Você está na página 1de 29

Private Public Partnership (PPP)

Executive Summary
Page | 1

Public-private partnerships (PPPs) in the delivery of public services have become a


phenomenon which is spreading the globe and generating great interest. But why is a concept,
barely mentioned a decade ago, now attracting such interest? Overall, the answer is that PPPs
avoid the often negative effects of either exclusive public ownership and delivery of services,
on the one hand, or outright privatization, on the other. In contrast, PPPs combine the best of
both worlds: the private sector with its resources, management skills and technology; and the
public sector with its regulatory actions and protection of the public interest. This balanced
approach is especially welcome in the delivery of public services which touch on every
human beings basic needs.

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.

Prepared by Orchestra
Private Public Partnership (PPP)

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
Page | 2
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.

Public-Private Partnerships (PPPs) aim at financing, designing, implementing and


operating public sector facilities and services. Their key characteristics include:
(a) Long-term (sometimes up to 30 years) service provisions;
(b) The transfer of risk to the private sector; and
(c) Different forms of long-term contracts drawn up between legal entities and public
authorities.

In PPP Risks, Rewards and Responsibilities (the 3Rs) are shared judiciously,
according to their competence, by both public and private sectors.

1.1) Reasons for Public-Private Partnership:


Accelerating the implementation of high priority projects by
packaging and procuring services in new ways
Turning to the private sector to provide specialized management
capacity for large and complex programs;
Enabling the delivery of new technology developed by private entities;
Drawing on private sector expertise in accessing and organizing the
widest range of private sector financial resources;
Encouraging private entrepreneurial development, ownership, and
operation of related assets;
Allowing for the reduction in the size of the public agency and the
substitution of private sector resources and personnel.

1.2) Who are the Partners?


1.2.1) Public Sector Partners
National government
District administration
Municipal authorities
Local government bodies
Para-statal corporations
State universities and research organizations

Prepared by Orchestra
Private Public Partnership (PPP)

1.2.2) Private Sector Partners

Commercial for-profit enterprises


Development-focused voluntary non- governmental organizations (NGOs)
Page | 3
Cooperative societies
Community-based organizations
Religious organizations
Professional organizations
Trade unions
Research and academic institutions
Households

2. Objective of the Report

The specific objectives of the report are given below;

To share the key concepts and principles of PPP;


To share the key aspects of Government thinking, policy, and strategies for PPP;
To detail the progress made so far, as well as the challenges faced in taking PPP
forward in Bangladesh;
To share relevant highlights from selected PPP cases and models of Bangladesh
To share the expectations from Government and private sector from PPP
To identify the existing PPP projects undertaken by the government of Bangladesh
To identify the prospective sectors suitable for PPP implementation in Bangladesh
To identify the challenges ahead of Bangladesh in successful implementation of PPP
To suggest some measures to address those challenges
To share the role of PPP office
To make a set of recommendations - based on the research conducted in Bangladesh-to
promote successful PPP in the country.

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

Prepared by Orchestra
Private Public Partnership (PPP)

focuses on key issues necessary to ensure successful and effective projects and PPP readiness
for project implementation.

Page | 4
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.

5. Rational of the study

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
-

Prepared by Orchestra
Private Public Partnership (PPP)

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.

7. WHY NEED PPP?


PPP have developed in part due tofinancial shortages in the public sector. PPPs have
demonstrated the ability toharness additional financial resourcesand operating efficiencies
inherent to theprivate sector.
Recent years have seen a marked increase incooperation between the public and
privatesectors for the development and operation ofenvironmental and transport
infrastructure. Now a day, PPP are needed for many reasons. They are:-

Better risk allocation


A core principle of any PPP is the allocation of risk to the party best able to manage it at least
cost. The aim is to optimize rather than maximize risk transfer, to ensure that best value is
achieved.

Better incentives to perform


The allocation of project risk should incentivize a private sector contractor to improve its
management and performance on any given project. Under most PPP projects, full payment
to the private sector contractor will only occur if the required service standards are being met
on an ongoing basis.

Prepared by Orchestra
Private Public Partnership (PPP)

Improved quality of service


International experience suggests that the quality of service achieved under a PPP is often
better than that achieved by traditional procurement. This may reflect the better integration of
services with supporting assets, improved economies of scale, the introduction of innovation
Page | 6
in service delivery, or the performance incentives and penalties typically included within a
PPP contract.

