Developing Infrastructure in Bangladesh through Public-Private Partnership
DHAKA, Jan. 9 (NsNewsWire) — The World Bank supported Investment Promotion and Financing Facility (IPFF) Project promotes private sector participation in infrastructure development through supplementing long term financing resources beyond the capacity of the local financial institutions. The project provides partial debt financing through Bangladesh Bank to participating financial institutions (PFIs) for bring private sector for infrastructure development.
On the current phase, IPFF provided financing for 50 MW power plant and a water treatment plant. Besides, the process for financing another 55 MW power plant at Nababganj and two WTPs in the Adamjee and Comilla EPZs are underway. The pipeline of sub-projects includes another 55 MW power plant, a container terminal, and a fiber optic cable network. Besides, sponsors of several other power sector initiatives have showed great interest for IPFF facility loans.
Recent restructuring led to revision of the interest rate which is now lower than the existing market rate. The participating Private Financing Institutes can get the loan on fixed or floating interest rate. The revised low interest rate has attracted the private sector significantly as seen from the increase in number of applications from the private sector for IPFF loan. IPFF interest rate now stands in the range of 8.5% for local currency financing. Interest rates for foreign currency denominated facility loans are priced at LIBOR + 0.30 percent.
Recently the World Bank and Bangladesh Bank jointly reviewed the project progress and advised that the existing 50 percent single sector exposure limit should be lifted given strong demand for IPFF financing from the power sector entrepreneurs. In addition to making financing available for infrastructure development, IPFF also supports improvement of quality of implementation of these subprojects by ensuring higher standards of environmental and social safeguard compliance.
IPFF originally started in August 2006 with an initial World Bank funding of $50 million and received additional financing of $257 million in September 2010. In the first phase, IPFF financed seven small power plants that added 178 MW to national grid.
IPFF also supports strengthening of the Government’s Public Private Partnership (PPP) Office and provides technical support for infrastructure project preparation. The project has also been contributing to build PPP institutions and develop PPP capacity among different stakeholders through series of workshops, investors’ meetings and training programs at home and abroad. The PPP Office of the Government is actively working to develop a solid infrastructure pipeline for the medium and long term.