Public-private partnerships in Bangladesh: Evolution, challenges and the way forward

Bangladesh's journey with Public-Private Partnerships (PPPs) reflects a blend of high aspirations and persistent challenges. Launched with ambitious goals and political commitment, the PPP framework was envisioned as a vehicle to address the country's infrastructure deficit by mobilising private capital and expertise. 

While progress has been notable in recent years, the journey has been far from linear, with numerous lessons learned along the way.

Bangladesh established its PPP framework with optimism, supported by budgetary allocations and political endorsements. From the outset, the model was praised, with high expectations for addressing infrastructure needs. 

However, private sector engagement remained limited during the initial years, with significant portions of the PPP budget remaining unutilised due to regulatory ambiguities, concerns about project viability, and bureaucratic bottlenecks. 

Limited technical capacity and financial expertise also compounded these issues, highlighting the need for a more robust framework to attract private sector investment. The early phase revealed that while the concept of PPPs held promise, practical implementation required extensive groundwork and institutional support.

Bangladesh's PPP landscape has undergone a transformation, marked by institutional strengthening, policy reforms, and landmark projects. The introduction of the PPP Policy in 2010, the enactment of the PPP Act in 2015, and the establishment of the Public Private Partnership Authority (PPPA) have provided regulatory clarity and technical support, while standardised guidelines and model contracts have streamlined processes. 

Financial tools such as viability gap funding (VGF) and project development facilities, supported by multilateral institutions like the Asian Development Bank (ADB) and the World Bank Group, have bolstered investor confidence. 

These measures have played a pivotal role in bridging the gap between conceptualisation and execution, enabling projects to move forward with reduced risks and enhanced feasibility.

Projects like the Dhaka Elevated Expressway and the Patenga Container Terminal have showcased the potential of PPPs to attract private-sector participation. These initiatives serve as tangible examples of how a well-structured PPP framework can deliver impactful results. 

The Dhaka Elevated Expressway, for instance, addresses critical urban mobility challenges, while the Patenga Container Terminal enhances Bangladesh's port infrastructure, facilitating trade and economic growth. 

Some PPP projects have succeeded in attracting interest from global firms in major infrastructure projects, such as ports, underscoring the potential for international investment. However, the response from the local private sector has been less robust. Local firms often face financial constraints, technical gaps, and risk aversion, although their involvement is growing in smaller projects within sectors like healthcare, ICT, and education. 

A robust legal framework could offer the stability and predictability necessary for large-scale infrastructure projects

Sultana Afroz, former secretary to the Government of Bangladesh

Despite significant progress, challenges continue to impede the effective implementation of PPPs in Bangladesh. Delayed feasibility studies, land acquisition hurdles, institutional weaknesses, corruption, and regulatory bottlenecks remain persistent obstacles. Frequent changes in leadership at the PPPA, coupled with lengthy approval processes and a lack of coordination among government agencies, often result in cost escalations and delays. These inefficiencies undermine the confidence of both local and international stakeholders in the PPP framework.

The absence of a comprehensive PPP law further exacerbates these challenges. While current policies provide a foundational framework, the lack of a dedicated legislative structure creates uncertainties that deter potential investors. A robust legal framework could clarify the roles and responsibilities of all stakeholders and offer the long-term stability and predictability necessary for large-scale infrastructure projects. This would not only attract investment but also enhance the overall effectiveness of PPP initiatives.

Significant capacity building within the PPPA and government departments is also crucial. Many agencies lack the expertise to design, procure, and monitor PPP projects effectively. Strengthening institutional capacity through targeted training programmes and technical assistance is essential to ensure that government officials can manage complex PPP transactions.

To enhance PPP effectiveness, targeted reforms are essential. Expanding the capacity of the PPPA by better preparing it for PPP project implementation through stability and competence in its top management, enacting a comprehensive PPP law, and introducing infrastructure-specific financial instruments can address institutional and financial challenges. Capacity-building programmes for government officials, streamlined land acquisition processes, and fostering partnerships between local and international firms can further strengthen the PPP ecosystem. 