Generation of additional revenues


The private sector may be able to generate additional revenues from third parties, thereby
reducing the cost of any public sector subvention required. Additional revenue may be
generated through the use of spare capacity or the disposal of surplus assets.

Greater efficiency in the use of resources


The experience ofprivatization has shown that manyactivities, even those
traditionallyundertaken by the public sector, can beundertaken more cost effectively withthe
application of private sectormanagement disciplines andcompetencies.

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

8.1 Concept of PPP


PPP is a relationship between the government and various private sector players for the
purpose of delivering a service by sharing the risks and rewards of the venture under a
contractual obligation;
A project under PPP may include all stages of lifecycle starting from ideation, design,
construction of infrastructure, where necessary and up to delivery of services and
maintenance;
In the PPP projects, the private sector is the active party who undertakes activities, depending
on the model, starting from the stage of conception and up to the stage of operation and
maintenance; and
In most of the cases, PPP allows private sector into areas of business, where the government
holds control over infrastructure or service before such partnership.

8.2 Characteristics of PPP

8.2.1 Main Characteristics of PPPs

Prepared by Orchestra
Private Public Partnership (PPP)

Promise of better project structure and design.


Allows better screening of projects. A bad project is a bad project no matter whether it
is implemented by the public or the private sector.
Better choice of technology based on life-cycle costing.
Better service delivery, especially if performance based payment is considered.
Better chances of completion on time and within the budget. Page | 7
Risk of default.
Project risks can easily turn into government risks.
Various liabilities on government (direct and indirect).
A long-term contract management system needs to be in place.
An administrative mechanism and special skills in the government are
required to develop and implement PPP projects.
Risk-sharing between public and private sectors.
Long-term relationship between parties.
Public service and ultimate regulatory responsibility remain in public sector.

8.3 Types of PPP


The possibility of Public-Private partnership is wide. A wide range of projects may be
undertaken under PPP. Some of the infrastructure business projects and social projects that
can work well in PPP are:
Telecommunication
Power
Port development
Highways and expressways
Oil and gas
Airports, terminals
Tourism
Water supply, sewerage and drainage
Industrial estates and parks, city and property development
Land reclamation, dredging, etc
Service sectors e.g. health and educational facilities
Environmental, industrial and solid waste management
Railways
Other urban, municipal and rural infrastructure;

And any other infrastructure Project of similar nature.

8.4 APPLICABILITY OF PPP

8.4.1 Applicability of PPP


Any project that generates public goods and services may be considered under the public-
private partnership, if at least one of the following circumstances exists for the project: -

Prepared by Orchestra
Private Public Partnership (PPP)

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.

8.4.2 Non-applicability of PPP


The following action/activities will not fall under the PPP purview:

Outsourcing of a simple function of a public service;


Creating a government owned enterprise (State Owned Company); and
Borrowing by government from the private sector.

8.5 SECTORAL COVERAGE OF PPP


Any project fulfilling one or more of above-mentioned applicability criteria in any
economic sector, according to the International Standard Industrial Classification (ISIC)
of all Economic Activities, Revision 4, specified by the United Nations, is eligible for
PPP. However, the priority sectors are: -

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);

Prepared by Orchestra
Private Public Partnership (PPP)

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. INSTITUTIONAL FRAMEWORK FOR PPP


For accelerating identification, formulation, appraisal, approval, monitoring and financing of PPP
projects, a simplified and dedicated institutional framework is required.

9.1 Structure

The institutional framework for developing strategy, identification, formulation, appraisal,


approval, monitoring and evaluation of PPP projects is presented below:
Public-Private Partnership Advisory Council (PPPAC);
Cabinet Committee on Economic Affairs (CCEA);
Office for Public-Private Partnership;
Line Ministry/implementing agency;
Finance Division; and
Planning Commission.

