$260m ADB fund for infrastructure
The Asian Development Bank has extended a $260 million loan to Bangladesh to help the country develop infrastructure under public-private partnership.
The private sector can get up to 80 percent of funds for infrastructure projects as cheap loans from the ADB.
Yesterday, the Manila-based donor and the Economic Relations Division (ERD) signed agreements for the loans to help finance PPP projects and renewable energy interventions.
The ADB said the assistance forms the first tranche of $526 million multi-tranche loans for the Third Public Private Infrastructure Development Facility (PPIDF 3).
“The PPIDF 3 seeks to increase investments in infrastructure, including renewable energy and energy efficiency facilities, aligned with Bangladesh's Seventh Five-Year Plan,” said ADB's Country Director Manmohan Parkash.
“It will also help leverage private sector investments in PPP projects to reduce pressure on direct financing from the public budget to meet the growth target.”
The support consists of $500 million market-based loan to finance medium and large-scale PPP infrastructure projects, and $26 million concessional loan to finance small and medium-sized renewable energy and energy efficiency facilities, primarily in the rural areas.
The fund will be disbursed through state-run non-bank financial institution Infrastructure Development Co Ltd (IDCOL).
IDCOL shall ensure that the maximum amount of loan given to a project does not exceed 40 percent of the total project cost, except that with prior approval of the ADB, according to the lender's document.
If the project is about renewable energy or energy efficiency, 70 to 80 percent of the loan can be disbursed.
The interest rate of the market-based portion of the loan will be LIBOR plus 100 basis points and that for concessional loan will be 2 percent.
The IDCOL lending to private sector projects will bear an interest rate that reflects the state-agency's cost of funds plus a spread to cover transaction costs and risk to be determined by IDCOL based on commercial and competitive terms, according to the documents.
The programme will also be supported by a $750,000 technical assistance to further strengthen the capacity of IDCOL.
The PPIDF 3 is a continuation of the previous efforts of the ADB, Bangladesh and IDCOL to address the country's infrastructure deficiencies.
ERD Secretary Kazi Shofiqul Azam and Parkash signed the agreements.