Bangladesh gets social PPP underway

Though its new PPP law has yet to be implemented, the South Asian country has pushed forward with a $28m hospital PPP with help from Malaysia. 

Construction has commenced at the site of Bangladesh’s Sheikh Fazilatunnessa Mujib Memorial KPJ Specialized Hospital & Nursing College, a BDT2.15 billion (€20 million; $28 million) public-private partnership with a domestic and Malaysian partner and one of Bangladesh’s first social infrastructure PPPs.

The Social Welfare Ministry of Bangladesh awarded the project to state-owned conglomerate Bangabandhu Sheikh Mujibur Rahman Memorial Trust and private player the KPJ Healthcare Berhad of Malaysia in November, but construction commenced only recently, according to Al Amin Rahman, partner at domestic law firm Fox Mandal Associates and the appointed legal counsel for drafting and finalising the agreement.

The Trust and the Social Welfare Ministry will be in charge of the hospital’s construction. The hospital will have 250 beds upon completion, Rahman confirmed. KPJ, on the other hand, will be responsible for the administration of the hospital and the nursing program it will run, which is expected to seat 50 students at a time, according to official documents. KPJ already runs 23 hospitals in Malaysia, Indonesia, Thailand and Australia.

This PPP is structured as a build-operate-transfer agreement. After construction is complete, KPJ will be entitled to the profits of the hospital while it is in charge of the operations. However, the time frame on the project was not specified, and Rahman told Infrastructure Investor that the duration and termination of the project was subject to change.

“The hospital will offer first-class healthcare, providing Bangladeshis with greater access to international standards of treatment,” Bangladeshi Prime Minister Sheikh Hasina said in a statement. “It will support national efforts to provide a safety net for the poor, as well as provide services for the disabled and help improve maternal and child healthcare.”

Bangladesh is also ironing out its new PPP framework regulations, Rahman added. The draft regulations were approved by the Bangladeshi Cabinet in October, but are still being revised. The new regulations, however, are expected to establish a PPP office and provide clarity on the awarding of PPP projects. For example, the process of selecting a private partner and the consequences of improper selection are laid out, Rahman explained.

The rights and responsibilities of each party in a PPP project, including financing and operational expectations, have also been more clearly outlined, as well as the processes related to conflict management, Rahman added.

“The enactment of the new PPP Law will be important for formulating and implementing a specific framework for the development of a sustainable PPP program,” he said.