9.2 Public-Private Partnership Advisory Council (PPPAC)


A PPP Advisory Council (PPPAC) is to be established that will advise on the overall PPP policy and
give broad guidance on PPP affairs. The composition of PPPAC will be as follows:

1) Prime Minister Chairperson


2) Finance Minister, Ministry of Finance Vice- Chairperson
3) Minister, Ministry of Planning Member
4) Minister, Ministry of Local Government,
Rural Development and Cooperatives Member
5) Minister, Ministry of Industries Member
6) Minister, Ministry of Commerce Member

Prepared by Orchestra
Private Public Partnership (PPP)

7) Minister, Ministry of Communications Member


8) Minister, Ministry of Posts and Telecommunications Member
9) Minister, Ministry of Shipping Member
10) Minister, Ministry of Law,
Justice and Parliamentary Affairs Member
11) Minister, Ministry of Housing and Public Works Member Page | 10
12) Minister, Ministry of Health and Family Welfare Member
13) Minister, Ministry of Foreign Affairs Member
14) Minister, Ministry of Education Member
15) Advisor (Economic Affairs) to Prime Minister Member
16) Advisor (Power, Energy and Mineral Resources)
to Prime Minister Member
17) Executive Chairman, Board of Investment Member
18) Minister, Ministry of Power,
Energy and Mineral Resources Member
19) Minister, Ministry of Science and ICT Member
20) Governor, Bangladesh Bank Member
21) President, Federation of Bangladesh
Chambers of Commerce & Industries (FBCCI) Member
22) President, Foreign Investors
Chamber of Commerce and Industry (FICCI) Member
23) Principal Secretary, Prime Ministers Office Member-Secretary

9.2.1 The Role of the PPPAC


To provide guidance to Office for Public-Private Partnership, line Ministries, when
necessary, for accelerating PPP Projects;
To provide advice on any possible bottlenecks relating to inter ministerial
coordination for implementation of PPP projects; and
To review and ensure achievement of PPP targets at a national level.

9.3 Cabinet Committee on Economic Affairs (CCEA)


Cabinet Committee on Economic Affairs or CCEA means the committee established by the
Government under Clause 18 of the Rules of Business, 1996.

9.3.1 The Role of CCEA related to PPP


To approve guidelines and procedures related to formulation, appraisal and approval
of PPP projects and their modifications;
To approve various model documents for general use and use for specific types of
PPP projects and their modifications;
To approve the procedure and guidelines for financial participation of the government
in PPP projects to be issued by the Finance Division;
To review and modify the classes and threshold investment values of PPP projects;

Prepared by Orchestra
Private Public Partnership (PPP)

To review contingent liability and impact on macroeconomic fundamentals for Large


PPP projects;
To recommend for enactment of PPP-related policy, laws, rules, regulations as and
when required;
To approve special and pro-poor incentives to PPP projects proposed by the line
Page | 11
Ministry/implementing agencies;
To provide In Principle approval for Medium and Large PPP projects;
To approve selected bidder for Large PPP projects after Request for Proposal stage;
To approve termination of PPP contract as proposed by the line Ministry; and
To approve organizational structure of Office for PPP.

9.4 Office for Public-Private Partnership (PPP)


For the promotion and efficient handling of PPP projects, an Office for PPP shall be
established, through resolution or by legal instrument, as a separate office under the Prime
Ministers Office. The Office for PPP will be formed as an autonomous unit having
significant autonomy on administrative and financial matters in discharging its mandated
functions. The Office for PPP will consist of officials recruited from public sector and private
sector, selected on a competitive basis, having knowledge and expertise on infrastructure/PPP
projects. The Office for PPP shall be headed by a Chief Executive Officer (CEO). The CEO
of the Office for PPP shall report directly to the Honorable Prime Minister.

9.4.1 The Role of the Office for PPP


To initiate, develop, formulate PPP projects;
To actively promote PPP to various potential investors;
To maintain a panel of experts for PPP projects;
To conduct pre-feasibility, feasibility studies and prepare relevant bidding documents,
when necessary;
To secure annual technical assistance financing for conducting prefeasibility,
feasibility studies and preparation of relevant bidding documents;
To seek appraisal for VGF for PPP projects;
To propose for approval of various laws, rules, regulations, model documents,
guidelines, procedures for general use and use for specific types of PPP projects;
To support line Ministries/implementing agencies in tendering and selection of
investors;
To undertake awareness creation activities and build capacity in line Ministries and
implementing agencies on PPP affairs;
To monitor PPP projects including the linked components;
To facilitate risk mitigation measures for private investment; and
To maintain an up-to-date internet portal with public access to laws, rules,
regulations, model documents, and short description and scope of negotiated PPP
projects, and secure access to private participants for tracking progress of processing
of specific PPP projects.

