 14
and have added 99 megawatt of power to the national grid. The remaining two projects are at
the final implementation stage. The total expenditure in the 5 aforementioned projects was
BDT 8.67 billion of which IPFF financed BDT 4.41billion (51% of total expenditure), private
investors financed BDT 2.51 billion (32% of total expenditure) and participating banks
financed BDT 1.46 billion (17% of total expenditure).
c. IIFC This too is a government sponsored company which is responsible for providing
expert assistance to relevant ministries, divisions or agencies regarding project development,
project formulation, project design, technical, engineering, implementation and monitoring
related issues for projects sanctioned by PPP initiative. Till now, IIFC has been under
contract to design 30, provide technical support to 8 and consultancy support to 16 PPP
projects. Almost all the projects implemented under PPP have taken IIFC support.
Under the current framework, through different type of PPP initiatives a small number of
projects have been implemented under the Annual Development Program (ADP) that is
mainly private sector initiatives. These initiatives were generally confined to education,
research and health sectors. Although, BIRDEM Hospital was established under the ADP in
the 1970s and 1980s, it was under responsibility of the Diabetic Associations. During the
same period, education institutes were established under joint initiative and if specific level of
individual contribution (e.g., 80%) were met then the institution was named after the donor.
In a similar manner, establishments like entertainment centers, libraries, sports facility etc
were set up for public benefit in various locations. Currently many projects are implemented
in a similar manner such as BishwaShahitya Kendras building complex, health care
infrastructure etc. Public partnership in many cases may be in the form of land acquisition,
land lease, construction cost sharing or providing seed money for projects. By reinvigorating
such initiatives, the current PPP Budget may begin a new phase.
1) Health Sector
2) Education Sector
3) Infrastructure Development
4) Tourism Sector
5) ICT Sector
6) Industries
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Operate and Transfer (BOOT) basis. This modern spectrum will be the first BOOT basis
private investment project and also the first PPP project of the country.
This long expected 9 km long four lane wide mega structure will not only mitigate the
congestions of traffics but also will be beneficial for the economic development of the
country. This would be a breakthrough-structure with state-of-the-art architecture and would
be its own kind in Bangladesh. Page | 17
Description of the Project:
It was decided that the flyover will begin from the crossing of the Nawabpur Project
Description:Road and Fazle Rabbi Road. The alignment will follow Sahid Dr. Fazle Rabbi
Road, keeping Gulistan garden, Bangabhaban and Rajdhani Market on the left. It will
intersect the Hatkhola Road at the Tikatuli crossing. The alignment will also intersect
AtishDipankar Road at the Saidabad crossing and intersect the Dhaka
Narayaganj Road at the Jatrabari crossing after crossing the Khal Bridge. It will end on
MuktiSarani towards Chittagong. But after the modification of the plan the project the two
end of the flyover has been extended to the ShanirAkhra of Dhaka-Chittagong Highway,
Polashi, Narayangonj Link Road.
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Establish improved and faster road connectivity with 30 districts including Chittagong
and Padma Multipurpose Bridge connecting road.
Utility infrastructure like water supply, electricity, gas etc. will be significantly Page | 18
developed.
The Meghnaghat Power Project has demonstrated how to plan, prepare, and implement a
successful power plant privately owned and operated by an independent power producer
(IPP) in Bangladesh. The project is rated successfulcommercially viable, financially
profitable, environmentally sound, and well-managed. It has provided a significant and much-
needed addition to the country's generation capacity that has helped serve the growing
demand of existing and new subscribers. The Asian Development Bank's (ADB) participation
and support were extensive, well-formulated, and critical to this success. Arguably, the major
disappointment has been the authorities inability to build on the project example by
implementing subsequent projects using a similar approach. Because of this inability, the load
shedding and supply problems that were a major reason for undertaking the project in the first
place have reemerged and are now hindering Bangladeshs economic performance.
11.2.1 The Project: On 5 December 2000, the Board of Directors of ADB approved a direct
loan of$50 million and a complementary financing scheme loan of $20 million for the
MeghnaghatPower Project under a non-sovereign operation. Two weeks later, the Board
approved a political risk guarantee (PRG) of $70 million for the project. The Government of
Bangladesh agreed to indemnify and reimburse ADB for all amounts paid by ADB under the
guarantee agreement.Several financial institutions and commercial banks co-financed the
project with senior loans of $20 million and subordinated loans of $60 million. The project
aimed to help
Prior to the project, the countrys annual per capita electricity consumption of 70 kilowatt-
hours was one of the lowest in the world. Further, while the demand for electricity had been
growing at 8% annually, the low plant utilization, inadequate investment, and high
distribution losses were causing significant load shedding that peaked in 1999 at 774
megawatts (MW) and with a total duration of 1,690 hours in 335 days.
