Infrastructure & PPPs in Bangladesh and Sri Lanka - Q1 2023 Update
YOG INFRA Q1 2023 insights
BANGLADESH continues to attract support from DFIs and G2G support for development of infrastructure projects, including via PPP modality. The focus has been on transport sector projects in the last quarter. SRI LANKA is aiming to attract international investments for developing infrastructure projects in near future.
Read more about key developments in Infrastructure and PPPs in the two countries in our latest insight.
COLOMBO PORT EXPANSION PROJECT TO BE DEVELOPED AS PPP
The Sri Lankan government has decided to approve the expansion of the Port of Colombo through a public-private partnership format. The first phase of the project will require an investment of USD 150 MN and will be implemented by the China Merchants Port Company, Colombo International Container Terminals Company, and the Sri Lanka Port Authority.
The Battenberg and Bloemendhal areas of the Colombo South Port will be expanded, the government intends to develop the port as a logistics hub in South Asia.
SRI LANKA APPROVES USD 442 MN ADANI WIND PROJECTS
The Board of Investment of Sri Lanka had issued a letter of approval to India’s Adani Group to build 2 wind power plants. The projects will cost an estimated USD 442 MN and will be located in Mannar and Pooneryn. The assets will add 350 MW to the national grid 2 years from now.
Adani Green Energy has set up a revolving construction facility of USD 1.6 BN with 26 international lenders to ensure availability of project financing. The Adani Group, through Adani Ports and Special Economic Zone, is building the West Container Terminal in Colombo Port for an estimated of USD 700 Mn.
AIIB TO LEND USD 75 MN FOR BANGLADESH HIGHWAY UPGRADE
The Asian Infrastructure Investment Bank (AIIB) will lend up to USD 75 Mn for Bangladesh’s Rampura-Amulia-Demra (RAD) Expressway Project. The public-private partnership (PPP) project entails designing, building, and operating a 12.5 km four-lane, access-controlled highway by upgrading an existing two-lane undivided carriageway. The total cost is estimated at USD 261 Mn, proposed to be financed by USD 68 Mn of equity and USD 193 Mn of senior debt facilities.
Project sponsors China Communications Construction Company and China Road and Bridge Corporation have been appointed the preferred bidder following an open competitive tendering process. The PPP contract has a concession period of 25 years, including a 4-year construction duration.
BANGLADESH SIGNED DEALS WITH SAUDI ARABIA AND CHINA
Bangladesh has signed an agreement and 3 memoranda of understanding (MoU) with Saudi Arabia and China. An agreement has been signed with a Saudi Company to set up gas pipelines through India and Bangladesh under a public-private partnership (PPP) basis. Besides, two MoUs were signed with Saudi Arabia for developing Rangpur SugarMills and Patenga Container Terminal, another MoU was signed with China for infrastructure development.
The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) also signed a memorandum of understanding with China Council for the Promotion of International Trade (CCPET). The FBCCI is organizing a 3-day business summit in partnership with the government at Bangabandhu International Conference Center (BICC). Chinese investors investing in Bangladesh more and more in energy, agro-based industry, food processing, and infrastructure development sectors. Saudi Arabia is to invest heavily in the energy sector of Bangladesh and investing in the agro-based industry and food sector.
DCCI FOR PPP TO MANAGE SUSTAINABLE ECONOMIC RECOVERY
The Dhaka Chamber of Commerce and Industry underscored the need for Public-Private Partnership to manage sustainable economic recovery. To further accelerate the economic recovery in 2023, DCCI urged the government to focus on uninterrupted and affordable energy supply to local and export-oriented manufacturing industries, improve the ease of doing business, develop an infrastructural environment conducive to attracting local and foreign investment, export diversification, facilitate easier access to credit facilities for CMSMEs and so on.
DCCI is of the view that long-term planning should be adopted following a predictable pricing policy in determining the energy price. To ensure energy security, it is necessary to explore new gas fields, strengthen long-term energy supply contracts and find alternative sources of energy import. Besides, it is necessary to ensure an uninterrupted supply of energy to industries and the government to emphasise it as a matter of priority.
DHIRASRAM ICD FINANCIERS FINALISED, CONSTRUCTION TO BEGIN IN 2024
Construction of the country's largest inland container depot (ICD) at Gazipur's Dhirasram is finally expected to start in 2024 as the government has finalised financiers for the project involving an estimated USD 774.56 Mn. The USD 250 Mn will come in the form of a loan from the Asian Development Bank (ADB) and the government will invest USD 416.15 Mn in the project while a private firm will inject the remaining USD 108 Mn to build the superstructure of the ICD. The Dhirasram ICD with a 7.2-metre rail link will be able to handle 4,00,000 TEUs (twenty-foot equivalent units) of containers a year.
The Bangladesh Railway and the ADB have agreed that the project should have a PPP component for ICD operation and maintenance. Specifically, while the substructure of the ICD will be constructed with a sovereign loan from the ADB, the procurement of equipment and construction of the superstructure will be funded by a PPP concessionaire and be responsible for the ICD operation and maintenance. The rail link will be constructed with the government's own funds. The BR will float a tender to appoint a private firm in 2026 under the PPP model for the construction of the superstructure of the ICD.
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