Prepared by Orchestra
Private Public Partnership (PPP)

10. Overview of PPP in Bangladesh

10.1 Background of the study


Page | 12
In order to achieve the Vision 2021 goal of Bangladesh becoming a middle income country
by 2021, we will need to ensure a more rapid, inclusive growth trajectory. To reflect the
aspirations of the people the target of the government is to raise the GDP growth rate to 8
percent by 2013. To achieve this GDP growth rate, the share of investment to GDP needs to
be raised to 35-40 percent. At present average investment GDP ratio is 24-25 percent, which
is lower than the national savings ratio. One estimate suggests that to sustain GDP growth
rate of 8 percent in 2013 and beyond requires additional USD 28 billion or BDT 1.96 trillion
for 2010-2015. To reduce the investment deficit, participation of the private sector through
public-private partnership (PPP) is an important route. In order to create an enabling
environment for attracting private investments on a sustained basis, GOB has taken a series
of measures. Previously, the GOB had issued the Bangladesh Private Sector Infrastructure
Guidelines (PSIG) for implementing the PPP Projects. There has been some success in
attracting private investment through PPP route in the power, gas and telecom sectors. The
Government seeks more investment in these and other sectors such as ports, roads, railway,
water supply, waste management, tourism, e-service delivery etc.

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.

Prepared by Orchestra
Private Public Partnership (PPP)

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.
Page | 13
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).

10.3 Existing Framework of Bangladesh PPP


In 1996, the government adopted a private sector power generation policy to promote private
sector participation. In 1997, under administrative control of the Economic Relation Division,
Infrastructure Development Company ltd (IDCOL) was established in order to promote
private sector investment in infrastructure development. Similarly, Infrastructure Investment
Facilitation Center (IIFC) was established by the government to assist relevant ministries
divisions or agencies with formulation of project proposal and screening as well as to provide
technical assistance. Later in 2004, under Public Private Partnership initiative, Bangladesh
Private Sector Infrastructure Guidelines (PSIG), which forms the basis of the current PPP,
were issued in order to boost individual investment in the development and maintenance of
infrastructure. In 2007, a 5 year term Investment Promotion and Financing Facility (IPFF)
endowed with BDT 4.18 billion (equivalent to USD 60 million) was set up in Bangladesh
Bank to finance government approved PPP based infrastructure development projects to be
implemented by the private sector. Later in 2008, policy to promote private sector
participation in power sector was formulated. Although these initiatives have been successful
in financing and implementing a few small scale infrastructure development projects, they are
not sufficient to cater to the requirements and potential of the country. Therefore, to reduce
the plight of the public and to boost economic development, an initiative is being undertaken
to revisit the current PPP framework and facilities.

10.4 Progress of PPP Implementation under the Present Framework

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:

Prepared by Orchestra
Private Public Partnership (PPP)

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.

10.5 Proposed Sectors of PPP in Bangladesh

1) Health Sector
2) Education Sector
3) Infrastructure Development
4) Tourism Sector
5) ICT Sector
6) Industries

Prepared by Orchestra
Private Public Partnership (PPP)

10.6 Lists of projected to be implemented under PPP


Page | 15

Prepared by Orchestra
Private Public Partnership (PPP)

10.7 List of PPP Project under existing framework


Page | 16
List of Recent Projects (Approved in the National Economic Council under Annual
Development Program of)

11. Study on Completed Projects under PPP

11.1 Mayor Mohammad Hanif Flyover

Infrastructure development is one of the top priorities of a country's economic progress.


Planned and well connected infrastructure services attract foreign direct investments and
boost local investments. To meet the present and future demand for infrastructure
development, developing and least developed countries like Bangladesh always face scarcity
of their own resources. Therefore, to accelerate infrastructure development, the Government
has encouraged private sector participation in infrastructure projects. The first such project is
the Jatrabari-Gulistan Flyover project in Dhaka which is to be implemented on a Build,
Operate, Own and Transfer (BOOT) basis. With the vision to be among the leaders in
infrastructure development, Orion Group incorporated Orion group, a concession company to
bid for the Jatrabari-Gulistan Flyover Project. After a highly competitive bidding, Orion
Group was awarded the concession to design, construct, maintain and operate the Flyover.
The Concession Agreement, the first of its kind in Bangladesh, was sealed on June 21, 2005.
This hi-tech capital intensive project is going to be the first Private Public Partnership (PPP)
project in Bangladesh. After their commencement the present government as a step to
encourage private investments took necessary actions to introduce Private Public Partnership
(PPP) in the infrastructure sector of the country. In this vision, the government has taken
decisive initiatives to complete the construction of the Jatrabari-Gulistan Flyover on priority
basis. Orion group was awarded the Jatrabari-Gulistan Flyover Project on a Build, Own,