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The project was constructed at a cost of $289.6 million, about $10 million below the initial
cost estimates at loan document. MPL passed the performance tests and received a takeover
certificate, which was issued to the EPC contractor on 28 January 2003. The projects
commercial availability through January to October 2007 was high at 99.5%. The 2007 load
factor through October was in line with budget expectations at 88.21%, while the heat rate
was better than the budget target, which is expected to result in below-budget fuel costs. Page | 19
From the start of commercial operations until the end of September 2007, MPL had supplied
about 14,875 gigawatt-hours of electricity to BPDB.Overall, the project has helped to
broaden access to a competitively priced and highly reliable power supply source for
Bangladesh.
1. Risk Transfer
Risk will be transferred to the party which is best able to manage this risk and at the least
cost. Risk transfer ensures that the parties involved will use conservative assumptions in
developing their expectations of benefits and costs.A detailed project risk analysis
promotes a shared understanding of the project by all parties involved in order to
communicate the complexity and detail of a scheme.
2. Output based specification
Specifying the project result as outputs allows innovation to take place. Outputs are the
products of a service. In the conventional procurement, an input specification is used,
therefore describing the asset used to provide a service. "Many clients (public sector) find
it difficult to articulate precisely which outputs they want. They can have whatever they
want, but at a price. Our skill in bidding (private sector) is to offer alternatives that
reduce the price, but still deliver reasonable outputs.
3. Long-term nature of contracts (including whole life costing)
The long-term nature of contracts allows the service provider more time to recover the
cost of the investment, enabling the supplier to reduce annual charges. It also gives the
supplier greater depth of experience in running the business which could be a source of
efficiency gain. It also makes it easier to transfer technology risk to the supplier by
enabling the supplier to make better judgement about when renewal of assets and capital
expenditure is incurred
4. Performance measurement and incentives
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Linking performance to payment provides the service provider the vital incentive to
deliver the required standards as defined in the output specification. Performance
measurement reflects risk transferred to the private sector, incentivised through the
payment mechanism. It is important for the government to retain some in-house
provision, so that they retain the knowledge base to engage in proper monitoring the
contracts. 5. Page | 20
5. Private sector management skills
Private sector management skills allow the project to be delivered ahead or on time. By
using public private partnerships for infrastructure investments the government will have
access to new skills. The public sector can get both significant R&D and the testing of
different approaches at private sector risk. Lower or stable rates over the long-term, equal
or improved service levels, better understanding of the utility, lower taxes and improved
technology are benefits that can be directly transferred to the customer from an effective
PPP. 6.
6. Competition
Generally, the benefits of introduction of competition to an area which is normally
dominated by public sector monopolies are: lower prices, greater innovation, increased
investment and better service.
7. Cost efficiencies
Public private partnerships can lead to cost efficiencies, which are the results of increased
competition, an improved proportion of risk transfer, a closer integration of the different
aspects of a project, better whole life costing and improved innovation. Significant cost
savings can be obtained in the long run by integrating capital investment and the delivery
of services (i.e. servicing the asset), because maintenance will be considered when the
asset is designed to maximize efficiency. Another reason for the creation of cost
efficiencies is the departure from standards (thus innovation).
8. Time-to-delivery savings
Public private partnerships can also lead to time-to-delivery savings, caused by a greater
private incentive to generate revenue as soon as possible and the increasing experience
with public private partnerships. Another reason for these time-to-delivery savings is the
existence of a learning curve for all parties involved. The private sector is driven by
profit motives and is accountable to shareholders to ensure that the profit isn't diminished
by higher interest charges and revenue losses from delays in project completion. In the
public sector, project completion delays might not have the same perceived direct
financial impacts.
9. Improved response to market forces
In case of user-fees, an improved response to market forces will be created, resulting in
greater efficiency. Traditionally, transportation facilities are publicly-funded. While users
do pay for the facilities they use, price signals aren't available to guide demand or supply.
These improvements in incentives to market forces are the improved profit margins, the
long term business, the whole life costing, the payment for performance and the merging
of design, build, finance and operation.
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10. Broad support In common, public private partnerships are broadly supported by the
European government, the national, regional and local government and by the private
sector because of the creation of value for money and because of the new source of
income Release of hidden asset value.