Sectoral diversification into areas like power transmission, renewable energy (RE), and e-governance holds significant potential for Bangladesh's PPP initiatives. Renewable energy projects, such as solar and wind power plants, can address the country's growing energy demand while reducing reliance on fossil fuels. 

Power transmission projects are essential to evacuate power from the RE and other power plants and reduce the cost to the country for under or unutilised power plants. 

Similarly, e-governance initiatives can improve public service delivery, enhance transparency, and foster greater citizen engagement. By exploring these emerging sectors, Bangladesh can create opportunities for innovation and sustainable development.

Improved transparency and accountability mechanisms are critical for sustaining investor confidence and public trust. Transparent procurement processes, regular audits, and open communication channels can mitigate risks of corruption and inefficiency. 

While Government-to-Government (G2G) arrangements are a valid approach in some sectors, they come at the cost of reducing transparency. It is thus important to limit their use, applying them only in sectors where private competition is limited.

Engagement with international financial institutions (IFIs) like the World Bank Group, ADB, and AIIB remains crucial. Aligning PPP policies with IFI standards, developing bankable projects, and leveraging IFI-backed guarantees can reduce perceived risks for private investors. Co-financing arrangements and capacity-building partnerships with IFIs can also support long-term growth. 

The technical expertise and financial backing provided by these institutions can act as catalysts for successful project implementation, particularly in complex infrastructure ventures. Greater collaboration with international lenders can also help address financing gaps and ensure the adoption of global best practices.

Efficiency in project implementation is vital for maximising the benefits of PPPs. Streamlining approval processes, defining clear timelines, and utilising digital platforms for monitoring can reduce time and costs. Digital platforms can provide real-time insights into project progress, enabling stakeholders to address issues promptly. 

Sector-specific guidelines tailored to unique requirements can enhance project execution, ensuring that initiatives are not hindered by a one-size-fits-all approach. Updated PPP rules and guidelines can further facilitate smoother project management by reducing bureaucratic delays and minimising unnecessary expenditures.

Moreover, fostering a culture of collaboration between public and private stakeholders is essential. Regular dialogue, shared objectives, and mutual trust can create a conducive environment for successful partnerships. 

Platforms for stakeholder consultation and feedback can also ensure that PPP projects are designed to meet the needs of end-users effectively.

Looking ahead, Bangladesh's progress in PPPs underscores their potential to address infrastructure needs and drive economic growth. The selection of projects should also be expanded beyond the building of new infrastructure to address issues of poor management and operational inefficiencies in existing public service providers through the inclusion of private sector participation. 

Continued reforms, capacity-building initiatives, and a focus on sustainable, inclusive projects aligned with national development goals will be key. By fostering an enabling environment and leveraging international best practices, Bangladesh can unlock the full potential of PPPs, improving the quality of life for its citizens.

The future of PPPs in Bangladesh also depends on the country's ability to adapt to changing global dynamics. Climate change, technological advancements, and evolving economic trends necessitate a forward-looking approach to PPP planning and execution. 

Integrating climate resilience into infrastructure projects, adopting cutting-edge technologies, and aligning with global sustainability standards can position Bangladesh as a leader in innovative PPP practices.

While challenges remain, Bangladesh's PPP journey offers valuable insights and opportunities for growth. With concerted efforts from all stakeholders, PPPs can serve as a cornerstone for the country's development, delivering long-term benefits that extend beyond economic gains to include social and environmental advancements. 

By building on its achievements and addressing existing gaps, Bangladesh can set a benchmark for successful PPP implementation in emerging economies.

Sultana Afroz is former Secretary to the Government of Bangladesh and former Chief Executive Officer (CEO) of the Public Private Partnership Authority (PPPA). 

Disclaimer: Views expressed in this article are the author's own.