National PPP landscape

Overview

Number of PPPs and Investment in PPPs

PPP Investment

$ 1026.8 M

Number of PPPs Reaching FC

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Value of PPPs Reaching FC

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Revenue Model and Government Support to PPPs

Number of PPPs with Govt. Support

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Number of User Charge PPPs

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Number of Govt. Pay PPPs

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PPPs under Preparation and Procurement

Number of PPPs under Preparation

----

Number of PPPs under Procurement

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FC = financial closure, Govt. = government, M = million.

Bangladesh has been ahead of many of its Asian peers and has evolved with a strong public–private partnership (PPP) regulatory structure that supports private sector investments in infrastructure. It has also created an empowered institutional structure, working directly under the Prime Minister’s Office to drive facilitation of PPPs. A policy and strategy for PPP was introduced in 2010, followed by the PPP Act in 2015, which aimed to spur development of core sector public infrastructure and services. The PPP Act provided a legal framework for the creation of PPPs by involving private sector participation along with the public sector, attracting local and foreign investments, and establishing a reliable authority for driving PPPs.

The PPP Act defines PPP as

“Contractual arrangement between the contracting authority (which may either be the Line Authority or the PPP Authority) and any private partner pursuant to which the private partner

assumes the obligation or responsibility for carrying out any public work or providing any service on behalf of the contracting authority;

in exchange for carrying out the public work or providing any service on behalf of the contracting authority, receives consideration for the work or services from public funds; charges, levies, or fees from the users or service recipients; or a consolidated profit through receiving consideration, charges, or fees for the said work or services; and

accepts the risk arising from carrying out the work in accordance with the terms and conditions of the aforesaid PPP contractual arrangement or providing any service on behalf of the contracting authority."

The act clearly defines the private sector’s obligation to take up a public work, with payments based on annuity, availability payment, or user charges with margin, in line with the risk allocation as defined in a contractual arrangement.

National Framework for Enabling PPPs

PPP Legal and Regulatory Framework

Parameters

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Does the country have -
National PPP law and PPP regulations?
Public financial management laws and regulations?
Sector-specific laws and regulations?
Procurement laws and regulations?
Environmental laws and regulations?
Laws and regulations for social compliance?
Laws and regulations governing land acquisition and ownership?a
Taxation laws and regulations?
Employment laws and regulations?
Licensing requirements?
What are the other components of the PPP legal and regulatory framework?	Guidelines, and Rules related to procurement, financing

aBangladesh Journal of Legal Studies. 2019. Law and Practice for Land Acquisition in Bangladesh. Dhaka. https://bdjls.org/law-andpractice-for-land-acquisition-in-bangladesh/.

Yes
Unavailable

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National Framework for Enabling PPPs

PPP Legal and Regulatory Framework

Evolution of the Public–Private Partnership

A policy framework for PPPs was introduced in Bangladesh in 1996 with the Private Sector Power Generation Policy. This marked the launch of PPP projects in the power sector—the 450-megawatt (MW) Meghnaghat and 360 MW Haripur power projects—which are two early success stories. The policy for encouraging partnerships with the private sector continued with the introduction of the Private Sector Infrastructure Guidelines (PSIG) 2004. The Policy and Strategy for Public–Private Partnership, 2010 (PPP Policy 2010) has been introduced, replacing the PSIG 2004. It updates policies and incorporates best international practice to further boost use of PPPs across multiple sectors and to provide a clear and transparent regulatory and procedural framework 1 . The Government of Bangladesh has enacted the Bangladesh Public Private Partnership Act, 2015 (Act No. XVIII of 2015) after repealing the policy and vision drawn up in 2010.

Between 2010 and 2015, to ease, facilitate, and standardize the process of PPP project preparation and implementation, the government formulated the Guidelines for Viability Gap Funding for PPP Projects in 2012, the Guidelines for PPP Technical Assistance Financing for PPP Projects in 2012, and the PPP Screening Manual in 2013, which together, have helped advance PPPs in the country.

In 2017, the government provided the Policy for Implementing PPP Projects through Government-to-Government (G2G) Partnership, 2017. In 2018, the government also issued Guidelines for Dealing with Unsolicited Proposals, Rules for Viability Gap Funding for PPP Projects, and Procurement Guidelines for PPP Projects. The PPP Policy 2010 shall be deemed repealed in view of the enactment of the PPP Act 2015, according to Section 47(1) of the act 2 . Further, in case of inconsistency with other laws, the provisions of the PPP Act 2015 shall prevail.

The table below explains major improvements in PPP Regulatory Framework based on these amendments.

1Government of Bangladesh, Public Private Partnership Authority. Government Policy. https://www.pppo.gov.bd/government_policy.php(accessed 15 June 2020).
2World Bank Group. 2018. Procuring Infrastructure Public–Private Partnerships in Bangladesh. Washington, DC.

Major Improvements in Public–Private Partnership

Reference Regulation	Brief Explanation
Public–Private Partnership (PPP) Act, 2015	PPPs in Bangladesh are mainly regulated by the Bangladesh PPP Act, 2015 (Act No. 18 of 2015), which was enacted on 16 September 2015. The objective of the act was “to provide for the legal framework for the creation of PPPs by involving private sector participation along with the public sector and attracting local and foreign investments upon connecting Bangladesh with the global economy to ensure extensive investment in infrastructure in different sectors in order to fulfill the basic needs of the people of Bangladesh and to expedite socioeconomic development in the interest of improvement of their living standard, and for establishment of a reliable Authority in this behalf and the matters ancillary thereto.”
Rules for Viability Gap Funding (VGF) for PPP Projects, 2018 replacing Guidelines for VGF for PPP Projects, 2012	The Government of Bangladesh has issued guidelines, published in the Bangladesh Gazette on 9 September 2012, for providing VGF to subsidize economically viable and financially unviable projects if they are constrained to charge affordable user tariffs or utility payments. The guidelines had set the criteria for eligibility to receive VGF and the procedure for submission, appraisal, approval, disbursement, and monitoring of the VGF. These guidelines of 2012 were repealed and replaced by the Rules for VGF of 2018. The VGF Rules were effective beginning 17 October 2018. The rules cover various elements including applicability, eligibility, approval process, disbursement, monitoring, and other administrative processes related to VGF.
PPP Screening Manual 2013	The PPP Screening Manual is the operational guideline for screening proposed PPP projects, with the goal to secure in-principle approval to these projects and allow them to proceed to the project development phase. This manual was developed based on the PPP Guidelines 2010, which represent the government’s existing policy on PPP projects.
Rules for PPP Technical Assistance Fund (PPPTAF) for PPP Projects, 2018 replacing the Guidelines for PPPTAF for PPP Projects, 2012	Through the Guidelines for PPPTAF for PPP Projects, published in the Bangladesh Gazette on 2 July 2012, the government offered technical support to develop infrastructure projects undertaken through PPPs. The guidelines provided procedures to be followed for utilization of the PPPTAF and covered applicability, utilization, approval process, recovery, and monitoring of the Fund. These guidelines were repealed and replaced by the Rules for PPPTAF of 2018. The PPPTAF Rules became effective on 30 October 2018. The PPPTAF Rules define various aspects related to handling of the PPPTAF, including its establishment and management, reporting requirements, sources and applicability, eligibility and approval rules, recovery, monitoring, and accounting rules related to the Fund.
Policy for Implementing PPP Projects through Government-to-Government (G2G) Partnership, 2017	Notified on 7 June 2017 by the PPP Authority, the policy builds on strong bilateral relationships and aims to develop and upgrade large public infrastructure assets in partnership with other countries, support the growing economy in a sustainable manner, and deliver essential public services; and provide the framework for engagement and modality in delivering PPP projects to be undertaken through a G2G partnership, whereby implementation will be carried out with the support of other governments and executed through their state-owned or private sector entities.
Guidelines for Dealing with Unsolicited Proposals, 2018	Notified in 2018, the guidelines relate to guidance on dealing with unsolicited proposals received by the contracting agencies/PPP Authority. It covers definitions, process of submission and evaluation, eligibility, approval processes, and ways of handling unsolicited proposals.
Procurement Guidelines for PPP Projects, 2018	Notified officially on 1 February 2018, these guidelines set out the process, time frames, and institutional roles and responsibilities for delivering each of the phases required for the selection of a private partner. These guidelines apply where the contracting authority is selecting a private partner for the delivery of its PPP project under the PPP Act framework, unless otherwise notified.

Source: Government of Bangladesh, Public Private Partnership Authority. Government Policy. http://www.pppo.gov.bd/government_policy.php (accessed 15 June 2020).

Public–Private Partnership Institutional Setup

The PPP Policy 2010 led to establishment of the PPP Office the following year. The impetus in the development of the PPP program began in 2012. The PPP Office had played a crucial role in reinvigorating PPPs in Bangladesh until the formation of the PPP Authority under the PPP Act of 2015. The PPP Authority had significant autonomy in administrative and financial matters and was set up under the Prime Minister’s Office. The PPP Authority acted as the central point for promoting the PPP concept and supporting line ministries and agencies in developing PPPs.3

A number of other institutions were also created to provide comprehensive support and ensure the success of the PPP program. The PPP Unit was established in the Finance Division to oversee, support, and process the requests for financing for the PPP program. The Bangladesh Infrastructure Finance Fund Ltd. was established to provide lending support to PPP project sponsors.

The PPP Authority had also developed a network of focal points at all relevant line ministries to support the processing of PPP projects, and it started the process of establishing PPP cells at select agencies dealing with multiple PPP projects.

Some of the relevant policies and laws in conducting PPP business in Bangladesh were the following:

The Income Tax Ordinance, 1984;
The Foreign Exchange Regulation Act, 1947;
Foreign Private Investment (promotion and protection) Act, 1980;
Investment Board Act, 1989;
Industrial Policy, 1999;
Arbitration Act, 2001;
Transfer of Property Act (1882), Registration Act (1908), Land Reforms Board Act (1989), and Acquisition and Requisition of Immovable Property Ordinance (1982);
The Companies Act, 1994; and
Environmental Conservation Act, 1995 (and amendment, 2000), and Environmental Conservation Rules, 1997.

3Government of Bangladesh, Public Private Partnership Authority. Annual Report 2018–2019. http://www.pppo.gov.bd/annual_report.php (accessed 15 June 2020) although it is noted that since the date of this review, a subsequent annual report has been published.

