"Good governance is the key to a project's success "

Edward Bodmer, Course Director of the workshop

What are the major challenges in project financing for countries like Bangladesh?

I think the major challenge is to get money for longer period. When you do not get the right kind of debt,people will have to pay more for the output of a project. For example, the life span of a flyover is long. You need long term loan matching the lifetime of the project. Otherwise the toll of the flyover will be higher and the people have to bear the extra burden. Same goes for power plants, roads and bridges.

Another important issue is to get the right kind of interest rate. In the Wall Street, they will ask for high risk premium for investing in Bangladesh citing that there is considerable political risk. I have found that interest rate of the same project varies dramatically from country to country. The investment community exploits the risk factors. It ultimately increases cost of a project in developing countries. This also works as a barrier towards innovation and eco-friendly solutions. Banks around the world will tell you not to build coal-fired power plants but they will also charge high interest for other alternative projects.

What should be the relation between the government and private financiers?

The investors look for a good contract. They want that the contract is being respected by the government. Sometimes infringement of the contract happens. That's why good governance in project management is required.

The private investors basically care about good return from their investment. The government has to make sure that it can bring the best from the investment for its people. The government should also maintain a balance between the rate of return of an investment and the growth rate of the economy. For example, if the rate of return is 15% but the growth of the economy is 5% that means someone in somewhere is taking out the 10% from the public. This is simple conomic calculation.

How do you assess the capacity of Bangladesh's human resource for project financing?

I am very much impressed by the quality and level of expertise of the human resource in the project financing sector of Bangladesh. If the country nurtures these talents, they will be an asset. In the workshop, I have tried to focus on project financing schemes and risk factors in the similar types of projects happening in Bangladesh and around the world. We have gone through various case studies and tried to find out the mistakes that could have been avoided. I think this type of global exposure will broaden their horizon and help them to deal with big projects effectively.