The information came to light during a memorandum of understanding (MoU) signing event on the PPP Financing Partnership with 15 interested banks and non-banking financial institutions
5.5% of the total SDG financing requirement has been targeted through the Public Private Partnership (PPP) Authority Bangladesh.
According to the long-term plan of the Bangladesh government, to become a developed country by 2041, the estimated amount of investment from the PPP project is around $3.8 billion per year.
The information came to light during a memorandum of understanding (MoU) signing event on the PPP Financing Partnership with 15 interested banks and non-banking financial institutions.
Principal Secretary to the Prime Minister Dr Ahmad Kaikaus attended the event as the chief guest while Secretary of Financial Institutions Division Sheikh Mohammad Salim Ullah was present as a special guest.
In 2016, the PPP Authority signed a memorandum of understanding (MoU) with another 14 banking and non-banking financial institutions.
The tenure of the MoU has ended and new banks have shown interest to be PPP financing partners, therefore, this MoU signing event took place.
“To ensure quick and easy access to project information for lenders and to facilitate financial closure for selected PPP projects this MoU shall play a pivotal role,” Dr Ahmad Kaikaus said during the event.
“As domestic financial institutions need to be made more aware of PPP projects, the signing of this MoU will be a milestone event in this regard,” he added,
Secretary to the Bangladesh government and Chief Executive Officer of the PPP Authority Sultana Afroz presided over the event.
She acknowledged the importance of timely finance to the projects’ successful implementation.
Sultana Afroz said: “PPP is the brainchild of Prime Minister Sheikh Hasina and the PPP Authority is working tirelessly for the infrastructural development of the country.”
“To make the PPP Financing Partnership program more effective and dynamic, PPP Authority organized a workshop earlier this year with financial institutions, and based on feedback from that workshop, today's event has been organized,” she added.
The challenges in PPP project financing in Bangladesh include a mismatch between loan terms in PPP projects and savings and loan disbursement period of financial institutions, limited use of Project Finance method for financing PPP projects.
Other challenges are non-mortgage of government land as collateral in PPP projects, limitation of the maximum single borrower limit, various financial institutions’ inadequacy of loan amount and absence of alternative sources including bond market, insurance fund, pension fund, etc.
All banking and non-banking financial institutions including Finance Division, Financial Institutions Division, Bangladesh Bank and Securities and Exchange Commission need to come forward with necessary changes in the conventional banking system to provide required financing to PPP project companies through the Project Finance system, reads a press release.
At the event, the activities of the PPP Authority, PPP project procurement process, existing PPP financing partnership MoUs and suitable PPP projects for financing in the future were discussed in detail.
It is being hoped that this will further expedite the communication of these organizations with the PPP authority.
This MoU will exist for the next five years from the signing date. It is expected that the PPP Financing Partners will be able to finance the PPP projects under the MoU and contribute to the development of the much-needed infrastructure of the nation.
A non-disclosure agreement (NDA) is also signed to complement the MoU.
The banks and financial institutions that signed the agreement 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 Development Finance Co Ltd, Brac EPL Investments Ltd, Riverstone Capital Ltd and UCB Investment Ltd.
The event was organized by the PPP Authority under the Prime Minister’s Office on Thursday at the Hotel Pan Pacific Sonargaon, Dhaka.
Top-ranking officials of the government agencies and other financial institutions were present along with prominent banking and economic sector specialists and journalists.