National Framework for Enabling PPPs

Types of PPPs

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Service Contracts

Management Contracts

Affermage or Lease Contracts

Design-Bid-Build (DBB)

Design-Build (DB)

Build-Operate-Transfer (BOT)

Design-Build-Finance-Operate-Transfer (DBFOT)

Build-Own-Operate (BOO)

Concessions

Joint Venture

Hybrid Contracts

Others

Build-Own-Operate-Transfer (BOOT)
Build-Lease-Transfer(BLT)
Partial Divesture
Project Finance Initiative

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National Framework for Enabling PPPs
Types of PPPs

The PPP Law 2015 defines a PPP project as “any public sector project which is undertaken for implementation through public–private partnership.” The law has not limited PPPs to any specific type and covers projects that include (i) construction or operation of any new infrastructure or a plan to do both; (ii) a plan to reconstruct any existing infrastructure; (iii) a plan to carry out both activities (i) and (ii); or (iv) delivery of all those goods or services, which are not related to any infrastructure facility. Although specific types of PPP contracts are not expressly defined in a regulatory documentation, the contractual models for PPPs in Bangladesh included in Your Guide to PPP in Bangladesh are as follows:

Joint venture and partial divestiture;

Concessions, build–operate–transfer, build–own–operate–transfer, build–own–operate, Project Finance Initiative, build–lease–transfer, design–build–finance–operate

Leases and affermage; and

Management and operating contracts

National Framework for Enabling PPPs

Eligible Sectors for PPPs

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Transportation Infrastructure

Road Infrastructure

Highways and expressways including mass-transit, bridges, tunnels, flyovers, interchanges, city roads, bus terminals, commercial car parking etc. (ISIC 42 and 49)

Rail and Mass Transit Infrastructure

Railway systems, rolling stock, equipment and facilities (ISIC 49)

Waterways Infrastructure

Port development (sea, river and land) including inland container terminals, inland container depot and other services (ISIC 52); River passenger terminals /landing stations (ISIC 52)

Seaport Infrastructure

Deep sea port development (ISIC 52)

Airport Infrastructure

Airports, terminals and related aviation facilities (ISIC 42 and 51)

Logistics Infrastructure

inland container terminals, inland container depot and other services (ISIC 52);

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Water, Wastewater, and Solid Waste Management Infrastructure

Water Resources and Irrigation Infrastructure

Land reclamation, dredging of rivers, canals, wetlands, lakes and other related facilities (ISIC 42)

Water Supply Infrastructure

Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Wastewater Infrastructure

Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Solid Waste Management Infrastructure

Environmental, industrial and solid waste management projects; (ISIC 38-39)

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ICT Infrastructure

Telecommunication Infrastructure

Telecommunication systems, networks and services including information and communication technology (ICT) (ISIC 60-63)

IT and Informatics Infrastructure

e-service delivery to citizens (ISIC 85)

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Energy and Electricity Infrastructure

Power Generation

Power generation, transmission, distribution and services (ISIC 35)

Power Transmission and Sub-Transmission

Power generation, transmission, distribution and services (ISIC 35)

Power Distribution

Power generation, transmission, distribution and services (ISIC 35)

Energy Conservation Infrastructure

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Other Infrastructure

Zone Infrastructure

Economic zone, industrial estates and parks, city and property development, including services to support commercial and noncommercial activities (ISIC 81-82)

Oil and gas infrastructure, including bio-energy

Exploration, production, transmission, and distribution of oil, gas, coal and other mineral resources (ISIC 05-09); Oil refinery, and production of LPG (ISIC 19);

Tourism Infrastructure

Tourism industry (ISIC 79)

Sports, arts, and culture facility infrastructure

city and property development, including services to support commercial and noncommercial activities

Penitentiary infrastructure

Traditional market

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National Framework for Enabling PPPs

Eligible Sectors for PPPs

Whereas the Policy and Strategy for PPP (2010) defined the specific sectors eligible for PPP, the PPP Law (2015) takes a less prescriptive approach, and instead entitles the relevant contracting authority to enter in a PPP contract for the construction or reconstruction of infrastructure. Infrastructure is very broadly defined as “any new or existing physical or nonphysical infrastructure in the public sector through which public goods or public services or both are created or provided”.

The Policy and Strategy for PPP (2010) states that a project is eligible for PPP if it fulfills the applicability criteria in any economic sector, according to the International Standard Industrial Classification of all Economic Activities, Revision 4, specified by the United Nations. However, it also identifies priority sectors that include those indicated in the table below.1

1Government of Bangladesh, Public Private Partnership Authority. 2010. Policy and Strategy for Public–Private Partnership (PPP), 2010. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Policy-Strategy-for-PPP-Aug2010.pdf.

Projects Eligible for Public–Private Partnership Mode of Procurement

Eligible Sectors
Sector	Subsectors	Asset/Facility Type
Transport and Logistics	Roads	Highways and expressways including mass transit, bridges, tunnels, flyovers, interchanges, city roads, bus terminals, and commercial car parking (ISIC 42 and 49)
	Railways	Railway systems, rolling stock, equipment, and facilities (ISIC 49)
	Airports	Airports, terminals, and related aviation facilities (ISIC 42 and 51)
	Seaports	Port development (sea, river, and land) including inland container terminals, inland container depots, and other services (ISIC 52) Deep sea port development (ISIC 52)
	Transmission pipelines
	Multimodal logistics parks
	Container terminals, dry ports
Energy	Power generation	Power generation, transmission, and distribution services (ISIC 35)
	Power transmission
	Power distribution
	Natural resources
	Oil and gas	Exploration, production, transmission, and distribution of oil, gas, coal and other mineral resources (ISIC 05-09) Oil refinery and production of LPG (ISIC 19)
	Energy conservation and street lighting
Water and Sanitation	Water supply	Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39)
	Water resources and irrigation	Land reclamation; dredging of rivers, canals, wetlands, and lakes; and other related facilities (ISIC 42)
	Wastewater
	Solid waste management	Environmental, industrial, and solid waste management projects (ISIC 38–39)
Social Infrastructure	Education	Social infrastructure (e.g., health, education, human resources development, research and development, and cultural facilities) (ISIC 85–88)
	Health care
	Public housing
	Government buildings
	Industrial zones and special economic zones	Economic zones, industrial estates and parks, city and property development, including services to support commercial and noncommercial activities (ISIC 81–82)
	Exhibition and convention centers
	Sports, arts, and cultural facilities
	Public markets
Other Infrastructure Sectors	ICT	Telecommunication systems, networks, and services, including ICT (ISIC 60-63) e-service delivery to citizens (ISIC 85)
	Industry	Production of fertilizer (ISIC 20)
	Poverty alleviation	Poverty alleviation projects (ISIC 84) Pourashava and village water supply (ISIC 36) Remote Area Power Supply Systems, rural gas supply (ISIC 35) Rural internet projects (ISIC 61) River passenger terminals/landing stations (ISIC 52) Rural health services and hospitals (ISIC 86) Irrigation and other agricultural services (ISIC 36)
	Tourism	Tourism industry (ISIC 79)

ICT = information and communication technology, ISIC = International Standard Industrial Classification, LPG = liquefied petroleum gas.

Source: Government of Bangladesh, Public Private Partnership Authority. 2010. Policy and Strategy for Public–Private Partnership, 2010. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Policy-Strategy-for-PPP-Aug2010.pdf.

In addition to the above, the policy indicates other urban, municipal, and rural projects that the government views as priority areas that would help support economic development. However, considering that the PPP Law provides a broad definition of infrastructure and does not restrict PPPs to any particular sector, the above list may be considered inclusive. Other sectors and projects identified by contracting authorities may also be considered for evaluation. It may further be noted that in Bangladesh, energy sector independent power producers (IPPs) are regulated by separate laws and generally follow a different approval and procurement method.

ICT = information communication technology.

National Framework for Enabling PPPs

PPP Institutional Framework

Parameters

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Does the country have a national PPP unit?
What are the functions of the national PPP unit?
Supporting the design and operationalization of the national PPP-enabling framework?
Helping develop a national PPP pipeline?
Supporting the arrangement of funding for project preparation (budgetary allocations, technical assistance funding from multilateral development agencies, operating a dedicated project preparation/project development fund)?
Guidance for project preparation to and coordination with the government agencies responsible for sponsoring the projects?
Making recommendations to the PPP Committee and/or other approving authorities to provide approvals associated with various stages of PPP process?

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National Framework for Enabling PPPs

PPP Institutional Framework

The PPP Authority in Bangladesh plays the role of a PPP unit for the country. Clause 9 of the PPP Act of 2015 details the power and functions of the authority, which are wide and overarching in the overall PPP program. Some of those functions are

promulgating, approving, publishing in the gazettes; and using PPP-related policies, regulations, directions, and guidelines;
providing the necessary direction to the contracting authority;
framing technical and best practice requirements, prequalification, and bid documents;
developing model PPP contracts;
providing consent, establishing the process, approving a bidder, approving a termination (where applicable), approving model contracts, and appointing advisors for PPP projects; and
reviewing and monitoring the PPP program.1

1Government of Bangladesh, Public Private Partnership Authority. 2015. PPP Act 2015. Dhaka. http://www.pppo.gov.bd/download/ppp_office/PPPLaw-2015.pdf.

Key Agencies and Their Roles in Promoting Public–Private Partnerships

Institution	Role
Cabinet Committee on Economic Affairs	Among other things, this committee provides in-principle approval and final approval for a PPP project for the contracting authority to enter into a contract with the preferred bidder and/or the project company.
PPP Authority	The PPP Authority was initially established as the Office for PPP in September 2010 under the Prime Minister’s Office to promote the PPP concept. Under the 2015 PPP Act, the Office for PPP was institutionalized as a statutory authority. Its powers and functions are set out in the PPP Act. They include providing decisions on the financial participation and provision of incentives by the government; framing technical and best practice requirements, prequalification, and bid documents; approving the selected bidder; approving the termination of PPP contracts; and approving model PPP contracts.
Line Ministry/Implementing Agency (or contracting authority)	Responsible for the identification, formulation, prequalification, tendering, contract award, and implementation oversight of PPP projects based on the PPP contract.
MOF PPP Unit	Established in the Finance Division of the MOF, the unit is responsible for overseeing the fiscal viability of PPP projects and sanctioning support funding for their development and financing, including managing the three key funds: the PPPTAF, the viability gap funding, and the Bangladesh Infrastructure Finance Fund.

MOF = Ministry of Finance, PPP = public–private partnership, PPPTAF = Public–Private Partnership Technical Assistance Fund.

Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

Entities Responsible for Public–Private Partnership Project Identification, Approval, and Oversight

Parameter
Who is responsible for identifying, preparing, and procuring public–private partnership (PPP) projects?	Line ministries and agencies
Is there a PPP committee for providing approvals at various stages of PPP projects?	The Cabinet Committee on Economic Affairs provides approvals at various stages.
Who are the approving authorities other than the PPP Committee for PPP Projects?	Approving the selected bidder and approving termination of PPP contracts are powers within the PPP Authority.
Does the country have an independent think tank for various PPP planning, budgeting, and policy decisions?	The PPP Authority has this role.
Is there a legislature for PPP program oversight?	The PPP Authority has this role.

The responsibility for the delivery of PPP projects rests with the line ministries and agencies that have been given the role under the Rules of Business of the Government. Line ministry and agency responsibilities include identification and development of the project, the procurement process, selection of the final bidder, and signing of the PPP contract with a private partner. The PPP Authority’s role also extends to supporting line ministries and agencies in those responsibilities.

According to Section 14 of the PPP Act 2015, in-principle and final approvals for a PPP project shall be granted by the Cabinet Committee. Both the PPP Law and the PPP Policy refer to the Cabinet Committee on Economic Affairs (CCEA), the committee established by the government under Clause 18 of the Rules of Business, 1996.

The CCEA functions, according to Section 11.3 of the PPP Policy 2010, include

providing in-principle approval for medium and large PPP projects, and
approving a selected bidder for large PPP projects after the request for proposal stage.

The PPP Law also indicates that the contracting authority or, as the case may be, the PPP Authority, may, subject to the approval of the Cabinet Committee, declare any project a national priority project as necessitated to accelerate the socioeconomic development of the country or to mitigate the effects of any major adversity faced by the general public on an urgent basis.

Various Entities and Their Roles in the Public–Private Partnership Process

Various Entities and Their Roles

PPP = public–private partnership, VGF = viability gap funding.

Source: Government of Bangladesh, Public Private Partnership Authority. 2018. Recent Experience of Establishing a PPP Framework to Mitigate Fiscal Risks in Bangladesh. Presentation for the Tokyo Fiscal Forum 2018. 4 June. https://www.mof.go.jp/pri/research/seminar/fy2018/tff2018_s3_03.pdf.