11. Cost efficiencies
Public private partnerships can lead to cost efficiencies, which are the results of increased Page | 21
competition, an improved proportion of risk transfer, a closer integration of the different
aspects of a project, better whole life costing and improved innovation. Significant cost
savings can be obtained in the long run by integrating capital investment and the delivery
of services (i.e. servicing the asset), because maintenance will be considered when the
asset is designed to maximize efficiency. Another reason for the creation of cost
efficiencies is the departure from standards (thus innovation).
12. Time-to-delivery savings
Public private partnerships can also lead to time-to-delivery savings, caused by a
greater private incentive to generate revenue as soon as possible and the increasing
experience with public private partnerships. Another reason for these time-to-delivery
savings is the existence of a learning curve for all parties involved. The private sector is
driven by profit motives and is accountable to shareholders to ensure that the profit isn't
diminished by higher interest charges and revenue losses from delays in project
completion. In the public sector, project completion delays might not have the same
perceived direct financial impacts.
13. Improved response to market forces
In case of user-fees, an improved response to market forces will be created, resulting in
greater efficiency. Traditionally, transportation facilities are publicly-funded. While users
do pay for the facilities they use, price signals aren't available to guide demand or supply.
These improvements in incentives to market forces are the improved profit margins, the
long term business, the whole life costing, the payment for performance and the merging
of design, build, finance and operation.
14. Broad support
In common, public private partnerships are broadly supported by the European
government, the national, regional and local government and by the private sector
because of the creation of value for money and because of the new source of income.
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Public private partnerships will also result in higher capital cost because of private
borrowing. The additional cost of private finance is - in general - approximately 1% to
2%.
3. Insecurity Page | 22
Whenever two or more parties enter into a contract, there is a risk that the
administrative efforts on each side will be frustrated by a lack of co-operation on the
part of the other party(s). Also, when a party enters into the tender procedure, the
party may not even be granted the concession. Because of these insecurities, the
number of bidders may be limited and thereby reducing the competitiveness of the
tender process.
4. Inefficiencies
Long-term operating contracts can lead to value for money. However, they can also
lead to inefficiencies due to a lack of contestability and competition. The tender-
procedure at the beginning of the process may have introduced competition; the
developer who has signed the contracts will have the exclusive rights to an
infrastructure facility, therefore practically enjoying a monopoly. During the
operation phase inefficiencies may be created due to a lack of contestability and
competition.
5. Culture gap
There exists a culture gap between the private and the public actors, which may result
in a loss of confidence in each other. The private sector's motive to take part in a
public private partnership is primarily profit-making or image-building; the public
sector's motive is merely social attractiveness. Another example of this culture gap is
the different discount rates used by the private and the public sector, which can be
explained by the difference in motives of both parties involved. In order to let the
discount rates be comparable, and thus reduce the culture gap, the public discount rate
has to be adjusted to the private discount rate. Unfair and unrealistic cost comparison
procedures can contribute to slow implementation or even failure of public private
partnerships, thereby raising transaction costs. company thinking helps improve
efficiency and effectiveness"
6. Short term rigidities
A public private partnership can be compared to a network. Durable networks create
stability and lower the uncertainty of actors. At the same time this also means
rigidities, dependencies and inability to adapt to changed conditions2. That's why
PPP-contracts should allow for changes to take place and prices benchmarked or
market-tested from time to time.
7. Hold-up problem
Another disadvantage of public private partnerships is the existence of the hold-up
problem, whereby a party may be able to enforce a new cost-revenue-ratio than
previously agreed upon. This problem may take place when the negotiation-position
of the parties involved change over time and when observance of the contract isn't
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perfectly possible. The relative position of negotiation is influenced by the sunk cost
aspect of investments and the alternative possibilities of usage
8. Public sector staff concern
If a public private partnership is intended to replace an existing public facility, this
may result in concern about the public sector staff's terms and conditions of
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influence the output of the project negatively
9. Political Commitment
In countries where the rule of law is not firmly entrenched governments have reneged
on contracts signed by previous administration. There also have been several cases of
governments reneging on contractually agreed terms (e.g. the right of levy cost
recovering tariffs) in the fact of public dissatisfaction.
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collaborate due to the diversity and differing languages spoken amongst the sectors.
Items like performance measures, goal measurements, government regulations, andthe
nature of funding can all be interpreted differently thus causing blurred lines of
communication.
