ADB to plug $526m into Bangladesh PPPs

The Asian Development Bank has approved a combined financing of $526 million to support PPPs and renewable energy projects in Bangladesh.

The facility consists of a $500 million market-based loan for medium to large-scale PPP infrastructure projects and a $26 million concessional loan to finance renewables and energy efficiency assets of a smaller size, primarily in rural areas.

Both loans come from the third Public-Private Infrastructure Development Facility, as part of a series of financing initiatives the ADB has launched in partnership with the Bangladeshi government.

The country has been promoting and financing PPP projects through the Infrastructure Development Company. The ADB has provided technical help to the state-owned financial institution to boost its capacity to finance projects on a commercial basis.

The government has also been looking to attract more private sector investment in large-scale infrastructure schemes by revamping its PPP framework, notably offering a 10-year tax exemption on incomes derived from the projects.

Bangladesh recorded an average growth of 6.3 percent between 2011 and 2015, the ADB said, adding that the country will require annual real GDP growth of 7.4 percent on average over the next five years to become an upper middle-income country.

The lender estimates that a boost in public and private investments from 29 percent in 2015 to 34.4 percent of GDP by 2020 is required to meet that target. The country's infrastructure gap is estimated at 5-6 percent of GDP, equivalent to a shortfall of $9 billion-$10 billion a year.