Shahiduzzaman Khan

The government is yet to finalise its guidelines on the Public-Private Partnership (PPP) initiatives, five months after the approval of the last national budget. The rules and regulations on the PPP, that were earlier set for preparation by the Ministry of Finance (MoF), would require the approval of the cabinet.

According to reports in the media last week, the government gave the BoI the authority last month to administer the PPP-related projects in some sectors, particularly that of tourism, instead of the MoF, that until then worked on matters relating to the PPP. But the BoI has not reportedly been

able to perform to its full potential, although it stated that the rules in question were in the process of formulation for submission to the cabinet. Besides, the BoI is also to form an advisory committee, restructure the private sector infrastructure committee under it and decide on location and activities of the PPP cell.

In the absence of proper PPP guidelines, potential infrastructure development projects cannot be taken up for finalisation and implementation. The process of engaging a private developer for setting up of a hi-tech park through tender is being delayed as the authority is still awaiting the approval of the PPP guidelines. This has caused some disappointment among the would-be willing investors.

Facilitation of the operation of the would-be PPP projects under diverse conditions prevailing in the country, sooner than later, is a big challenge before the government. Much here will depend on the effective staffing and institutional support for the PPP cell which in expected to play a catalyst's role in coordinating the activities of the government ministries, donor agencies, foreign and local financial institutions and the project sponsors.

The spirit of PPP is all about a shift towards leveraging government finances with private sector resources. Hence, the PPP cell needs to work out an effective strategy by which infrastructure projects can draw financing from all fronts. Country's burgeoning capital market is a potential sector wherefrom some substantial fund can be generated. The Dhaka Stock Exchange (DSE) Chief hinted recently that the capital market might be able to generate an ambitious fund worth Tk 20 billion for the PPP projects. There is also a need to attract global infrastructure funds to participate in the country's PPP projects.

During their recent visit to Bangladesh, some Indian investors expressed their eagerness to invest in some of 'good and viable' PPP projects, especially in the communications sector. They are still waiting for the government to prepare a policy for execution of the PPP projects. However, they contended that the Public Procurement Act (PPA) and its relevant rules could be used as the legal basis for project implementation and contract execution under the new window. The government has recently brought some changes in the PPA, mainly related to work experiences of the contractors, relaxing some of its rules. The multilateral donors, however, have experienced their "reservation" over such amendments.

Indeed, the concept of the PPP has generated a lot of interest in today's corporate world. Many developed countries have set up specialised PPP units to facilitate and manage large infrastructure investments. Others have established public institutions that support PPP development. Such units have recently begun to proliferate in the developing world as well. Consideration of such units in regions like Africa, East Asia, and South Asia has been driven by the increasing recognition of the need to boost infrastructure investment. Yet a PPP unit is bound to fail if there is no high-level political support. Public support is also necessary for successful implementation of PPP projects.

The private sector in Bangladesh is still fragile to attract large capital, both from home and abroad. It is also physically constrained to implement large projects. In such a situation, PPP initiatives are unlikely to bear fruits, unless the government selects projects that are sound, viable and easy to implement. There is also a need to ensure competitive bidding to meet transparency, accountability and creditworthiness of PPP projects.

Large infrastructure projects need a relatively longer period of time for implementation. The required time to implement the projects may go beyond the tenure of a government. If there is a change of government through the periodic electoral cycle, uncertainty may arise over the implementation of PPP projects if the next government is not favourably disposed towards their continuation. This has happened to a number of projects in some developing countries. Thus, some large projects were abruptly abandoned after spending a large amount of state fund.

In order to make PPP initiatives successful in the country, the government needs to formulate appropriate policy framework, incentive packages and mechanism for implementation, and build trust and confidence of the investors, irrespective of the policy regimes. As the overseas entrepreneurs reportedly are already showing their interest in new moves for PPP initiatives in Bangladesh, this provides an opportunity to make the best use of foreign direct investment.

While the PPP has the potential to play a pioneering role in building country's infrastructure network, a broader partnership between the government and the private sector in policy formulation and implementation can also help overcome slow policy implementation. That being said, the country has still a long way to go to meet its huge infrastructure requirements.

szkhan@thefinancialexpress-bd.com