The case for an overhaul: Diagnosis from the new PPP authority CEO
An ageing analysis of ongoing projects suggests that over 70% of the projects are more than 5 years old. So where did we go wrong?
It has been a month since I have had the opportunity to look under the hood of our PPP Authority. One does not have to be a career expert on Public-Private Partnership to see that we have a high-powered engine poorly fitted on the wrong chassis. Therefore, all we see from outside is a misfiring car with occasional black smoke from the exhaust.
Over a decade into existence, successful PPP projects are few and far between. Only 4 out of 81 projects have reached the finish line, 8 remain partially complete, and the rest have formed a long tail of ongoing projects. An ageing analysis of ongoing projects suggests that over 70% of the projects are more than 5 years old. So where did we go wrong? Perhaps we misaligned our ambition with our ability to execute.
The market and experts seem to have converged in citing the importance of PPP for a transition economy like Bangladesh. We must continue the beastly demand for infrastructural development at scale to catch up with our rivals. And that too with the government's coffers merrily looted by her own countrymen for over a decade.
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Therefore, an off-balance sheet solution like PPP backed by the right level of risk allocation could bridge the gap with private capital. Additionally, the Bangladesh government's abysmal track record in on-time project completion is another reason to have a private partner who could inject the much-needed sense of urgency.
However, the PPP model has produced mixed results across the world. The Neoliberal supporters have been harassed by many throughout history. PPPs fail when we pick the wrong projects, either due to sheer incompetence or a poorly designed process. PPPs fail when we take too long to negotiate, losing sight of cost overruns. And PPPs fail when we are just deeply corrupt.
In Bangladesh's case, sadly, they all are on display. The PPP Authority, commissioned to be in the driver's seat, has been reduced to being just a glorified postman. I can see the on-paper rationale for placing the PPP Authority under the Prime Minister's Office.
The CEO of the PPP Authority has direct access to the button called 'prime minister.' However, I find it equally baffling that the country's orchestrators ignored the risk of the PPP Authority never getting any airtime from the Prime Minister in a crowd of bigger priorities.
The remedy to the current state of despair lies in restructuring the PPP Authority. First, the PPP Authority needs real muscle. As an independent entity, it often falls short of the sufficient clout necessary to dictate a course of action. A solution to this could be to merge the PPP Authority with BIDA to give it more punch or shift the PPP Authority under the Ministry of Finance.
A more transformative approach could be to create a Ministry of Investments and bring the PPP Authority, along with all other investment promotion agencies, under one roof. This soft power then needs to be translated into insights and actions. The PPP Authority officials need to be the go-to experts on project structuring – true specialists that government officials can lean on.
The immediate challenge is talent. There are multiple solutions we need to experiment with to resolve the lack of such resources in the PPP Authority. In the short run, the PPP Authority will have to tap into the private sector. I expect a struggle to find the right resource in the local market, as we as a country have accomplished very little in PPP.
The PPP Authority needs real muscle. As an independent entity, it often falls short of the sufficient clout necessary to dictate a course of action. A solution to this could be to merge the PPP Authority with BIDA to give it more punch or shift the PPP Authority under the Ministry of Finance.
In the medium run, once the perception about PPP turns the corner, ambitious bureaucrats keen on advanced finance and project management could be deputised to the PPP Authority. Eventually, we would need a modified version of the Korean KDI or China's CPFI in building institutional capacity – a research powerhouse – possibly in partnership with top universities or think tanks.
Above all, unless we refit our PPP Authority with skilled professionals and a leader who has sufficient influence in government to provide 'air cover', the future of PPP projects will continue to teeter like a rusty car whose wheels are about to come off.
But there's still time, although the urgency has gone up a notch. As the very first step, we have started the journey by sending cancellation notices to ministries, pulling the plug on projects with no prospect. The focus now is on tangible wins this year.
For a handful of priority projects with significant milestones in 2025, PPP Authority is stepping up to lead, advise and coordinate. The proof, however, will be in the pudding – and this time, the stakes could not be higher.
Ashik Chowdhury is the newly appointed CEO of the Public Private Partnership Authority. He concurrently serves as the Executive Chairman of the Bangladesh Investment Development Authority, the Bangladesh Economic Zones Authority, and the Maheshkhali Integrated Development Authority.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
