15 lenders to take part in PPP project financing

The Public Private Partnership Authority yesterday signed a memorandum of understanding (MoU) with 15 banks and non-banking financial institutions to facilitate financing of PPP projects.

The MoU will stay in effect for the next five years. A non-disclosure agreement has also been signed to complement the MoU.

The authority has been largely unsuccessful in availing financing for PPP projects since 2016, when it signed an MoU with 14 banks and non-banking financial institutions.

Under that MoU, the authority organised various workshops over the past couple of years on PPP financing. The authority also shared documents on projects with PPP financing partners.

However, private financial institutions have not provided loans for the PPP model projects.

On the other hand, the state-owned Bangladesh Infrastructure Finance Fund Limited (BIFFL) has provided long term syndicated loans of Tk 1,075 crore with the China Development Bank and CITIC Limited for a Dhaka bypass project.

Presiding over yesterday's ceremony, Sultana Afroz, chief executive officer of the PPP Authority, acknowledged the importance of the timely availability of financing for a project's successful implementation.

Challenges include mismatch between loan term of PPP projects and loan disbursement periods of financial institutions, inability to keep government land as collateral and limits on single borrowers, she said.

Various financial institutions lack the lending capacity while there are no alternative sources, such as the bond market, insurance and pension funds, she said.

All relevant institutions including the Finance Division, Financial Institutions Division, Bangladesh Bank and Bangladesh Securities and Exchange Commission should come forward, she said.

They should adopt necessary changes in the conventional banking system to provide necessary financing to PPP project companies, she said.

Ahmad Kaikaus, principal secretary to the prime minister, said the MoU would play a pivotal role in providing lenders quick and easy access to project information and to facilitate financial closure for select PPP projects.

"As domestic financial institutions need to be made more aware in PPP projects, the signing of this MoU will be a milestone," he said.

Sheikh Mohammad Salim Ullah, secretary to the Financial Institutions Division, was present as special guest.

The participating lenders are Eastern Bank Limited, Prime Bank Ltd, HSBC, City Bank Ltd, Standard Chartered Bank, Mutual Trust Bank Ltd, Southeast Bank Ltd, Midland Bank Ltd, Lankan Alliance Finance Ltd, Prime Bank Investment Limited, NDB Capital Ltd, Industrial and Infrastructure Development Finance Company Ltd, Brac EPL Investments Ltd, Riverstone Capital Ltd and UCB Investment Ltd.

The first, successfully implemented PPP project in the health sector was inaugurated at the National Institute for Kidney Diseases and Urology in 2016.

One of the eight ongoing projects under the PPP model is over a 46.73-km Dhaka elevated expressway including connecting roads. The project will cost around $1.4 billion.