Entities Responsible for Public–Private Partnership Project Monitoring

Parameter
Is there an entity for monitoring of public–private partnership (PPP) projects after commercial close?	UA
Is there an entity for monitoring and management of fiscal risks and liabilities from PPP projects for the Ministry of Finance (MOF)?	PPP Unit under MOF

UA = Unavailable

One of the functions of the PPP Authority, according to the PPP Act 2015, is "supervising and coordinating the progress of PPP projects." However, the act does not provide any other framework or details relating to project monitoring or contract management.

The Finance Division of the Ministry of Finance has established the MOF PPP Unit. That unit has responsibility for overseeing the fiscal viability of PPP projects and sanctioning support funding for their development and financing. The MOF PPP Unit has management responsibility for overseeing three key funds—the PPP Technical Assistance Fund, the viability gap funding (VGF), and the Bangladesh Infrastructure Finance Fund.2

The PPP Unit works on behalf of the government to monitor budget implications of upcoming PPP projects and to manage any contingent liability exposure the government may deem appropriate to support PPP project financing. In this role, the PPP Unit provides critical support to overall public financial management by giving input to the overall national Medium-Term Budgetary Framework.

2Government of Bangladesh, Public Private Partnership Authority. MOF PPP Unit. http://www.pppo.gov.bd/mof_ppp_unit.php#:~:text=Public%20Private%20Partnership%20Authority%20Bangladesh&text=The%20Finance%20Division%20of%20the,for%20their%20development%20and%20financing.

National Framework for Enabling PPPs

The PPP Process

Parameters

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Does the PPP legal and regulatory framework provide for a PPP implementation process covering the entire PPP life cycle?
Does the Feasibility Assessment Stage cover
Technical feasibility?
Socioeconomic feasibility?
Environmental sustainability?
Financial feasibility?
Fiscal affordability assessment?	a
Legal assessment?	a
Risk assessment and PPP project structuring?	a
Value for Money assessment?	a
Market sounding with stakeholders?
Is the PPP procurement plan required?
Is there a need to set up a separate PPP procurement committee?
Is competitive bidding the only method for selection of PPP private developer?
Is the prequalification stage necessary? Or does the PPP legal and regulatory framework allow flexibility to skip the prequalification stage?	(single stage bidding is allowed)
Does the PPP legal and regulatory process provide the option to the preferred bidder for contract negotiations?
Does the PPP legal and regulatory framework allow unsuccessful bidders to challenge the award/submit complaints?
What is the maximum time allowed for submitting a complaint/challenging the award by unsuccessful bidders from the announcement of the preferred bidder?	5 days
Does the PPP legal and regulatory framework provide for transparency?
Which of the following are required to be published?
Findings from the feasibility assessment?
Procurement notice?
Outcome of stakeholder consultations from market sounding?
Clarifications to prequalification queries?
Prequalification results?
Clarifications to pre-bid queries?
Results for the bid stage and selection of preferred bidder?
Final concession agreement to be entered between the government agency and the preferred bidder? And other PPP project agreements executed between government agency and preferred bidder?
Confidentiality

aWhile these elements are not specifically referred to in the procurement guidelines/PPP Law, they are evaluated as per the process under the PPP Screening Manual and are required.

Yes
No
Unavailable

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National Framework for Enabling PPPs

The PPP Process

Section 14 of the Procurement Guidelines for PPP Projects, 2018 on the Feasibility Study of the PPP Project indicates that "To test the overall viability and in order to finalize the scope and commercial structure of the PPP Project, a feasibility study of the PPP Project must be carried out by or on behalf of the Contracting Authority. The scope of the feasibility study may include, but shall not be limited to, the following: technical issues, commercial and financial considerations, environmental factors, social issues, linked projects, and any other issues that may be deemed relevant by the PPP Authority or the contracting authority."1

Although not expressly stated in the Procurement Guidelines for PPP Projects (2018), the World Bank Benchmarking of PPP Procurement in Bangladesh mentions that value for money and fiscal affordability assessments are carried out as part of the project development, and the PPP Knowledge Lab makes reference to risk identification and market assessment during preparation of the PPPs.

Section 47 of the Procurement Guidelines provides for negotiations. The Evaluation Committee shall, in order to finalize the PPP contract, negotiate with the preferred bidder in relation to only those terms and conditions, which are identified as capable of being negotiated in the PPP contract. The contracting authority may include other representatives to join the negotiation meetings alongside the Evaluation Committee. It also indicates that negotiations in relation to price and/or rates would only be permitted where it could improve the position of the contracting authority.

The Procurement Guidelines of 2018 set out the process, timescale, and institutional roles and responsibilities for delivering each of the phases required for selection of a private partner. The guidelines are based on four phases of the project development life cycle: identification phase, development phase, bidding phase, and approval and award phase.

The bidding phase for PPP projects can either be a single-stage bidding process or a two-stage bidding process:

Single-stage bidding process comprises only an invitation for bid (IFB).
Two-stage bidding process comprises a request for qualification (RFQ) and a request for proposal (RFP).

1Government of Bangladesh, Public Private Partnership Authority. 2018. Procurement Guidelines for PPP Projects. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Procurement-Guideline-for-PPP-Projects-2018.pdf.

Activities from Identification to Award Stage of Public–Private Partnership Projects

Phase	Description
Identification Phase	The identification phase is the first phase in selecting a private partner for the delivery of a PPP project. During this phase, the contracting authority and/or the PPP Authority may identify the project to be delivered on a PPP basis, apply the opinion of the PPP Authority in relation to the project, and seek in-principle approval. Steps in this phase include the following: The contracting authority (or the PPP Authority) identifies the project to be delivered on a PPP basis preferably from the Government’s Annual Development Program. The contracting authority may consult the PPP Authority on the various elements of appropriate project identification. Where the contracting authority is not an applicable line ministry, such contracting authority will submit the proposal for the identified project (PPP project proposal) for endorsement by its applicable line ministry, which may seek views and feedback from the PPP Authority. After its review, the line ministry may endorse, reject, or seek a resubmission of the proposal from the contracting authority. Screening of the project proposal by the PPP Authority before submission to the CCEA for in-principle approval. A prefeasibility study may be conducted at this stage. Line ministry submits the project proposal for the CCEA’s in-principle approval after clearance from the PPP Authority. The CCEA provides in-principle approval if found appropriate. Typical timeline for in-principle approval is 2 months.
Development Phase	The development phase is the second phase in selecting a private partner for the delivery of a PPP project. During this phase, the contracting authority, with the support of the PPP Authority and relevant experts, shall determine the feasibility of implementing the project on a PPP basis. Steps in this phase include the following: Phase to be undertaken only after in-principle approval is accorded. Contracting authority shall form a project delivery team based on the communication received from the PPP Authority. The project delivery team shall oversee progress and development of the feasibility study and shall ensure that the agreed timelines are met. The PPP Authority shall establish a project assessment committee for each project. Line ministry submits the project proposal for the CCEA’s in-principle approval after clearance from the PPP Authority. Contracting authority shall conduct a feasibility study of the project and submit it to the PPP Authority for review and approval before finalization. Transaction advisors may be appointed for undertaking the feasibility study and for other stages of the project until the project award. Advisors are to be appointed as per the applicable regulations. The contracting authority may instruct for a registration-of-interest process to be carried out to obtain formalized feedback from the market in relation to the PPP project, subject to the concurrence of the PPP Authority.
Bidding Phase	The bidding phase is the third phase in selecting a private partner for the delivery of a PPP project. During this phase, the contracting authority shall process and approve the applications, proposals, or bids (as applicable) submitted in response to the bid documents (RFQ, RFP, or IFB) issued by the contracting authority to select the private partner who shall implement the project on a PPP basis. Steps in this phase include the following: Advertising: The contracting authority shall advertise all RFQs or IFBs, as applicable based on any guidance or standard templates issued by the PPP Authority or as may be specifically approved by the PPP Authority. The PPP Authority may also issue advertisements in relation to the RFQ or IFB, as applicable. The PPP Authority may organize other activities, including contacting foreign trade missions in Bangladesh, Bangladeshi trade missions abroad, or using advisors for project promotion activities up to submission of bids. Online Registration: Contracting authority may require all interested parties to register online to access the bid documents and other relevant information and to participate in the bidding process. Data Room Creation and Maintenance: During the RFQ and IFB stages, only registered entities shall be given access to the Data Room which shall contain the RFQ or IFB (as applicable), any addenda and/or corrigenda to the RFQ or IFB issued by the contracting authority, notice of invitation to the pre-application meeting or pre-bid meeting, and/or any other relevant information for the bidding process. Further, any updates or additional information relating to the PPP project may be uploaded to the Data Room. During the RFP stage, only shortlisted bidders shall be given access to the Data Room. The contracting authority shall apply the type of bidding process for a PPP project based on the instruction of the PPP Authority or any policies, rules, regulations, guidance, guidelines, or notifications issued by the PPP Authority pursuant to the PPP Act. Stages of Bidding: The single-stage bidding process shall be an IFB only. The two-stage bidding process shall have an RFQ stage and an RFP stage. The RFQ stage of the bidding process shall include prequalification and shortlisting. The maximum number of shortlisted bidders shall be five. These bidders may be invited to submit their technical and financial proposals in two separate sealed envelopes enclosed in an outer single envelope. Alternatively, only financial proposals may be sought at this stage. Evaluation Criteria and Method for RFQ Prequalification may be carried out based on technical and financial capacity of the applicants. Technical capacity may include examples of the experience of having undertaken projects of a similar nature as defined in the RFQ document. Financial capacity may include examples of experience of having provided and/or raised funds for projects as defined in the RFQ document. In addition, shortlisting may be based on single test or multiple tests. It may specify mandatory compliance requirements. Evaluation Criteria and Method for RFP or IFB The evaluation method may either include the quality and cost-based selection method or the cost-based selection method, the decision of which is made by the contracting authority based on concurrence of the PPP Authority. Tied proposals or tied bids may be dealt by way of inviting best and final offer. Bidding Documents The guidelines provide broad guidance on the IFB, RFQ, and RFP documents indicating the points they should cover. However, there is no reference of any standard documents or model agreements that is available. The documents prepared by the contracting authority would have to be reviewed by the PPP Authority through project assessment committee, and any feedback received shall be incorporated by that authority. Timelines: The guidelines suggest timelines for the bidding process under different models, which may be extended by the contracting authority upon informing the PPP Authority. The bids submitted in response to the IFB shall be received within a minimum of 42 days from the issuance of the IFB document. The applications submitted in response to the RFQ shall be received within a minimum of 28 days from the issuance of the RFQ document. The proposals submitted in response to the RFP shall be received within a minimum of 42 days from the issuance of the RFP document. Treatment of a Single Application, Proposal, or Bid IFB: If only one bid is received, the bidding process shall continue. RFQ: If only one application is received or only one applicant is shortlisted, the process shall be cancelled and redone, or an IFB shall be attempted. RFP: If only one proposal is received, the bidding process shall continue. Opening Committee and Opening Procedure: The Opening Committee shall be responsible for opening the bids/applications. Evaluation Committee: In evaluating applications, proposals, or bids (as applicable), an evaluation committee shall be formed immediately after the issuance of the RFQ or IFB (as applicable), and in any case no later than the due date. The constitution is recommended by the PPP Authority and must be approved by the line ministry. The Evaluation Committee shall have either five or seven members. Where the value of the PPP project is Tk8 billion or more, then the Evaluation Committee shall have seven members. Negotiation: Upon completion of the evaluation of the proposals or bids (as applicable), the Evaluation Committee may, through the contracting authority, invite the preferred bidder for negotiations.
Approval and Award Phase	The Approval and Award Phase is the fourth and final phase in selecting a private partner for the delivery of a PPP project. During this phase, the PPP contract shall be sent to the CCEA for final approval. The contracting authority, with the support of the PPP Authority, shall issue the letter of award to the preferred bidder. Steps in this phase include the following: Upon completion of the negotiation, the applicable line ministry shall submit the legally vetted PPP contract to the CCEA for its final approval. The letter of award shall be issued within 4 weeks following receipt of the CCEA approval.