Prepared by Orchestra
Private Public Partnership (PPP)

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:

Name of the Project:Jatrabari-Gulistan Flyover Project on BOOT Basis


Line Ministry: Ministry of Local Government, Rural Development and Cooperation
Govt. Executing Agency: Dhaka City Corporation
Design Review & Finalization Consultant: Consulting Engineering Services (India) Pvt.
Design Review & Finalization Consultant: Consulting Engineering Services (India)
Pvt.Ltd. in association with DCC, Devcon, DUL.
Supervision Consultant: Consulting Engineering Private Limited.
Concessionaries Contractor: Simplex Infrastructure Ltd. India

11.1.1 Salient Features of the Flyover

Total length including ramps 9 km.


13 Ramps (6 entry ramps, 7 exit ramps) to connect with existing road network and bus
terminal.
Pre- cast; pre stress segmental box type Superstructure.
4 lane divided carriageway for movement of traffic in both the directions.
Minimum clear height along the carriageway under the flyover will be 5.5 m in accordance
with the AASHTO, IRC and 7.2 m at level crossing in accordance with Bangladesh railway

11.1.2 Areas Covered:

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.

11.1.3 Benefits of the Project:

Prepared by Orchestra
Private Public Partnership (PPP)

Ease/Reduce the traffic congestion of the southern part of Dhaka city.

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.

Contribute towards national economy development & future investment

11.2 Meghnaghat Power Project

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

(i) address Bangladeshs power shortages, and


(ii) Improve the country's extremely low rate of access to electricity.

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.

Prepared by Orchestra
Private Public Partnership (PPP)

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.

12. Advantages & Disadvantages of PPP in Bangladesh


12.1 Advantages of public private partnerships

The advantages of public private partnerships can be defined as follows:

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

Prepared by Orchestra
Private Public Partnership (PPP)

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.

Prepared by Orchestra
Private Public Partnership (PPP)

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.

12.2 Disadvantages of public private partnerships

The disadvantages of public private partnerships can be defined as follows:

1. Higher transaction cost


PPPs represent opportunities to reduce total project cost. However, tendering costs
and developing costs are usually much higher than under conventional procurement.
The transaction cost will increase with the complexity of relations and the duration of
such relations. They will decline with more and more experience with PPPs and its
(standardized) contracts.
2. Higher capital cost

Prepared by Orchestra
Private Public Partnership (PPP)

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

Prepared by Orchestra
Private Public Partnership (PPP)

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
employment. This fear will have to be dealt with seriously; otherwise it could Page | 23
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.

10. Existing service providers


Where incumbent service providers, often state owned, remain in the market they are
often the subject of preferential treatment. This goes hand in hand with a tendency, in
many countries, to invite private participation in the absence of a commitment to
overall sectoral liberalization.

11. Public governance


Many private investors have had to contend with conflicting public authorities, for
instance central versus sub-national governments, or regulatory bodies versus
ministries. In addition, non-existent or inexperienced regulators created avoidable
uncertainty about price and tariff setting.

12. Regulatory framework


A weak legal environment necessarily leads to concerns for non-state underwriters of
long-term contracts. Existing legislation in many countries was designed to define
public sector responsibility in infrastructure and is inadequate in a situation of private
participation. In addition, human capital such as relevant regulatory expertise is in
short supply in many countries without much experience in privately operated
utilities.

13. Award procedures


The award procedures often lack of transparency and are not based on objective
evaluation criteria. Corruption has been a problem- in general, and in the specific
context of awards. Also, some projects have been compromised by official preference
for local participation, preferred sub-contractors or suppliers and the employment of
weakly qualified local staff.

14. Conflicting aims


Often one objective (that is, one PPP project) has been expected to serve several
policy objectives, from financial, to macroeconomic, to social, to environmental.