21. Autonomy within the partnership
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the project alone, take initiative when needed, and keep some individualism
throughout the process. This is beginning to happen more with the privatization of
public-private partnerships where the private organization may own the partnership
itself and the government then keeps full responsibility for it. This keeps parts of the
partnership separate for focus
22. Conflicts
These can arise from any of the above topics but even outside issues or forces may
bring a partnership to a halt. Even though these partnerships are entered into with the
best of intentions even the most trivial issues can snowball into greater conflict
halting a partnership dead in its tracks. Having no understanding and communication
between parties can cause conflicts with use of language, stereotyping, negative
assumptions, and prejudice about the other organization. These conflicts can be
related to territorialism or protectionism, and a lack of commitment to working within
the partnership.
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As far as Bangladesh is concerned, the prospective sectors under PPP could be the following:
Power and Energy
Solar System
Transport Infrastructure (roads, rail, sea-ports, airport and water transport)
Tourism and Air Transport
Information Technology
Pure Drinking Water
Industry
Health and Family Welfare
Education (particularly secondary and technical) and Research
Housing
Climate management
In the phase of global warming and environmental degradation, PPP can be a good tool to
restore coastal infrastructure. To meet the Millennium Development Goal (MDG) target of
25% forest, community forestry and coastal forestry can be undertaken and for that, PPP can
be a worthwhile avenue.
But there are some problems faced by public and private sectors regarding PPP. In
Bangladesh, public sector is reluctant and private sector is hesitant to invigorate PPP
initiatives. In the public sector, bureaucracy tops the list of problems. In our country, they are
by and large reluctant to accelerate PPP initiatives for there is chance of exposing public
sector inefficiency. The historical bureaucratic lethargy of the country is acting as a catalyst
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in slowing the pace of step forward of such projects. Lack of knowledge and practical
training of such a new concept has made them shaky about PPP. On the part of the private
sector, it is the mutual disbelief that is hindering the sector from stepping up whole-heartedly.
With no formal guideline, dedicated framework, or tailor-made law for PPP in place till
today, there is every reason for private sector to be tentative in a country with volatile
political condition. They also fear that undue bossing, lack of performance-based-pay, and Page | 27
too much controlling of their counterpart in the name of PPP could jeopardize the fate of
private sector.
15. Conclusion
Public Private Partnership (PPP) is the most important topic among developing countries of the
world. Without infrastructural development it wont be possible for a developing country to switch
from developing to developed country. For rapid infrastructural development public private
partnership is the most collaborative work of Government and private companies. A contract has been
made between private party and Government where the private party provides a public service or
project and assumes substantial financial technical and operational risk in the project. Public Private
Partnership is being considered world wide as a unique window for the development of infrastructure
sector for the countries.
Bangladesh is the latest country that has entered into the new investment paradigm of the PPP over
last 4 years. Bangladesh Govt. has allocated a lot of funds for implementing PPP projects for the last
several years but has failed. The example of PPP projects are Dhaka Elevated Expressway and
Gulshan-Jatrabari Flyover. In PPP model, Public Private sectors jointly undertakes large projects on
partnership basis. Through this model, private sector arranges the resource bears the cost of building
infrastructure. Under this model projects are usually long term in nature and private entrepreneurs get
recovery of their investment through toll revenue collection. The Government, the private sectors
investors and public can get all benefit if private sector enticed into infrastructure development under
PPP. Since the private invests in the infrastructure development there is no need for Government to
take loans and pay interest. Like many other successful Government of different countries, our
Government should take more initiatives to make PPP programs are successful.
16. Recommendation
The following recommendations are based on the consultation with different actors from thepublic
and private sectors, review of secondary documents, and exposure to other country experiences on
PPP.
i. Arrange required consultations between the Govt. and private sector to start direct dialogue on
PPP, and to work out the specific issues and recommendations, and operational implications
for those. This might entail a series of meetings and dialogues between the two sides with
balanced representation from both Govt. and private sector.
ii. The operational mechanisms and procedural guidelines should be worked out
immediately.The PPP Policy and Strategy document published this year is useful, but there is
need for specific guidelines to operationalize the policy/strategy.
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Private Public Partnership (PPP)
iii. Legal and regulatory issues in relation to PPP should be sorted out. PPP should be kept outof
all political and bureaucratic influences so that the projects can run smoothly irrespective of
changes in the government.
iv. There should be greater representation of the private sector in the PPP committees including
the Advisory Committee.
v. Conduct policy research and analysis on PPP issues and make recommendations for reform,
and craft a PPP roadmap to be adopted by the Govt. and the private sector. Page | 28
vi. Ensure policies and laws to enable PPP projects to continue irrespective of changes in the
political regime in the country.
vii. Convene a forum on PPP with participants from the private sector, donors and civil
society.The scope of work of the forum should include:
Promoting PPP in the identified priority areas;
Assisting the government in promoting good governance in PPP through
open,transparent, and participatory processes;
Assisting the government in jumpstarting effective implementation of five to six
priority PPP projects within the next six months in line with the PPP guidelines;
Assisting the government in taking forward necessary policy reform to promote
effective PPP; and
Assisting the government's PPP Unit in developing a pipeline of bankable projects.
