Bangladesh mandates ADB to advise on expressway connecting 10 economic zones

Bangladesh has mandated the Asian Development Bank's Office of Public–Private Partnership (OPPP) to provide transaction advice on the Joydebpur-Mymensingh Road project to be built along one of the country's busiest economic corridors.

The scope of the mandate agreed with Bangladesh's Public–Private Partnership Authority covers project feasibility, transaction due diligence and structuring, bidder procurement, and negotiation to reach commercial and financial closure.

The ADB signed a MoU on Thursday with the high officials of the Roads and Highways Department of the road transport and bridges ministry in this regard at a hotel in Dhaka.

Planning Minister MA Mannan presented as the chief guest at the event while Ashok Lavasa, 

vice president for Private Sector Operations and Public-Private Partnerships, ADB, F Cleo Kawawaki, head of the Office of Public-Private Partnership, ADB, Mushfiqur Rahman, chief executive officer and secretary of the Public Private Partnership Authority spoke at the event.

The ADB published a report titled "public–private partnership monitor" at the event which revealed that a total of 69 PPP projects across various sectors were implemented in Bangladesh with a private investment worth $6.74 billion or TK 57157 crore from 1990 to 2019.

About 76% of the investment was contributed by the energy sector and the ports sector attracted over 12% of PPP investments.

The report highlighted that the government set a target to reach PPP investment to 1.8% of GDP per year and implement 30% of infrastructure projects under the PPP modality.

The report revealed that Summit Corporation Limited invested the highest $1,191 in Bangladesh for nine projects. Orion Group invested the second highest $705 million for three projects. General Electric of the United States invested $459 million.

Planning minister MA Mannan said Bangladesh requires a huge amount for infrastructure to reach the next level of development. He asked the ADB and other development partners to provide more finance for infrastructure.

He called for more coordination among the government projects at the preparation and implementation stage and hoped that the report revealed by the ADB would accelerate PPP projects in Bangladesh.

 "Joydebpur-Mymensingh Road project builds on OPPP's successful track record in supporting the Government of Bangladesh in the road sector," said F Cleo Kawawaki.

"This expressway will further demonstrate how the private sector's innovation, efficiency, and capital can be leveraged to build climate resilient adaptable infrastructure. OPPP is focused on providing advice that assesses options to decarbonise the expressway and plan for future interventions like electric vehicle charging and innovative climate mitigation and adaptations," he added. The project is expected to cut road congestion and improve road safety.

The ADB officials said at the event that, OPPP's mandate will encompass capacity augmentation to identify a robust pipeline of new opportunities and monitor two other road PPP projects in Bangladesh – the Dhaka Bypass Road PPP project which achieved financial close in April 2021, and Rampura Amulia Demra PPP project which reached commercial close in January 2022. These two projects are estimated to mobilise over $600 million of private sector capital.

The project will convert the existing national highway-3, an 87-kilometer road connecting Joydebpur city at the outskirts of Dhaka to the northern district of Mymensingh, to a four-lane access-controlled expressway with service lanes on each side for local traffic.

Estimated initial capital expenditure of the project is over $400 million. Project costs, construction and concession duration will be assessed as part of feasibility study. Construction should cause minimal disruption given the need to use the existing highway, which is expected to see a sharp increase in heavy vehicle traffic when the 10 economic zones connecting to it are operational.  

The public–private partnership monitor report of the ADB revealed further that the PPP market in Bangladesh is relatively mature, but there have been various challenges to PPP implementation.

Developing sector-level frameworks and model documents or standard bidding documents is crucial in bringing added transparency and clarity, with the hope that more in the private sector will bid for projects.

The lack of long-term financing is a significant impediment to PPPs in Bangladesh. While a few specialized institutions have been developed, there is still a significant gap in the overall financing requirements of the country, which leads to heavy dependence on foreign or development funding routes.

Another challenge of PPPs is the limited capacity of contracting authorities and experience in handling PPP projects.