CCEA = Cabinet Committee on Economic Affairs, IFB = invitation for bids, PPP = public–private partnership, RFP = request for proposal, RFQ = request for qualification.

Source: Government of Bangladesh, Public Private Partnership Authority. 2018. Procurement Guidelines for PPP Projects. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Procurement-Guideline-for-PPP-Projects-2018.pdf.

Process for Public–Private Partnership Project Development

ADP = Annual Development Program, CCEA = Cabinet Committee on Economic Affairs, PPP = public–private partnership, PPPA = Public–Private Partnership Authority, VGF = viability gap funding.

According to the Policy for Implementing PPP Projects through Government-to-Government (G2G) Partnership issued in 2017, a decision to implement a PPP project on a G2G partnership basis may be taken at any time before the bidding phase has started, or after the bidding phase if it has not been completed successfully. The PPP Authority may submit an official request to other governments to enter into a G2G framework agreement or memorandum of understanding that may define the main features of the procedure (including modalities of expression of interest from other governments; selection process; process for developing, negotiating, and agreeing the terms and conditions of the PPP contract; and dispute resolution process). The PPP Authority may also take up a proposal from any other government interested in entering into a G2G framework agreement.2

2Government of Bangladesh, Public Private Partnership Authority. 2017. Policy for Implementing PPP Projects through Government to Government (G2G) Partnership, 2017. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Policy_G2G_Partnership-2017.pdf.

National Framework for Enabling PPPs

Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

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Does the country have PPP Guidelines/PPP Guidance Manual?
Does the PPP Guidelines/PPP Guidance Manual adequately cover the process, entities involved, roles and responsibilities of various entities, approvals required at various stages, and the timelines for the various stages of the PPP project life cycle?
What are the templates and checklists available in the PPP Guidelines/PPP Guidance Manual?
Project Needs Assessment and Options Analysis checklist?
Project Due Diligence checklist?
Technical Assessment checklist?
Environmental Assessment checklist?
PPP Procurement Plan template?
Does the country have standardizedmodel bidding documents for PPPs?
Model Request for Qualification (RFQ) document?
Model Request for Proposal (RFP) document?
Model PPP/Concession Agreement?
State Support Agreement?
VGF Agreement?
Guarantee Agreement?
Power Purchase Agreement?
Capacity Take-or-Pay Contract?
Fuel Supply Agreement?
Transmission and Use of System Agreement?
Performance-Based Operations and Maintenance Contract?
Engineering, Procurement and Construction Contract?
Does the country have standardized PPP agreement terms?	a
Does the country have standardized/ model tool kits to facilitate identification, preparation, procurement, and management of PPP projects?
PPP Family Indicator?
PPP Mode Validity Indicator?
PPP Suitability Filter?
PPP Screening Tool?	b
Financial Viability Indicator Model?
Economic Viability Indicator Model?
VFM Indicator Tool?
Readiness Filter?
Is there a framework for monitoring fiscal risks from PPPs including the following?
Process for assessing fiscal commitments?
Process for approving fiscal commitments?
Process for monitoring fiscal commitments?
Process for reporting fiscal commitments?
Process for budgeting fiscal commitments?
Are there fiscal prudence norms/thresholds to limit fiscal exposure to PPPs?
Is there a process for assessing and budgeting contingent liabilities from PPPs?

aClause 26 of the PPP Law provides guidance on terms and conditions of a partnership contract.
bWhile there are no tools for suitability filters or financial viability, the screening manual covers various elements including suitability of a project for PPP, financial viability, VFM-related aspects, and related elements.

Yes
No
Unavailable

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National Framework for Enabling PPPs

Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

The government adopts the World Bank standard bidding documents for procurement of all projects that are funded by the bank. Further, the PPP Authority website newsletter dated 14 July 2012 confirms that, based on the consultations with various stakeholders, including the line ministries, implementing agencies, and donor agencies, the PPP Authority—considering the comments and insights obtained from the consultation and review process—finalized the Draft PPP Law, Project Screening Manual, Project Development Manual, Tender Process Manual, Environmental and Social Safeguards Framework, and four Model Concession Agreements.1 However, copies of such agreements could not be accessed on the website of the PPP Authority or other reference material reviewed, and it is therefore unclear if the same are being deployed.

The Sustainable and Renewable Energy Development Authority provides for model contracts for IPPs in Bangladesh.

1Government of Bangladesh, Public Private Partnership Authority. 2012. Remarkable Progress Achieved in the Country’s PPP Preparation. http://www.pppo.gov.bd/download/ppp_office/Remarkable-Progress-Achieved-PPP-Preparation.pdf.

Key Clauses Related to Public–Private Partnership Agreement

Clause 26 of the PPP Law provides guidance on terms and conditions of a partnership contract. The clause indicates that the PPP contract may provide for any, or all, of the matters indicated in table below.

Terms and Conditions Related to Public–Private Partnership Projects

Modality of the Project	Term of Contract	Public Goods and Public Services
Technical specifications and compliance standards	Environmental and security requirements	Performance indicators and date of completion
Expenditure recovery mechanism through collecting levy and strategy for its adjustment	Construction and operations bond	Insurance
Acceptance test and method	Rights and obligations of the parties to the public–private partnership (PPP) contract and risk allocation	Modality and amount of government financial participation
Transfer of assets (if any) after the end of the PPP contract	Post transfer confirmation letter and method	Submission of report
Supervision strategy of the contracting authority	Ownership of assets	Immediate steps during disaster
Governing law	Provision for arbitration	Rights over project area and security interest

Source: Government of Bangladesh, Public Private Partnership Authority. 2015. PPP Law 2015. Dhaka. http://www.pppo.gov.bd/download/ppp_office/PPP-Law-2015.pdf.

Public–Private Partnership Screening Manual 2013

The PPP Screening Manual is the operational guideline for screening PPP project proposals in order to secure in-principle approval and proceed to the next phase—the project development process. This manual is aimed at providing guidance to the main stakeholders through the following:2

the line ministry or implementing agency proposing the PPP,
the PPP Authority reviewing and recommending the PPP, and
the Cabinet Committee for Economic Affairs (CCEA) that is approving the PPP.

The manual also provides clarity and transparency based on which PPP projects will be screened. While the manual has been prepared based on the PPP Policy of 2010, it has not been repealed and continues to be applicable after the PPP Act replaced the PPP Policy. The manual covers various screening conditions for a project: applicability of a PPP, sector coverage, legally permissible, output-driven, sufficient size, financially viable, marketable, bankable, implementable, and endorsement.

The figure below provides a snapshot from the manual of the steps for gaining in-principle approval of a PPP project.

2Government of Bangladesh, Public Private Partnership Authority. 2013. PPP Screening Manual. Dhaka. http://www.pppo.gov.bd/download/ppp_office/PPP-Screening-Manual_Final-Draft_09April2013.pdf.

Steps for Gaining In-Principle Approval for Public–Private Partnership Projects

BOT = build-operate-transfer, CCEA = Cabinet Committee on Economic Affairs, LM = line ministry, PPP = public–private partnership.

Source: Government of Bangladesh, Public Private Partnership Authority. 2013. PPP Screening Manual. Dhaka. http://www.pppo.gov.bd/download/ppp_office/PPP-Screening-Manual_Final-Draft_09April2013.pdf.

Key Clauses Related to PPP Agreements

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Does the law specifically enable lenders the following rights:
Security over the project assets?
Security over the land on which they are built (land use right)?
Security over the shares of a PPP project company?
Can there be a direct agreement between the government and lenders?
Do lenders get priority in the case of insolvency?
Can lenders be given step-in rights?
Does the law specifically enable compensation payment to the private partner in case of early termination due to:
Public sector default or termination for reasons of public interest?	a
Private sector default?	a
Force majeure?	a
Does the law enable the concept of economic/financial equilibrium?	a
Does the law enable compensation payment to the private partner due to:
Material adverse government action?	a
Force majeure?	a
Change in law?	a

aThe Public-Private Partnership (PPP) Law does not provide for specific guidelines or stipulations related to the above aspects. However, it does not expressly disable the authority from inclusion of terms related to termination and compensation. In general, the regulatory framework does not expressly regulate material adverse government action, force majeure (unforeseen circumstances that prevent someone from fulfilling a contract), or change in law. Chapter 6 of the PPP Act on terms and conditions of partnership contract does not expressly state that the contract shall contain provisions for grounds for termination. However, this is not an exhaustive list, and compensation for such events can be negotiated within the contractual terms agreed between the parties in the PPP agreement.

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National Framework for Enabling PPPs

Standard Operating Procedures, Tool Kits, Templates, and Model Bid Documents for PPPs

According to the Bangladesh Bank, the policy framework for foreign investment in Bangladesh is based on the Foreign Private Investment (Promotion and Protection) Act (1980), which ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation. It also guarantees nondiscriminatory treatment between foreign and local investment, and repatriation of proceeds from sales of shares and profit.

It is not possible to give asset security by means of a general security agreement due to the requirement of perfection of security, which involves registration, notification, or recording with separate regulators or parties. An agreement is required in relation to each type of asset, notwithstanding there are different forms of security available such as mortgage over immovable property, hypothecation over present and future book debts, movable properties and plant and machinery, pledge over shares, letters of credit, and corporate or personal guarantees.

Security over shares can be taken by way of pledge of shares, by executing a share pledge agreement. To create a security interest by way of pledge in favor of the lender, the chargors are required to deposit with a third party

original certificates in respect of the shares; and
blank share transfer forms executed by each of the chargors, along with verification of the same by the borrower.

Secured creditors have priority over all other creditors and claimants, except floating charge holders as per the Companies Act (1994) and the Bankruptcy Act (1997). The debts are fully payable unless the assets are insufficient to meet them, in which case they are abated in equal proportions.

The Power Purchase Agreement (PPA) for Solar Power Projects expressly provides for events of termination, compensation, force majeure, and default events, and the process and applicability of compensations in each of these events. It does not, however, provide for any recourse for change in law or adverse government actions.

Provisions in Model Contracts

A party to a concession contract is generally excused from performing its obligations when a force majeure event occurs. There are no specific regulations as to force majeure costs. However, under the model contracts, where an indirect political force majeure event occurs after the commercial operation date, and the insurance proceeds recoverable by the project company are insufficient to cover the force majeure costs incurred, the project company can claim a reimbursement from the contracting party equal to 50% of the shortfall.1

Under the model contracts, if a direct political force majeure event occurs after a commercial operation date, the project company can claim a reimbursement from the contracting party equal to all the force majeure costs properly and reasonably incurred by the project company in respect of the force majeure event. On termination due to a prolonged force majeure event, the authority generally pays to the contractor 100% of the senior debt termination amount plus equity at par, minus the amount equal to insurance claims admitted and/or paid by the insurance companies.

1Thomson Reuters, Practical Law. Project Finance in Bangladesh: Overview. https://uk.practicallaw.thomsonreuters.com/Document/I4a320d6517c111e89bf099c0ee06c731/View/FullText.html?transitionType=SearchItem&contextData=(sc.Search).

Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

National Framework for Enabling PPPs

Unsolicited PPP Proposals

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Does the PPP legal and regulatory framework allow submission and acceptance of unsolicited proposals?
What are the advantages provided to the project proponent for an unsolicited bid?
Competitive advantage at bid evaluation?	(an additional 10% for its bidding evaluation score)
Swiss Challenge?	a
Compensation of the project development costs?
Government support for land acquisition and resettlement cost?
Government support in the form of viabiity gap funding and guarantees?

aThe Guidelines for Unsolicited Proposals (2018) does not explicitly state whether the mode of selection is acceptable or not.

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National Framework for Enabling PPPs

Unsolicited PPP Proposals

Section 20 of the PPP Act 2015 defines unsolicited proposals as "a written proposal for the implementation of a PPP Project submitted unilaterally by an Original Proponent on its own initiative and not in response to any Formal Government Request," and provides for accepting unsolicited proposals by the contracting authorities. The act further clarifies that the procedure for handling unsolicited proposals shall be in line with the guidelines approved by the Board of Governors of the PPP Authority.1

In line with this, the government has published in a gazette the Guidelines for Unsolicited Proposals, 2018, which guides authorities in handling unsolicited proposals. Based on the guidelines, the private sector proponent can submit a concept note—setting out the proposed PPP project scope and its past relevant experience—to the contracting authority for review and consideration, with a copy to the applicable line ministry and the PPP Authority. If a concept note obtains the necessary approvals, then the applicable proponent will be asked to submit its detailed unsolicited proposal. However, the government is not obliged to consider the proposal.2

Article 16 of the Guidelines for Unsolicited Proposals indicates the mode of competitive bidding for unsolicited proposals that may include a bonus system as set out in Article 17, or other appropriate methods that may be proposed by the PPP Authority and approved by the approving authority (CCEA). To that extent, the guidelines make options for selection inclusive and do not explicitly discourage other procedures. Therefore, in addition to competitive advantage in the form of bonus points, the authorities may also adopt other models such as the Swiss challenge.

According to Article 17 of the Guidelines for Unsolicited Proposals (2018), the bonus for the unsolicited bidder would be equivalent to 7% of the evaluation score assessed by the evaluation committee for the proposal or bid submitted by the unsolicited bidder. In previous guidelines (i.e., PPP Unsolicited Procedures, 2014), the Swiss challenge system was also included in the mode of competitive bidding.

1Government of Bangladesh, Public Private Partnership Authority. 2015. PPP Law, 2015. Dhaka. http://www.pppo.gov.bd/download/ppp_office/PPP-Law-2015.pdf.
2Government of Bangladesh, Public Private Partnership Authority. 2018. Guidelines for Unsolicited Proposals, 2018. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Guidelines-for-Unsolicited-Proposals-2018.pdf.

Compensation

Article 18 of the guidelines clarifies that all costs related to the unsolicited proposal shall be borne by the project proponent only:

"All costs and expenses associated with the preparation and submission of the unsolicited proposal or any other costs shall be fully borne by the Original Proponent. The Applicable Line Ministry and/or the Contracting Authority shall not be liable in any manner whatsoever for any such costs and/or expenses incurred by the Original Proponent nor shall they be liable for any losses suffered by the Original Proponent and/or for any actions by the Original Proponent and/or for any consequences thereof".

It is noted that the Guidelines for Dealing with Unsolicited Proposals (2018) make no specific reference to government support for land acquisition and resettlement costs or viability gap funding (VGF), except that during the project development phase, the contracting authority may seek the PPP Authority’s approval to assess the need for VGF and guarantees. However, the Procurement Guidelines for PPP Projects (2018) shall apply to unsolicited proposals subject to incorporation of the requirements of the unsolicited proposal guidelines.

Further, the Rules for Viability Gap Funding for PPP Projects (2018) state that "the VGF shall apply to all kinds of PPP Projects including the national priority PPP projects, and PPP projects taken under the Policy for Implementing PPP Projects through Government-to-Government (G2G) Partnership, 2017."3

3Government of Bangladesh, Public Private Partnership Authority. 2018. Rules for Viability Gap Financing for Public–Private Partnership Projects, 2018. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Rules-for-VGF-for-PPP-Projects-2018.pdf.

National Framework for Enabling PPPs

Foreign Investor Participation Restrictions

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Is there any restriction for foreign investors on:
Land use/ownership rights as opposed to similar rights of local investors?
Currency conversion?
PPP projects with foreign sponsor participation (number)

Yes
Unavailable

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National Framework for Enabling PPPs

Foreign Investor Participation Restrictions

Foreign Participation

Pursuant to Paragraph 1, Chapter 9 of the Guidelines for Foreign Exchange Transactions (Forex Guidelines), foreign investors are free to make investments in Bangladesh except for a few reserved sectors such as arms and ammunition, nuclear energy or power, security printing, and minting, as mentioned in the Industrial Policy of the Government in force. There is no limitation pertaining to foreign equity participation in nonreserved sectors. An entity carrying out a project in a nonreserved sector may, therefore, be set up in collaboration with local investors or may be wholly owned by foreign investors. Therefore, the selected private partner can be a local entity, an entity with 100% foreign ownership, or a foreign-owned local entity.

It is noted that a number of PPPs that have reached financial close were exclusively owned by foreign enterprises, for example, in the transport sector (airports and ports), energy sector (thermal power generation), and social infrastructure sector (health).

With regard to the use of foreign labor, nationals of all foreign countries, with the exception of Israel, are eligible for work permits in Bangladesh as long as they are age 18 or older. However, according to the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Export Processing Zones Authority (BEPZA) guidelines, expatriate work permits can normally be granted only for posts that require skills and expertise that is not available locally.

The guidelines also specify that the ratio of expatriate to national employees in any company is capped at 1:20 in industrial companies, and 1:5 in commercial offices. According to the Investment Policy Review by the United Nations Conference on Trade and Development (UNCTAD) (2013), the regulatory framework on the issue of work permits lacks transparency and clarity. The laws and regulations that are relevant include the Foreigners Act of 1946, the Foreigners Order of 1951, the Registration of Foreigners Act of 1939, the Bangladesh Control of Entry Act of 1952, and guidelines from BIDA and BEPZA. The key trade policy in Bangladesh is covered in the Export Policy 2015–2018, the Import Policy Order 2015–2018, the Imports and Exports (Control) Act of 1950, and some sector policies. According to the Investment Policy Review by UNCTAD (2013), approval of imports of machinery and equipment has to be sought from BIDA. However, exemptions of duties on the import of machinery and spare parts (for a period of 12 years, or up to 10% of the total capital invested) are offered by the government in certain projects, for example, in power generation. Moreover, companies located in the export processing zones benefit from the standard exemptions of import duties.

The Foreign Investment Act of 1980 guarantees the right of repatriation of invested capital, profits, capital gains, post-tax dividends, and approved royalties and fees. Foreign firms can repatriate funds without much difficulty, provided the appropriate documentation is in order. The foreign exchange regulations may restrict repatriation of divestment proceeds to the net asset value, with repatriation of capital and capital gains being subject to strict reporting requirements or authorization by the Central Bank of Bangladesh, the Bangladesh Bank.

Foreign currency borrowing

For private sector borrowing of foreign currency loans, the Bangladesh Bank requires the borrower to obtain permission from BIDA. Borrowers can raise foreign borrowing from internationally recognized sources such as international banks, international capital markets, multilateral financial institutions, export credit agencies, and suppliers of equipment. Foreign borrowing is allowed for project financing only and cannot be used for working capital. In providing approval, BIDA considers the borrower’s past conduct and the financial viability and profitability of the project. The following conditions are generally applicable:

A maximum 70:30 debt-to-equity ratio. For some sectors such as power, a debt-to-equity ratio of up to 80:20 is allowed.
A standard interest ratio of up to London interbank offered rate (LIBOR) +4%. An all-in cost ceiling is considered in determining interest, which also includes other annualized fees and expenses.

Foreign direct investments into sectors

Bangladesh actively seeks foreign investment, particularly in the agribusiness, garment and textiles, leather and leather goods, light manufacturing, electronics, light engineering, energy and power, information and communication technology (ICT), plastic, health care, medical equipment, pharmaceutical, ship building, and infrastructure sectors.1

Foreign and domestic private entities can establish and own, operate, and dispose of interests in most types of business enterprises. Four sectors, however, are reserved for government investment:

arms, ammunition, and other defense equipment and machinery;
forest plantation and mechanized extraction within the bounds of reserved forests;
production of nuclear energy; and
security printing.

BIDA is the principal authority tasked with supervising and promoting private investment. In addition to BIDA, three other investment promotion agencies—BEPZA, Bangladesh Economic Zones Authority (BEZA), and Bangladesh Hi-Tech Park Authority (BHTPA)—promote domestic and foreign investment. BEPZA promotes investments in export processing zones.

Bangladesh allows private investment in power generation and natural gas exploration, but efforts to allow full foreign participation in petroleum marketing and gas distribution have stalled. Regulations for telecommunication infrastructure currently include provisions for 60% foreign ownership (70% for tower sharing). In addition to the four sectors reserved for government investment, there are 17 controlled sectors that require prior clearance or permission from the respective line ministries or authorities. These are

deep-sea fishing;
bank/financial institutions in the private sector;
insurance companies in the private sector;
generation, supply, and distribution of power in the private sector;
exploration, extraction, and supply of natural gas/oil;
exploration, extraction, and supply of coal;
exploration, extraction, and supply of other mineral resources;
large-scale infrastructure projects (e.g., flyover, elevated expressway, monorail, economic zone, inland container depot/container freight station);
crude oil refinery (recycling/refining of lube oil used as fuel);
medium and large industries using natural gas/condensate and other minerals as raw material;
telecommunications service (mobile/cellular and land phone);
satellite channels;
cargo/passenger aviation;
sea-bound ship transport;
seaports/deep seaports;
Voice over Internet Protocol (VOIP/IP) telephone; and
industries using heavy minerals accumulated from sea beaches.

In certain strategic sectors, the Government of Bangladesh has placed unofficial barriers on the ability of foreign companies to divest from the country.

1US Department of State. 2020. 2020 Investment Climate Statements: Bangladesh. https://www.state.gov/reports/2020-investment-climatestatements/bangladesh/.

National Framework for Enabling PPPs

Dispute Resolution

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Does the country have a Dispute Resolution Tribunal?
Does the country have an Institutional Arbitration Mechanism?
Can a foreign law be chosen to govern PPP contracts?
What dispute resolution mechanisms are available for PPP agreements?
Court litigation
Local arbitration
International arbitration
Has the country signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

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National Framework for Enabling PPPs

Environmental and Social Issues

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Is there a local regulation establishing a process for environmental impact assessment?
Is there a legal mechanism for the private partner to limit environmental liability for what is outside of its control or caused by third parties?
Is there a local regulation establishing a process for social impact assessment?
Is there involuntary land clearance for PPP projects?

Yes
Unavailable

National Framework for Enabling PPPs

Land Rights

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Which of the following is permitted to the private partner:
Transfer land lease/use/ownership rights to third party
Use leased/owned land as collateral
Mortgage leased/owned land
Is there a legal mechanism for granting wayleave rights, for example, laying water pipes or fiber cables over land occupied by persons other than the government or the private partner?
Is there a land registry/cadastre with public information on land plots?
Which of the following information on land plots is available to the private partner?
Appraisal of land value
Landowners
Land boundaries
Utility connections
Immovable property on land
Plots classification

Yes
Unavailable

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National Framework for Enabling PPPs

Land Rights

There is no special regulation regarding land rights under the PPP framework in Bangladesh; therefore, the general law will apply. The 1972 Constitution (last amended in 2014) provides that all citizens shall have the right to hold, acquire, transfer, and dispose a property; however, the 1950 State Acquisition and Tenancy Act sets a 33-acre land ceiling for private landowners.