17. References
1) AECOM Consult, Inc., (2005). Synthesis of Public-Private Partnership Projects for
Roads, Bridges and Tunnelsfrom Around the World, 1985-2004 (Washington D.C.:
United States Department of Transportation).
2) Akintoye, Li., (2006). Privatizing Highways in the United States. Review of
Industrial Organization,29/1-2 (September): pp. 27-53.
3) Akintoye, Li., Edwards, and Hardcastle (2005), op. cit.; R. Orr, The Privatization
Paradigm. Jumping ontothe Infrastructure Bandwagon. Infrastructure Journal,
(September/October 2006).
4) Forrer, J., James, K.E., Edwin K., and Boyer, E., (2010). PublicPrivate Partnerships
and the PublicAccountability Question. Public Administration Review, May/June,
Vol. 70, Issue 3, pp 475-484.
5) Government of Australia, (2010). http://www.ausaid.gov.au/closeup/forestry.cfm
(Retrieved onNovember).
6) Gmez-Ibez, J.A., Meyer, J.R., (1993). Going Private: The International
Experience with TransportPrivatization. Washington, D.C.: The Brookings
Institution, November.
7) Jamaluddin, S., (2010). Progress of public-private partnership programmes. The
Financial Express April 07.OECD., (2006). Interim Report on the Role of Private
Participation in Major Infrastructure Provision,Submitted to the Working Party on
Territorial Policy in Urban Areas at its 8th session in Bilbao,Spain, June, 5-6,
GOV/TDPC/URB(2006)5, Public Governance and Territorial
DevelopmentDirectorate, OECD, Paris.
8) Pablo, S., Bozeman, B., (2004). The Gradient Effect in Federal Laboratory-
Industry TechnologyTransfer Partnerships. Policy Studies Journal 32(2): pp. 235
252.
9) Park, H., (2006). PPI System in Korea and its Policy Issues. Seoul: Korea
Development Institute.
10) Rendell, E., (2009). Opening remarks, Memo to the President: Invest in
Infrastructure for Long-TermProsperity. January 12, Washington, DC.
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Private Public Partnership (PPP)
11) Roger, W., (2003). The Rhetoric and Reality of PublicPrivate Partnerships. Public
Organization Review 3(1): pp. 77107.
12) The Financial Express, (2011). http://www.thefinancialexpress-
bd.com/2009/06/16/69874.html (Retrieved on January).
13) Vining, A.R., Boardman, A.A., and Poschmann, F., (2005). Public-Private
Partnerships in the U.S. andCanada: There Are No Free Lunches. Journal of Page | 29
Comparative Policy Analysis: Research andPractices, 7/3: pp. 199-220Zhang, X.Q.,
(2006). Public Clients Best Value Perspectives of Public Private Partnerships in
InfrastructureDevelopment. Journal of Construction Engineering and Management,
132/2 (February): pp. 107-114.
14) Zouggari, M., (2003). Public Private Partnerships: Major Hindrances to the Private
Sectors Participationin the Financing and Management of Public Infrastructures.
International Journal of WaterResources Development, 19/2 (June): pp. 123-129.
15) http://bangladeshbudgetwatch.wordpress.com/?s=PPP+allocation (Retrieved on
February, 2011)
16) http://bdoza.wordpress.com/2009/07/17/bangladesh-budget-2009-10-and-ppp/
17) http://onnesha.wordpress.com/2009/06/12/bangladesh-national-budget-2009-2010/
18) http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22011850~
menuPK:34463~pagePK:34370~piPK:34424~theSitePK:4607,00.html (Retrieved on
January, 2011)
19) http://www.albd.org/autoalbd/index.php?option=com_content&task=view&id=367&I
temid=1 (Retrievedon October 29, 2010), Election Manifesto of Bangladesh Awami
League-2008
20) http://www.bdnews24.com/budget/
21) http://www.brookings.edu/~/media/Files/events/2009/0112_infrastructure/20090112_i
nfrastructure.pdf
22) http://www.mof.gov.bd/en/
23) http://www.nbr-bd.org/
24) http://www.parliament.uk/commons/lib/research/rp2001/rp01-117.pdf (Retrieved on
September, 2010)
25) http://www.prothom-alo.com/ (Retrieved on May 30, 2011)
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