AN INTELLIGENT COMPANY
IDCOL, who? Doesn't ring a bell?
It should.
After all, through its 47 partners, it has installed 3.2 million solar home systems that provide clean electricity to 13 million rural people of the country. To get an idea about how big of an achievement that is, here is a fact: the number of solar home systems in the rest of the world combined is less than 2 million. It has also financed infrastructure like land ports and invested heavily in the telecommunication sector.
Owned by the government but managed by people from the private sector, IDCOL or Infrastructure Development Company Limited is a happy marriage between the private and the public sector. Today it is one of the few government owned companies that are actually running on profit. What's the secret behind its phenomenal success?
To find answers, I first meet SM Monirul Islam, its Chief Financial Officer and Head of Operations, who is the oldest employee of the organisation. “Since it is a public limited company and a non-bank financial institution, it is different from organisations like DESCO, DPDC, and BTCL. We have greater leverage in taking decisions. We are accountable to a board instead of a ministry.”
The eight-member powerful board–consisting of four senior secretaries to the government and four noted personalities from the private sector–reflects the spirit of private-public partnership that defines the award winning organisation. “The board was constituted in such a manner that interests of both sectors are protected. We owe it to the board for our success,” Monirul Islam says.
His humility is impressive but the fact is an organisation's strength lies in its people who are the most valuable asset it can have. But where to get them? Through recruitment, of course. “Recruitment is the start of good practices or bad. We outsource the job of taking and evaluating the entrance exam to reputed universities. Thus we can maintain absolute transparency in the recruitment process and hire the best-qualified candidates in the market.”
For a company that boasts a paid off capital of BDT 2600 million, their head office has an astonishingly small staff–only sixty two employees comprising of financial and market analysts, engineers, lawyers, IT experts, accountants and environmental and social safeguard specialists.. “Two words describe us: agile and nimble,” brags Mahmood Malik, CEO and executive director.
That's true, on the two days we visit them we do not see any peon–ghosts of the colonial era– ambling around carrying files. When we enter the office of the CEO and the CFO, no personal secretary or personal assistant stops us. Thank IDCOL for that. The bigger the boss, the meaner the assistant.
So they have a highly skilled and productive workforce. But how to keep them motivated? “We offer one of the best pay structures in the market. It motivates professionals to stay and contribute. We are thankful to the board for that,” Mahmood Malik, says.
The management understands that training is the key to enhancing the performance of their employees. Monirul Islam says, “Next month, we are sending a junior employee to a Latin American country to attend a workshop on Improved Cook Stove. Last year we launched the 1 million Improved Cook Stoves (ICS) project.”
IDCOL was established in 1997. “The World Bank and the Bangladesh government decided that it was necessary to create a special vehicle that could ensure the involvement of the private sector in infrastructure development,” Monirul Islam, the CFO says. “IDA, a member of the World Bank Group had allocated $225 million to this effect.” IDCOL was to play the role of a financial intermediary.
“In a developing country like ours, the government simply does not have enough resources to build all the infrastructures we need,” says Nazmul Haque, Director (Investment) and Head of Advisory. “Infrastructure projects are different from other projects because they are larger and there are no precedents of them being carried out by the private sector. But if we can create conducive conditions, there is no reason why the private sector will not come to this kind of business.”
Their first project was the 450 MW power plant at Meghna Ghat. “We invested $80 million in the $360 million project,” Monirul Islam says. “Today the private sector produces about 2200 MW of electricity of which about 50 percent is financed by IDCOL.”
Since then it has also financed Greenfield projects like land ports at Sonamasjid and Hili. “Greenfield projects are riskier than others because there is no market data available. We built a Central Effluent treatment Plant in Chittagong EPZ for waste management which is not only necessary to reduce pollution but also has commercial potential. Provided the right support, it can grow into an industry.”
Diversification seems to be the mantra. “If you want to build an airport in Cox's Bazaar in private initiative, we will be interested in financing it. We are considering a mega project in Sylhet–a resort on 200 acres of land complete with a runway and helipads.”