The International Comparative Legal Guides for Bangladesh states that, in practice, there is a general understanding that foreign entities cannot own land (based on the Land Office refusing to allow registration to any person not holding a Bangladeshi identification) and, as such, land has to be owned by foreigners through incorporating a company in Bangladesh. The International Comparative Legal Guides also notes that, in many cases, land owned by municipal corporations is leased out to interested parties for long tenures, with restrictions in respect of the transfer of a lease to a foreign entity.

According to the Investment Policy Review by UNCTAD (2013), access to land titles and land registration are subject to many laws and regulations, including the Transfer of Property Act of 1882, the Registration Act of 1908, and the Land Reforms Board Act of 1989. These laws and regulations make it complex, long, and costly to administer and find relevant information for a piece of land. The Bangladesh Registration Rules (2014) stipulate that, among other things, land value, owners, boundaries, and immovable property on land should be captured during land registration.

In Bangladesh, real estate may be held as an owner with freehold right, as a lessee with leasehold rights, or as a licensee with mere right to use.1

Freehold right. The landlord of the property enjoys absolute right, title, and interest in the property. Freehold right may be acquired by way of inheritance, gift, will, or purchase. Landlords can deal with the property in the way they desire.
Leasehold right. A person enjoying freehold rights may lease the property along with certain rights, as per agreed terms and conditions, and for a stipulated period, against some consideration to another person to use the property strictly as per the agreed terms and for a specified purpose only.
License. A license is a right to do or continue to do, in or upon the immovable property of the landlord, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property. A mere license does not create an interest in property to which it relates.

Foreign persons or entities are not allowed to own real property in Bangladesh. However, certain structures allow foreigners to have ownership rights to real property. Foreigners may incorporate a local company with 100% foreign ownership and have that foreign-owned local company own property. Foreigners can establish joint-venture companies in Bangladesh that can own real property or shares of a local company that owns real property. Foreigners may also lease land in certain specialized areas, such as export processing zones.

1DFDL. 2018. Investment Guide Bangladesh, 2018. Dhaka. https://www.dfdl.com/resources/publications/investment-guides/bangladeshinvestment-guide-2018/.

Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

Government Support for PPP Projects

Project Funding Support

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Project Funding Support
Is there a dedicated government financial support mechanism for PPP projects?
What are the instruments of government financial support available under this government financial support mechanism?
Capital grant
Operations grant
Annuity/availability payments
Guarantees to cover
Currency inconvertibility and transfer risk
Foreign exchange risk
War and civil disturbance risk
Breach of contract risk
Regulatory risk
Expropriation risk
Government payment obligation risk
Credit risk
Minimum demand/revenue risk
Risk of making annuity/availability payments in a timely manner
What are the caps/ceilings for the government financial support under each of the abovementioned government financial support instruments?	40% of the estimated capital cost for capital grant; 40% of estimated project cost for annuity.
Is there a minimum PPP project size (investment) for a PPP project to be eligible for receiving government financial support?
Are there minimum financial commitment requirements for the private developer equity before the government support could be drawn?	The rules indicate a prorata disbursement based on equity contribution, but no specific minimum limits.
Is the government financial support required, usually the bid parameter for PPP projects?	a
Are unsolicited PPP proposals eligible to receive government financial support?
Are there standard operating procedures for providing government financial support to PPP projects?
Appraisal and approval process
Budgeting process
Disbursement process
Monitoring process
Accounting, auditing, and reporting process
Who are the signatories to the government financial support agreement?	PPP Unit of Finance Division; lead financial institution and project company/ special-purpose vehicle
Who is responsible for monitoring the performance of PPP projects availing government financial support?	Contracting authority and lead financial institution
Independent engineer?
Government agency?
Ministry of Finance?
What are the other forms of government support available for PPP projects?
Land acquisition funding support?
Funding support for resettlement and rehabilitation of affected parties?b b
Tax holidays/exemptions?
Real estate development rights?
Advertising and marketing rights?
Interest rate/cost of debt subventions?
Other subsidies and subventions?
Can the other forms of government support be availed over and above the government financial support through various instruments listed above?

aRule No. 5, subpoint (i) of the Rules for Viability Gap Funding for PPP Projects (2018) states that "The viability gap funding (VGF) amount shall be set by the Government or the Preferred Bidder's offer and in both cases the bid parameter shall be in accordance with the PPP Act and Power Generation Policy, 2018." Also, subpoint (j) states that "Where the VGF is based on Preferred Bidder's offer, the VGF shall form a key component of the financial evaluation criteria alongside other technical evaluation criteria." However, both the Procurement Guidelines 2018 and the PPP Law are silent on specific selection/bid parameters for projects that make use of VGF-related proposals.
bAsian Development Bank. 2019. Public-Private Partnership Monitor. Second Edition. Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

Yes
No
Unavailable

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Government Support for PPP Projects

Direct government support for PPP projects in Bangladesh comes primarily by way of project preparation funds and viability gap funding. The country has developed a framework and rules for efficient execution and utilization of the funds.

Overview of Government Support Facilities

Clause 16 of the PPP Law clarifies details about the financial participation of the government in PPP projects, and states that “the government may provide financing against the following activities of PPP projects, such as

technical assistance financing,
viability gap financing,
financing against equity and loan,
financing against linked component, and
financing against such other activities as may be determined by the PPP Authority.”

Thereby, the options and forms in which the government could support PPPs have been kept open-ended and based on recommendations made by the PPP Authority.

Viability Gap Funding

As indicated above, Clause 16 specifies that the government could extend its support by way of viability gap funding (VGF). The operationalization of the VGF was initially driven by the Guidelines for VGF for PPP Projects, 2012, which were repealed and replaced by the Rules for VGF for PPP Projects, 2018. The latter defines various rules toward operationalizing the VGF. The rules provide that the VGF could be applicable to any kind of PPP projects, including unsolicited proposals, in the following form:

capital grant, in which case the maximum support would be up to 40% of the total estimated capital cost of the project; or
annuity, in which case the maximum support would be up to 40% of the total estimated project cost; or
combination of both, in which case the maximum support would be up to 40% of the total estimated project cost.

From the eligibility perspective, the rules prescribe certain prerequisites, including the following:

The PPP project shall be a project taken up under the PPP Act and shall provide a public service against predetermined tariff or user charge.
The project meets the threshold economic rate of return (ERR), as specified by the PPP Unit, Finance Division from time to time.
The project should have detailed feasibility study prepared, including computation of ERR.

Based on the project company’s request for disbursement received by the PPP Unit of the Finance Division through the contracting authority, the PPP Unit shall review the request and disburse the VGF to the project company through the lead financial institution, as per agreed terms. Point 10 of the rules also specifies that the “Contracting Authority shall be responsible for regular monitoring and periodic evaluation of the PPP Project compliance with agreed milestones and performance levels” and further indicates that “the Lead Financial Institution shall also be responsible for regular monitoring and periodic evaluation of the PPP Project compliance with agreed milestones and performance levels…, and it shall also send a quarterly progress report to the Contracting Authority, PPP Authority, and PPP Unit of the Finance Division”.

Although the VGF has not been utilized yet in the country, agreements have been reached for the VGF to support the road projects indicated below:

Dhaka Elevated Expressway,
Upgrading of Dhaka Bypass to 4-Lane (Madanpur–Debogram–Bhulta–Joydevpur),
Flyover from Shantinagar to Mawa Road via 4th (New) Bridge over Buriganga River, and
Dhaka-Chittagong Access Controlled Highway.

Land Acquisition and Resettlement

The government support for PPP projects may also take the form of acquisition or requisition of land, resettlement of populations, or the provision of utilities. Examples where the government was responsible for land acquisition are the Bibiyana 300–450 MW Gas-Fired Combined Cycle Power Project and the Dhaka Elevated Expressway PPP Project. According to the World Bank Benchmarking of PPP Procurement in Bangladesh, the procuring authority spends an average of 270 calendar days for obtaining permits, land, and/or right-of-way required under the regulatory framework. The applicable law in this regard is the Acquisition and Requisition of Immovable Property Act, 2017.

Government Guarantees and Tax Subsidies

PPP regulations are silent on the provision of government guarantees. In practice, a number of energy generation projects received payment guarantees under PPAs; however, in other sectors, guarantees have not been provided. The government is offering fiscal incentives to PPP investors, such as reduced import tax on capital goods and various tax holidays, with the aim of reducing the cost of implementing the project and enhancing its viability. The government has also provided tax exemptions for foreign technicians on capital gains and royalty fees, and on the income of a project company in relation to the implementation of PPP projects in certain sectors (including highways, bridges, and ports). Value-added tax exemptions are also available in relation to certain services provided for PPP projects, and the incentives may vary based on the project location.

Project Development Funding

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Project Development Funding
What are the various sources of funds for PPP project preparation?
Budgetary allocations
Dedicated project preparation/project development fund
Technical assistance from multilateral/bilateral/and donor agencies
Recovery of project preparation funding from the preferred bidder
At what stage of the PPP project, can the project preparation/development funding be availed by the government agency?
Pre-feasibility stage
Detailed feasibility stage
Transaction stage
Is there a list of project preparation/project development activities towards which the project development funding can be utilized?
Can the project development funding be utilized to appoint transaction advisors for PPP projects?
Is there a specific process to be followed by government agencies to appoint transaction advisors?
What are the payment mechanisms for making payments to transaction advisors?
Timesheet-based
Milestone-based
Are there standard agreements and documents to avail project development funding?
Who are the signatories to the project development funding agreements?	PPP Authority and line agency/ ministry

Yes
No
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Government Support for PPP Projects

According to procurement guidelines issued by the government, the contracting authority or the PPP Authority should adhere to the process provided in the Public Procurement Act, 2006 and the Public Procurement Rules, 2008, including any amendments to them, in order to appoint the transaction advisor(s) and/or consultant(s) until the applicable policies, rules, regulations, guidance, guidelines, or notifications for appointment of transaction advisor(s) and/or consultants under the PPP Act are promulgated.

Public–Private Partnership Technical Assistance Fund

Clause 16 of the PPP Law specifies that the government could extend its support by way of technical assistance financing. The operationalization of the Public–Private Partnership Technical Assistance Fund (PPPTAF) was initially based on the Guidelines for PPPTAF, 2012, which were repealed and replaced by the Rules for PPPTAF 2018. The latter defines various rules toward operationalizing the technical assistance fund. The fund is administered and managed by the PPP Authority, and fund utilization is reported semiannually to the PPP Unit, Finance Division.

The PPPTAF had an initial government contribution of Tk2 billion and is replenished by way of

recovery from the successful bidders;
budgetary support, if required, by the Ministry of Finance; and
grants from national and international financial institutions or development partners, subject to government approval.1

Rule 6 of the Rules for PPPTAF describes the activities eligible for utilizing the fund, such as

development of individual PPP projects, including detailed feasibility and procurement;
capacity-building activities;
promotional activities for PPP programs and projects;
development of regulations, policies, and other related activities for PPP; and
development of sector-based programs for PPP.

One of the prerequisites for PPP projects to use the PPPTAF is the CCEA’s in-principle approval, which indicates that the PPPTAF cannot be utilized for prefeasibility studies. The fund can be used for appointing consultants by the PPP Authority, if such appointment is made on a competitive bidding basis, as per the Public Procurement Act, 2006, and rules made thereunder. Fund utilization is based on the proposal submitted by the contracting authority, reviewed by the PPP Authority, and approved by an interministerial committee based on recommendations of the PPP Authority.

