PPP authority signs MoU with 15 financial institutions for partnership financing
The Public Private Partnership (PPP) Authority organised the signing of a Memorandum of Understanding (MoU) with 15 interested banks and non-banking financial institutions at Hotel Pan Pacific Sonargaon, Dhaka on Thursday.
Dr. Ahmad Kaikaus, Principal Secretary to the Prime Minister attended the occasion as chief guest while Sheikh Mohammad Salim Ullah, Secretary, Financial Institutions Division was present as special guest, says a press release.
Banks signed the MOU include Eastern Bank Limited, Prime Bank Ltd, HSBC, The City Bank Ltd, Standard Chartered Bank, Mutual Trust Bank Ltd, Southeast Bank Ltd, Midland Bank Ltd, Lankan Alliance Finance Ltd, Prime Bank Investment Limited, NDB Capital Ltd, Industrial and Infrastructure Development Finance Co. Ltd, Brac EPL Investments Ltd, Riverstone Capital Ltd, UCB Investment Ltd.
According to the long-term plan of the Government for becoming a developed country by 2041, the estimated investment in PPP projects is about USD 3.8 billion per year. In addition, 5.5 percent of total SDG financing requirement has been targeted through PPP.
In 2016, the PPP Authority signed a MoU with 14 banking and non-banking financial institutions. The tenure of the MoU ended and new banks have shown interest to be PPP financing partner; this MoU signing thus took place.
Dr. Ahmad Kaikaus, Principal Secretary said on this occasion, "To ensure quick and easy access to project information for lenders and to facilitate financial closure for selected PPP projects this MoU will play a pivotal role. As domestic financial institutions need to be made more aware in PPP projects, the signing of this MoU will be a milestone event."
Sultana Afroz, Secretary to the Government and Chief Executive Officer of the PPP Authority presided over the ceremony and highlighted the importance of timely finance to the projects' successful implementation.
To make the PPP Financing Partnership program more effective and dynamic, PPP Authority organized a workshop earlier this year with financial institutions, and based on feedback from that workshop, the signing of the present MoU has been organized.
The challenges in PPP project financing are mismatch between loan term in PPP project and savings and loan disbursement period of financial institutions, limited use of project finance method for financing PPP projects, non-mortgage of government land as collateral in PPP project. It also includes limitation of the maximum single borrower limit, various financial institutions' inadequacy of loan amount and absence of alternative sources of finance including bond market, insurance fund, pension fund, etc. in Bangladesh.
All banking and non-banking financial institutions including Finance Division, Financial Institutions Division, Bangladesh Bank and Securities and Exchange Commission which need to come forward with necessary changes in conventional banking system to provide the required financing.
In the event PPP project procurement process, existing PPP financing partnership MOUs and suitable PPP projects for financing in the future were discussed in detail. It was hoped that this will further expedite the communication of these organizations with the PPP authority.
This MoU will exist for next five (5) years from the signing date. It is expected that the PPP Financing Partners will be able to finance the PPP projects under the MoU and contribute to the development of the much-needed infrastructure of the nation. A Non-Disclosure Agreement (NDA) is also signed to complement the MoU.