Development, however, means more. “We want to build social infrastructures like schools and hospitals. If you want to establish an institution like Bangladesh Institute of Technology, we can support it. We are also interested in emerging sectors like ship building.”
Although IDCOL “is much like a bank and can do everything a bank does other than retail banking,” it plays a much wider role. Mahmood Malik, the CEO says, “We are involved in a whole range of other activities such as capacity building of the partner organisations (PO) and the market itself, training customers and employees of POs, awareness building, quality assurance and monitoring and evaluation.”
Monirul Islam adds that depending on the merit of the project they can issue loans on concessionary terms. “For the Meghna Ghat power plant, we issued the loan for 23 years which would be unthinkable for a bank.”
Monitoring and evaluation is crucial to a project's success. To learn from experiences and see where things have gone wrong is to take informed decisions in the future. “We meet with the POs every month to see their progress and immediately address quality or operational issues,” Mahmood Malik says. “Rather than imposing on them, we ask what they need. This helps them grow a sense of ownership.”
This sense of ownership can only develop when people feel you care. And the only way to do that is by following up. Following up is following through.
Last year, they launched an ambitious project to install 1550 solar irrigation pumps in rural areas by 2017, intended to provide irrigation facility to off-grid areas and reduce dependency on fossil fuel. They have already approved 114 solar irrigation pumps of which 38 are in operation. “Our model has been adopted by many countries,” Md Enamul Karim Pavel, Head of Renewable Energy says. “With 40 percent subsidy, solar irrigation pumps can compete with diesel pumps. Ultimately, it will require no subsidy. In India they have given 100 percent subsidy on solar pumps and yet it has not been successful. Projects like this will be viable only when certain conditions are met: the local market must have the capacity to supply the equipment, POs must have the capacity to install, and then monitor and evaluate performance of the system.”
Other countries are taking notice of how IDCOL gets things done. “We have opened up an advisory unit through which we are disseminating our knowledge in sectors which have earned us global recognition,” Md Enamul Karim Pavel, Head of Renewable Energy says, “Last year alone, eight African countries sought our advisory services and 80 delegates including ministers of foreign governments visited our organisation. We are capable of designing projects in other countries. We plan to open a separate wing to help others learn from us.”
IDCOL's efficiency and transparency have earned both the trust and respect of the partner organisations here at home as well. Rural Services Foundation (RSF), a sister concern of Rahimafrooz has been doing business with them from the start. Ruhul Quddus, executive director of RSF, says, “We are very satisfied with their financial mechanism, support services, management and transparency. However, Renewable Energy sector should enjoy the benefit of government tax holiday.” RSF has installed 1800 bio gas plants and solar systems in 473000 rural households.
Md Nazrul Islam Khan, Secretary, Ministry of Information & Communication Technology and a member of the board believes that their model could be replicated in organisations like Titash Gas, Bangladesh Gas Fields Company Limited, RAJUK, and WASA. “IDCOL is an example of efficiency. However, I think they could use a little more publicity. The company website which is in English may also have a Bangla version so more people can learn about it.”
There is much to learn from IDCOL in a country where projects too often fail simply because objectives are not well defined and progress is not monitored or evaluated and there are no follow-up actions in place. Nazmul Haque, Director (Investment) says. “Before a project is launched, a feasibility study must be done. In our case, it is carried out by globally reputed third party consultants.”
The ultimate goal of a project is to be self-sustainable. IDCOL has made that possible. “When we started the solar home system project, we were giving a huge amount of concession on each system sold,” Monirul Islam says. “Now we are very close to commercialisation.”
The solution to our problems may not lie in always looking to the government but in building more organisations like IDCOL where the government meets the business world to achieve development goals. “When a rural woman for the first time in her life turns on the switch and there's light, the joy in her face makes all our hard work worthwhile,” Monirul Islam says.
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