The Public Procurement Rules, 2008 of Bangladesh provide guidelines and standard documents for selection of consultants that include both lump-sum contracts and time-based contracts, signifying that both modes are allowed in Bangladesh.

1Government of Bangladesh, Public Private Partnership Authority. 2018. Rules for Public–Private Partnership Technical Assistance Financing, 2018. Dhaka. http://www.pppo.gov.bd/download/ppp_office/Rules-for-PPPTAF-2018.pdf.

Maturity of the PPP Market

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PPP Project Statistics
Is there a national PPP database for the country?
Is the distribution of PPP projects across infrastructure sectors available?
Is the distribution of PPP projects across various stages of the PPP life cycle available?

No
Not Applicable

PPP Project Pipeline

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Does the country publish a national PPP project pipeline?
At what frequency is the national PPP project pipeline published?
Is the national PPP project pipeline based on the national infrastructure plan for the country?

Yes
No
Unavailable

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Maturity of the PPP Market

The PPP Law and Guidelines for procurement specify that the “Contracting Authority and/or the PPP Authority may identify a Project to be delivered on a PPP basis from the list of Projects set out in the Government’s Annual Development Program or may identify a Project that is not listed in the ADP,” indicating that the projects taken up on PPP need not necessarily be part of the country’s annual development program but should be justified on a need basis for necessary approvals from the PPP Authority and the CCEA.

The PPP Authority prepares and maintains a PPP project pipeline that is published in its annual report and available on the PPP Authority’s website. The pipeline provides the name and status of the project, along with a short profile of the project for investors. The status of the project reflects at which stage the project currently is and is categorized as follows:1

Preparation Stage
- CCEA approved (in principle)
- Project development stage – Advisor appointment to be initiated
- Project development stage – Advisor appointment
- Project development stage – Detailed feasibility study ongoing
- Project development stage – Detailed feasibility study completed
Procurement Stage
- Procurement stage – CCEA final approval to be obtained
- Procurement stage – Invitation for bids (IFB) to be issued
- Procurement stage – IFB evaluation ongoing
- Procurement stage – Evaluation completed
- Procurement stage – Legal vetting ongoing
- Procurement stage – Request for proposal (RFP) to be issued
- Procurement stage – RFP issued
- Procurement stage – RFP evaluation ongoing
- Procurement stage – Negotiation completed
- Procurement stage – No bid received
- Procurement stage – Tender unsuccessful
- Procurement stage – Retender to be started
Award Stage
- Award stage – Contract to be signed
- Award stage – Contract signed
Post-Award Stage
- Construction stage
- Operational stage

The Bangladesh Economic Review 2019 lists 56 projects in 13 sectors, worth $23.8 billion, that have been approved for implementation through PPP.2

In addition, many independent power producers (IPPs), considered to be a form of PPP, are listed in the renewable energy master database of the Sustainable and Renewable Energy Development Authority.

1Government of Bangladesh, Public Private Partnership Authority. PPP Projects. http://www.pppo.gov.bd/projects.php
2Ministry of Finance, Finance Division. 2019. Bangladesh Economic Review 2019. Dhaka. https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/e8bc0eaa_463d_4cf9_b3be_26ab70a32a47/Banglades%20Economic%20Review%202019%20Eng.zip.

PPP Book

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Sources of PPP Financing
Who are the typical entities financing PPP projects in the country?
Private developers
Construction contractors
Institutional/financial/private equity investors
Pension funds
Insurance companies
Banks
Nonbanking financial corporations/Financial institutions
Donor agencies
Government agencies and state-owned enterprises
What is the distribution of financing among these entities financing PPP projects?
Does the country have the history/track record of issuing bonds by infrastructure projects?
How many infrastructure projects private developers for infrastructure projects have raised funding through bond issuances?
What is the value of funding raised through capital markets by PPPs?
Does the country have a matured derivatives market to hedge certain risks associated with PPPs?
Does the country have a national development bank?
Does the country have credit rating agencies to rate infrastructure projects?
Typically, what are the credit ratings achieved/received by infrastructure projects?
Is there a threshold credit rating for infrastructure PPPs below which institutional investors, pension funds, and insurance companies would not invest in infrastructure PPPs?
What is the typical funding model for infrastructure PPPs -- corporate finance or project finance?	BOTH
Are there regulatory limits/restrictions for the maximum exposure that can be taken by banks to infrastructure projects?

Yes
No
Not Applicable
Unavailable

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Maturity of the PPP Market

The table below shows the vehicles and options available in Bangladesh to support PPP projects financially.

Unit	Role
Bangladesh Infrastructure Finance Fund Limited (BIFFL)	To encourage the private sector to invest in public–private partnership (PPP) projects, the BIFFL, a nonbanking financial institution, was incorporated by the Ministry of Finance in 2011. The objective is to provide long-term financing in local currency to infrastructure projects that meet the BIFFL’s investment criteria. The BIFFL seeks to attract investment from both institutional and retail investors (including nonresident Bangladeshis and overseas foreign workers) to provide an alternative savings/investment vehicle in the Bangladesh market. The BIFFL is managed independently, following objective investment criteria, and is targeted to provide a variety of capital products to PPP projects, including long-term debt, short-term construction capital, and equity (future). In August 2020, the Asian Development Bank approved a $50 million loan to the Government of Bangladesh to fund PPP infrastructure projects in the country. The project will support government efforts in strengthening the BIFFL’s institutional capacity to develop PPP infrastructure projects.
Infrastructure Development Company Limited (IDCOL)	The IDCOL, established in 1997 by the Government of Bangladesh as a nonbank financial institution, plays a major role in bridging the financing gap for developing medium- to large-scale infrastructure and renewable energy projects in Bangladesh. The company now stands as the market leader in private sector energy and infrastructure financing in Bangladesh. The IDCOL offers a full range of financing solutions to viable private-sector-owned infrastructure projects, including long-term local and foreign currency loans, working capital loans, debt and equity arrangement, debt restructuring, takeover financing, and financial advisory and agency services. The IDCOL has expanded its infrastructure financing window, bringing in social and tourism infrastructure as well as infrastructure-backward linkage industries under the broad definition of infrastructure. The IDCOL also provides concessionary financing support to projects with significant positive contributions toward environmental conservation and pollution control.
Investment Promotion and Financial Facility (IPFF)	The IPFF aims to finance private infrastructure projects based on PPP. Private investors can approach the participating financial institutions (PFIs) to access funds allocated under the IPFF program. The first round of international investment position (IIP) had World Bank’s International Development Association (IDA) credit of $307 million, with the Government of Bangladesh cofinancing $60 million. The implementing agency was the Bangladesh Bank, operating through 19 PFIs. The IPFF II Project (July 2017–June 2022), a follow-on project of the IPFF, has been taken up by the Government of Bangladesh (with the financial support of the World Bank) to create a sustainable platform for long-term financing in infrastructure and further strengthen the capacity of the private sector in filling the substantial infrastructure gap in Bangladesh. The main objective of the project is to increase long-term financing for infrastructure and to build capacity of local financial institutions for promoting private-sector-led infrastructure financing in Bangladesh. The estimated cost of the IPFF II Project is $416.7 million ($356.7 million from the IDA and $60.0 million from the Government of Bangladesh). The eligible sectors for financing under the IPFF II Project include power; port development; environmental, industrial, and solid waste management; highways and expressways; airports; water supply and distribution; industrial estates and parks; social sector; and information technology. The technical assistance component is being utilized in procuring consultants and building capacity of key stakeholders, such as the PPP Authority and the BIFFL. Component 1 of the IPFF II was a long-term infrastructure financing component, while Component 2 was technical assistance. Component 1 was provided to PFIs for further on-lending and investment support of long-term infrastructure investments by private sector investors and an investment sponsor. In addition to conventional debt, Component 1 was envisaged to include innovative debt instruments such as promoter/sponsor loans, mezzanine financing, takeout financing facilities, and specialized project/infrastructure bonds. In addition, equity and credit guarantees and credit enhancement were piloted through the BIFFL.

Unit

Role

Bangladesh Infrastructure Finance Fund Limited (BIFFL)

To encourage the private sector to invest in public–private partnership (PPP) projects, the BIFFL, a nonbanking financial institution, was incorporated by the Ministry of Finance in 2011. The objective is to provide long-term financing in local currency to infrastructure projects that meet the BIFFL’s investment criteria. The BIFFL seeks to attract investment from both institutional and retail investors (including nonresident Bangladeshis and overseas foreign workers) to provide an alternative savings/investment vehicle in the Bangladesh market. The BIFFL is managed independently, following objective investment criteria, and is targeted to provide a variety of capital products to PPP projects, including long-term debt, short-term construction capital, and equity (future).

In August 2020, the Asian Development Bank approved a $50 million loan to the Government of Bangladesh to fund PPP infrastructure projects in the country. The project will support government efforts in strengthening the BIFFL’s institutional capacity to develop PPP infrastructure projects.

Infrastructure Development Company Limited (IDCOL)

The IDCOL, established in 1997 by the Government of Bangladesh as a nonbank financial institution, plays a major role in bridging the financing gap for developing medium- to large-scale infrastructure and renewable energy projects in Bangladesh. The company now stands as the market leader in private sector energy and infrastructure financing in Bangladesh.

The IDCOL offers a full range of financing solutions to viable private-sector-owned infrastructure projects, including long-term local and foreign currency loans, working capital loans, debt and equity arrangement, debt restructuring, takeover financing, and financial advisory and agency services.

The IDCOL has expanded its infrastructure financing window, bringing in social and tourism infrastructure as well as infrastructure-backward linkage industries under the broad definition of infrastructure. The IDCOL also provides concessionary financing support to projects with significant positive contributions toward environmental conservation and pollution control.

Investment Promotion and Financial Facility (IPFF)

The IPFF aims to finance private infrastructure projects based on PPP. Private investors can approach the participating financial institutions (PFIs) to access funds allocated under the IPFF program. The first round of international investment position (IIP) had World Bank’s International Development Association (IDA) credit of $307 million, with the Government of Bangladesh cofinancing $60 million. The implementing agency was the Bangladesh Bank, operating through 19 PFIs.

The IPFF II Project (July 2017–June 2022), a follow-on project of the IPFF, has been taken up by the Government of Bangladesh (with the financial support of the World Bank) to create a sustainable platform for long-term financing in infrastructure and further strengthen the capacity of the private sector in filling the substantial infrastructure gap in Bangladesh.

The main objective of the project is to increase long-term financing for infrastructure and to build capacity of local financial institutions for promoting private-sector-led infrastructure financing in Bangladesh. The estimated cost of the IPFF II Project is $416.7 million ($356.7 million from the IDA and $60.0 million from the Government of Bangladesh). The eligible sectors for financing under the IPFF II Project include power; port development; environmental, industrial, and solid waste management; highways and expressways; airports; water supply and distribution; industrial estates and parks; social sector; and information technology. The technical assistance component is being utilized in procuring consultants and building capacity of key stakeholders, such as the PPP Authority and the BIFFL.

Component 1 of the IPFF II was a long-term infrastructure financing component, while Component 2 was technical assistance.

Component 1 was provided to PFIs for further on-lending and investment support of long-term infrastructure investments by private sector investors and an investment sponsor. In addition to conventional debt, Component 1 was envisaged to include innovative debt instruments such as promoter/sponsor loans, mezzanine financing, takeout financing facilities, and specialized project/infrastructure bonds. In addition, equity and credit guarantees and credit enhancement were piloted through the BIFFL.

Sources: Asian Development Bank. 2020. Bangladesh: Strengthening Bangladesh Infrastructure Finance Fund Limited Project. Manila. https://www.adb.org/projects/51311-001/main; Bangladesh Bank. Bangladesh. https://www.bb.org.bd/aboutus/dept/dept_details.php; Bangladesh Infrastructure Finance Fund Limited. About BIFFL. https://biffl.org.bd/; and IDCOL. Bangladesh. https://idcol.org/home/about.