Prepared by Orchestra
Private Public Partnership (PPP)

Protests by local communities and non-governmental organizations against individual


projects have rebounded on investors rather than the initiating authorities.
15. Flexibility
between the two partners as well as the contract and staff involved throughout the
process: If one party feels they are losing some of the control they may work on
adopting more rules and regulations throughout the process instead of working Page | 24
together to be flexible and mediate an issue.
16. Timeline
Non-profits are working on a long-term timeline. Many of their goals can only be
achieved with long-term commitment; this is where their focus will lie. For-profit
organizations are more short-term oriented because of short-term goals focusing
primarily on profitability. Finally, government agencies' timeline depends a lot on
election timelines and therefore can change regularly.
17. Focus of the project
Partners may not have the same focus when entering into a partnership even though
they think they might.
18. Funding priorities
When parties cannot agree on where funding should go this can sometimes lead to
losses in time, resources, and the overall funding for the project. Funding priorities for
government bodies looks typically at where the public's funds were spent in relation
to the contract made. This then typically is looked at as in how many hours of
participations, forms filled out, meals served, etc. Neighborhood organizations or
small and local non-profits saw a broad source of funding during the early years but
there has been a shift in funding more recently reducing the overall funding and
seeing more of it go to larger agencies focusing on large grants.
19. Accountability
With the rise in public-private partnerships there is also a rise in the responsibility that
the non-profits tend to hold. With the government relying on many more of these
organizations to provide the public services they cannot it is also proving difficult for
the government to hold these non-profits responsible When responsibilities are not set
to the letter this can cause some in managerial positions to take the back seat, seeing
their counterparts taking the initiative to get tasks done. This leaves an unbalance of
work and sometimes those with the most stills are not doing the job. This can also be
brought on by under management causing more problems such as a lack of focus for
the projects, mismanaged funding, and miss communication. Too many projects and
partnerships can also lead to a lack of accountability. When there are too many tasks
they seem to all fall short of the hoped perfection some partners may be taking over
roles of others because accountability has not been well defined. This can also lead to
some taking advantage of others when they note the any weakness. This can cause a
distrustful partnership
20. Communication or understanding
One of the largest issues that can be discussed, communication can be a huge
downfall and can contribute to many of the other risks within partnerships. It can be
said that when entering into a cross-sector partnership it is difficult to understand and

Prepared by Orchestra
Private Public Partnership (PPP)

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
While working together is important it is still strength to be able to work on parts of Page | 25
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.

13. Government provide incentives to encourage investment in PPP


projects
The government of Bangladesh has provided for a number of incentives and benefits for
PPP investors in its PPP policy framework. These include:
Viability Gap Financing: A budgetary fund to provide financial subsidy for
PPP projects that have high socio-economic value but are not sufficiently
commercially viable to be delivered on a PPP basis. Up to 30% of the total
project cost can be subsidized either as part of a capital contribution during
construction or in the form of annuity payments during operation.
Fiscal Incentives: There are provisions permitting PPP investors to benefit from
various fiscal incentives (for e.g. reduced import tax on capital goods, various tax
holidays) to reduce the cost of implementing the project and to enhance viability
of project.
Special Incentives (Non-Fiscal): Any specific project may get special incentives
or other no fiscal incentives to support the implementation of policy objectives or
to enhance the ease and efficiency of delivering the project. These may include
exemption from specific provisions related to insurance regulations, banking
regulations, foreign exchange regulations etc.
Unsolicited Proposal: To encourage private investor participation and
innovation in PPP projects, government has permitted the submission of

Prepared by Orchestra
Private Public Partnership (PPP)

unsolicited proposals for the delivery of PPP projects. However, to ensure


openness and transparency unsolicited proposals are also subject to an open and
competitive procurement process. The unsolicited bidder is incentivized through
the application of either the Swiss Challenge System (where the unsolicited
bidder is given the right to resubmit and enhance his bid) or Bonus System
(where the unsolicited bidder is given a pre-agreed bonus to be applied during Page | 26
the evaluation).

14. Prospect of PPP in Bangladesh


The third world country like Bangladesh must not depend only on the donors for
infrastructure investments. Private-public combined efforts will have the greatest effect in
this sector. The previously predominant areas like energy, transport, water and sanitation,
education and health provide a good offer for the private organizations and the public bodies
to apply the financial acumen and managerial skill while sharing the risks associated
(http://web.worldbank.org). H. Parkfound that, in Korea, PPPs are used in the development of
schools, hospitals, and public housing. A.R. Vining ET al. found that in the U.S., PPPs are
found in sectors such as prisons and water supply and waste-water treatment.

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

Prepared by Orchestra
Private Public Partnership (PPP)

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.

Prepared by Orchestra
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.

Prepared by Orchestra
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)

Prepared by Orchestra