7 ambitious communications projects picked for urgent implementation

Finance Minister AMA Muhith yesterday, for the first time, proposed an allocation of Tk 2,500 crore for the public-private partnership initiative to implement different projects in infrastructure, health and education sectors.

The government yesterday also presented a position paper to the Parliament on “New Investment Attempts in Public Private Partnership Initiative”.

The finance minister in his budget speech said, “We are going to take special initiatives to involve the private sector under Public Private Partnership (PPP) to meet the probable investment gap in infrastructure development and maintenance alongside the government’s investment.”

Out of the total Tk 2,500 crore allocation, Tk 2,100 crore is for ensuring government partnership in equity and loan assistance from the government to different projects.

The Viability Gap Funding will receive Tk 300 crore which is to be given as subsidy to construction of power plants, hospitals, schools and roads to attract investment.

A total of Tk 100 crore has been earmarked in the budget for pre-feasibility study of the projects.

Muhith said, “The challenge before us, is to set up an institution for

preparation and implementation of PPP budget. We hope that the PPP budget management will be fully operational by September next.”

The government in the position paper identified seven projects for “very urgent” basis implementation under the proposed public-private partnership (PPP) budget.

Except the construction of a deep-sea port in Chittagong, the rest of the projects are estimated to cost $13.85 billion.

The PPP projects are Dhaka-Chittagong Access Control Highway at an estimated cost of $3.02 billion, construction of a sky rail around Dhaka city at a cost of $2.8 billion, construction of a Dhaka city underground railway at a cost of $3.1 billion, Dhaka city elevated expressway at a cost of $1.23 billion, Dhaka-Narayanganj-Gazipur-Dhaka Elevated Expressway at a cost of $1.90 billion, four gas or coal-fired 450 megawatt power stations at a cost of $1.80 billion, and the construction of Chittagong Deep-Sea Port.

The position paper also mentioned some other projects having public importance. Of those Bus Rapid Transit (BRT), Articulated Bus Service, Bus Route Francise (BRF) in the communications sector, cancer or other hospital construction in health sector, setting up secondary school, construction of dormitories, health centre, auditorium and gymnasium in public universities, upgradation of existing degree colleges and setting up research institutions.

The position paper estimates an investment deficit of $28.06 billion in the period between the next fiscal year and 2014. An estimated investment deficit of $1.04 billion is expected to dog the next fiscal year.

The position paper also proposed tax waiver or a payment of minimum tax under the PPP initiative.

Import of capital machinery under PPP initiatives will enjoy duty-free facilities and tax holidays, or a minimum tax might be imposed on profits only for a specific period.

The mode of project implementation under the PPP initiative will be on the basis of Build-Own-Operate (BOO), Build-Operate-Transfer (BOT) and Build-Own-Operate-Transfer (BOOT).

Adviser to the previous caretaker government Dr Akbar Ali Khan told The Daily Star, “If the government cannot improve its administrative efficiency and capacity for negotiation the public-private partnership concept would not succeeded.

The concept is nothing new. The Awami League government of Sheikh Hasina in its earlier stint took a similar initiative. What is new this time is that an allocation is being made for it in the budget, he added.

Earlier the investment included only the infrastructure sector but this time it would include the health and education sector.

Under the initiative the World Bank provided a fund of about 450 million dollar and the loan was given in very soft terms. Despite this, half of the fund was not utilized and the WB had to take the unutilised money back, Akbar continued.

In case of big projects like monorail, elevated express highway the question of acquiring land is involved. Necessary laws have to be formulated and enacted in this regard.

In the health sector if private clinic is established common people will not be benefited, he said.

World Bank senior economist Zahid Hussain said, Bangladesh needs to reduce its reliance on the Annual Development Program (ADP) as an instrument to deliver energy, infrastructure, and social services.

He said experience also shows that there is no unique formula for developing a sound PPP framework. However, successful programs are characterised by clear policy and legal frameworks for PPPs. The PPP unit needs to be staffed with technically sound and experienced negotiators with specific knowledge on project design, financing and management.

East Coast Group Chairman and Managing Director of Mobil Jamuna Lubricant Ltd (MJLL) Azam J Chowdhury said the public-private partnership in large infrastructure and energy projects must be free from political influence.

He believes that private-public partnership will act as a major incentive for Foreign Direct Investment (FDI).