Fresh agreements likely soon following barren funding for PPP projects

MUNIMA SULTANA | Thursday, 14 October 2021

Fresh financing agreements are set to be signed with banks and financial institutions following the expiry of previous deals sans successful funding of any PPP projects in the last five years under the latest economic model.

Officials said the Public-Private Partnership Authority (PPPA) got armed with fit preparations to strike the deals, in a fresh bid to give a shot in the dormant PPP arm.

Fifteen banks and non-banking financial institutions or NBFIs will join hands with the PPPA this time around under memorandum of understanding (MoU) to be inked at a city hotel today (Thursday).

The PPPA signed the first MoU on 'PPP Financing Partnership' with 14 banks and FIs, including a Japanese bank, on November 03, 2016 to facilitate smooth financing and speedy implementation of projects under the emerging model which a mix of already-tested public and private sectors.

However, the sources said, none of the 32 PPP projects now under various implementation stages could get any finance from these banks and FIs in the last five years.

Though the PPPA claimed the financing of two projects -Dhaka Elevated Expressway and Dhaka Bypass-those projects have got funds from government-owned financing institutions like Bangladesh Infrastructure Finance Fund Limited.

PPPA officials said the Authority had tried to gather the reasons for the barriers to the PPP-project financing during a recent meeting with different banks and FIs and decided to sign the fresh MoU to overcome those by taking steps from respective sides.

"We have been informed of some regulatory barriers to the PPP project financing from them (banks and FIs) which mismatch the PPP Act with the conventional loan system," said one official, preferring not to be named.

He also said new financing proposals like from bond market, pension fund have been proposed to incorporate into the new MoU for exploring new scope of financing.

Sources also said the PPPA had already sent a Demi Officio letter to Finance Division to overcome regulatory hurdles in the existing banking law to ensure smooth PPP financing by the banking institutions.

The officials say the new MoU tries to streamline the experiences gathered in the last five years.

The banks and FIs signing the fresh deals are Eastern Bank Limited, Prime Bank Ltd, HSBC, The 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 Develop-ment Finance Co. Ltd , Brac EPL Investments Ltd , Riverstone Capital Ltd and UCB Investment Ltd.

Mizuho Bank of Japan, AB Bank, Modhumat Bank, Dhaka Bank, IDLC and IDLC Finance are among others dropped from the earlier list. The HSBC is added to the fresh MoU signatories from among the foreign banks.

Sources said Mizuho Bank did not respond to the call of the PPPA during the review meeting held last January due to travel restrictions on the country amid coronavirus pandemic situation. The new list was prepared based on the January meeting.

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