Key Infrastructure Financing Sources

Item	Non/Limited Recourse Loan	Non/Limited Recourse Local Currency Loan	Project Financing, Local Public Sector Banks	Interest Rate Swaps	Currency Swaps	Project Financing through Project Bond Issuance
Maximum tenor, in years	5–7	6–8	5–10	15	<5	UA
Up-front arrangement fee, bps	UA	100–200				UA
Floor rate	LIBOR	Central Bank Lending Rate				UA
Margin rate, bps	UA	UA				UA
Percentage of foreign debt out of total debt for project financing			<30%			UA
Percentage of project bonds out of total debt for project financing
Typical debt-to-equity ratio			75:25
Timeline to financial close (month)			>12
Minimum DSCR covenant levels, x			>1.5x
Nominal interest rates
Real interest rates
Security package

bps = basis points, DSCR = debt service coverage ratio, LIBOR = London interbank offered rate, UA = unavailable.

Source: Asian Development Bank. 2019. Public–Private Partnership Monitor. Second Edition. Manila. https://www.adb.org/sites/default/files/publication/509426/ppp-monitor-second-edition.pdf.

Active Banks in Project Finance in Bangladesh in 24 Months Preceding December 2019

Bank	Total Project Financing		Transaction
Bank	($ million)	(Tk billion)	Transaction
Bank of China	590.16	50.05	1
Export-Import Bank of China (China Exim Bank)	590.16	50.05	1
China Construction Bank	590.16	50.05	1
Exim Bank of China	461.00	39.09	1
Industrial and Commercial Bank of China	400.00	33.92	1
Sumitomo Mitsui Banking Corporation	219.00	18.57	3
Clifford Capital	173.00	14.67	2
Infrastructure Development Company, Limited	80.87	6.86	1

Source: Inframation Group. Country Factbook-Bangladesh. https://www.inframationnews.com/country-factbook/3747026/bangladesh.thtml (accessed 7 July 2020).

Equity sponsors also play an important role in the development of projects. The table below shows the most active project sponsors over the last 24 months.

Active Project Sponsors in Bangladesh in 24 Months Preceding December 2019

Name	Total Project Financing		Transaction
Name	($ million)	(Tk billion)	Transaction
S. Alam Group	2,459.00	208.53	1
SEPCO Electric Power Construction Corporation III	2,459.00	208.53	1
HTG Development Group	2,459.00	208.53	1
Italian–Thai Development	1,133.37	96.11	1
Summit Power Limited (Bangladesh)	207.00	17.55	1
Mitsubishi Corporation	139.00	11.79	1
Summit Corporation Limited	139.00	11.79	1
Symbior Solar	80.87	6.86	1
Paragon Group	80.87	6.86	1

Source: Inframation Group. Country Factbook— Bangladesh. https://www.inframationnews.com/country-factbook/3747026/bangladesh.thtml (accessed 7 July 2020).

Credit Rating Agencies

There were eight credit rating agencies registered in Bangladesh in early 2020, as indicated in the table below .1

1Bangladesh Securities and Exchange Commission. List of Credit Rating Agencies. https://www.sec.gov.bd/home/cragency (accessed 24 June 2020).

Rating Company	Subsidiary/Technical Partner of	Date of Issuance of Registration Certificate
Credit Rating Information and Services Ltd.	Rating Agency Malaysia Berhad	28/08/2002
Credit Rating Agency of Bangladesh Ltd.	ICRA Limited of India	24/02/2004
Emerging Credit Rating Ltd.	Malaysian Rating Corporation Berhad	22/06/2010
National Credit Rating Ltd.	The Pakistan Credit Rating Agency Ltd.	22/06/2010
ARGUS Credit Rating Services Ltd.	DP Information Group, Singapore	21/07/2011
WASO Credit Rating Company (BD) Limited	Financial Intelligence Services Ltd.	15/02/2012
Alpha Credit Rating Limited	Istanbul International Rating Services Inc.	20/02/2012
The Bangladesh Rating Agency Limited	Dun & Bradstreet South Asia Middle East Ltd.	07/03/2012

Note: Dates expressed in dd/mm/yyyy format.

Source: Bangladesh Securities and Exchange Commission. List of Credit Rating Agencies. https://www.sec.gov.bd/home/cragency (accessed 24 June 2020).

The credit rating agencies are regulated by the Bangladesh Securities and Exchange Commission. According to the annual financial stability report of 2018 published by the Central Bank of Bangladesh (the Bangladesh Bank), "Most of the corporate entities/exposures obtained the similar credit rating in 2018 in comparison to the rating of 2017. The percentage of upward migration of credit ratings was greater than downward migration in 2018" reflecting the "resilience of the financial system with respect to corporate solvency."2

2Bangladesh Bank. 2018. Financial Stability Report 2018. Issue 9. Dhaka. https://www.bb.org.bd/pub/puball.php (accessed 20 July 2020).

National PPP landscape

Overview

Number of PPPs and Investment in PPPs

PPP Investment

Number of PPPs Reaching FC

Value of PPPs Reaching FC

Revenue Model and Government Support to PPPs

Number of PPPs with Govt. Support

Number of User Charge PPPs

Number of Govt. Pay PPPs

PPPs under Preparation and Procurement

Number of PPPs under Preparation

Number of PPPs under Procurement

National Framework for Enabling PPPs

PPP Legal and Regulatory Framework

Parameters

National Framework for Enabling PPPs

PPP Legal and Regulatory Framework

Evolution of the Public–Private Partnership

Major Improvements in Public–Private Partnership

Public–Private Partnership Institutional Setup

National Framework for Enabling PPPs

Types of PPPs

Service Contracts

Management Contracts

Affermage or Lease Contracts

Design-Bid-Build (DBB)

Design-Build (DB)

Build-Operate-Transfer (BOT)

Design-Build-Finance-Operate-Transfer (DBFOT)

Build-Own-Operate (BOO)

Concessions

Joint Venture

Hybrid Contracts

Others Build-Own-Operate-Transfer (BOOT)Build-Lease-Transfer(BLT)Partial DivestureProject Finance Initiative

National Framework for Enabling PPPs

Types of PPPs

National Framework for Enabling PPPs

Eligible Sectors for PPPs

Transportation Infrastructure

Road Infrastructure Highways and expressways including mass-transit, bridges, tunnels, flyovers, interchanges, city roads, bus terminals, commercial car parking etc. (ISIC 42 and 49)

Rail and Mass Transit Infrastructure Railway systems, rolling stock, equipment and facilities (ISIC 49)

Waterways Infrastructure Port development (sea, river and land) including inland container terminals, inland container depot and other services (ISIC 52); River passenger terminals /landing stations (ISIC 52)

Seaport Infrastructure Deep sea port development (ISIC 52)

Airport Infrastructure Airports, terminals and related aviation facilities (ISIC 42 and 51)

Logistics Infrastructure inland container terminals, inland container depot and other services (ISIC 52);

Water, Wastewater, and Solid Waste Management Infrastructure

Water Resources and Irrigation Infrastructure Land reclamation, dredging of rivers, canals, wetlands, lakes and other related facilities (ISIC 42)

Water Supply Infrastructure Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Wastewater Infrastructure Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Solid Waste Management Infrastructure Environmental, industrial and solid waste management projects; (ISIC 38-39)

ICT Infrastructure

Telecommunication Infrastructure Telecommunication systems, networks and services including information and communication technology (ICT) (ISIC 60-63)

IT and Informatics Infrastructure e-service delivery to citizens (ISIC 85)

Energy and Electricity Infrastructure

Power Generation Power generation, transmission, distribution and services (ISIC 35)

Power Transmission and Sub-Transmission Power generation, transmission, distribution and services (ISIC 35)

Power Distribution Power generation, transmission, distribution and services (ISIC 35)

Energy Conservation Infrastructure

Social Infrastructure

Education Infrastructure Social infrastructure e.g. health, education, human resource development, research and development, and cultural facilities, (ISIC 85-88)

Health Infrastructure Social infrastructure e.g. health, education, human resource development, research and development, and cultural facilities, (ISIC 85-88)

Public Housing

Government Buildings

Other Infrastructure

Zone Infrastructure Economic zone, industrial estates and parks, city and property development, including services to support commercial and noncommercial activities (ISIC 81-82)

Oil and gas infrastructure, including bio-energy Exploration, production, transmission, and distribution of oil, gas, coal and other mineral resources (ISIC 05-09); Oil refinery, and production of LPG (ISIC 19);

Tourism Infrastructure Tourism industry (ISIC 79)

Sports, arts, and culture facility infrastructure city and property development, including services to support commercial and noncommercial activities

Penitentiary infrastructure

Traditional market

National Framework for Enabling PPPs

Eligible Sectors for PPPs

Projects Eligible for Public–Private Partnership Mode of Procurement

National Framework for Enabling PPPs

PPP Institutional Framework

Parameters

National Framework for Enabling PPPs

PPP Institutional Framework

Key Agencies and Their Roles in Promoting Public–Private Partnerships

Others

Build-Own-Operate-Transfer (BOOT)
Build-Lease-Transfer(BLT)
Partial Divesture
Project Finance Initiative

Road Infrastructure

Highways and expressways including mass-transit, bridges, tunnels, flyovers, interchanges, city roads, bus terminals, commercial car parking etc. (ISIC 42 and 49)

Rail and Mass Transit Infrastructure

Railway systems, rolling stock, equipment and facilities (ISIC 49)

Waterways Infrastructure

Port development (sea, river and land) including inland container terminals, inland container depot and other services (ISIC 52); River passenger terminals /landing stations (ISIC 52)

Seaport Infrastructure

Deep sea port development (ISIC 52)

Airport Infrastructure

Airports, terminals and related aviation facilities (ISIC 42 and 51)

Logistics Infrastructure

inland container terminals, inland container depot and other services (ISIC 52);

Water Resources and Irrigation Infrastructure

Land reclamation, dredging of rivers, canals, wetlands, lakes and other related facilities (ISIC 42)

Water Supply Infrastructure

Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Wastewater Infrastructure

Water supply and distribution, sewerage and drainage, effluent treatment plans (ISIC 36-39);

Solid Waste Management Infrastructure

Environmental, industrial and solid waste management projects; (ISIC 38-39)

Telecommunication Infrastructure

Telecommunication systems, networks and services including information and communication technology (ICT) (ISIC 60-63)

IT and Informatics Infrastructure

e-service delivery to citizens (ISIC 85)

Power Generation

Power generation, transmission, distribution and services (ISIC 35)

Power Transmission and Sub-Transmission

Power generation, transmission, distribution and services (ISIC 35)

Power Distribution

Power generation, transmission, distribution and services (ISIC 35)

Education Infrastructure

Social infrastructure e.g. health, education, human resource development, research and development, and cultural facilities, (ISIC 85-88)

Health Infrastructure

Social infrastructure e.g. health, education, human resource development, research and development, and cultural facilities, (ISIC 85-88)

Zone Infrastructure

Economic zone, industrial estates and parks, city and property development, including services to support commercial and noncommercial activities (ISIC 81-82)

Oil and gas infrastructure, including bio-energy

Exploration, production, transmission, and distribution of oil, gas, coal and other mineral resources (ISIC 05-09); Oil refinery, and production of LPG (ISIC 19);

Tourism Infrastructure

Tourism industry (ISIC 79)

Sports, arts, and culture facility infrastructure

city and property development, including services to support commercial and noncommercial activities