All but one of the projects under public-private partnership failed to progress despite operation of the PPP office for eight years, prompting moves for remodelling its modus operandi.
As of now, 44 such projects involving US$14 billion in private investment have been approved by the cabinet committee, according to government documents.
Analysts believe government attempts so far for accelerating the model have failed to gain momentum as the government is not taking risk as in the power projects.
They said the government should take risks initially by providing guarantees on the profitability of investment made in this field for longer terms.
However, the PPP Authority said the projects were not seeing the light mainly for lack of 'financial close' by the private winning parties.
They said many such projects usually run up to 35 years before the private parties give those up to the government at the end of build-own-transfer (BOT) tenure.
Usually, the private builders seek funds from foreign sources, including the Asian Development Bank, the IFC and such other international organisations.
Only one small PPP project on dialysis for kidney patients came out successful in eight years of operation of the PPP office since 2008-09.
People familiar with the PPP promotion told the FE that a new policy is in the final stages of framing to enhance government-to-government cooperation under the flagship development model.
The policy now awaits the nod from the prime minister office. The PPP Authority formed under the PPP Act 2015 is under the PMO.
The policy is believed to attract overseas investors and foreign government agencies to invest in such projects in Bangladesh.
They hoped another guideline on national-priority projects would also give a boost to the PPP development model.
Economists and analysts say the government was successful in branding its power plants in attracting local and foreign investors. But in the cases of the PPP, the government didn't take such steps.
"Government must share risks with the PPP projects, we like it or not," said Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh.
He said guarantees on profit must be ensured otherwise the investors will not come here.
Dr Mansur feels the country lacks expertise in properly exercising the financial affairs applied for the private entities. "There is not bond market to take funds on long terms."
Under the PPP model, government agencies are committed to providing lands and with existing structures. Private parties develop the project with their own funds or through loans, equity supports or grants.
The government in major infrastructural projects provide viability-gap fund up to 30 per cent where returns from investment will be much lower than the size of the investment.
The government has given its commitment for Dhaka Elevated Expressway and Dhaka bypass four-lane projects but not yet disbursed a single penny as such fund release is conditional.
People at the PPP Authority said they want to complete a project within 24 months but many bidders seek time on different grounds.
They said government agencies again cause problems when they see expected returns on investments.
"There are many instances where the government agencies created problem by raising land prices high, which leaves the private parties in frustration to proceed…," said Md Abul Bashar, a director at the PPP Authority.
Many private entities on the other hand feel shy to invest when they see low 'internal rate of return', a key indicator for investment.
If the IRR becomes low, say 10 per cent, the private parties feel discouraged from making investment as there are more opportunities to derive much by investing such amount of money.
Filing cases by the aggrieved bidders also delays the execution of the process.
"We've readied all documents for Upal Motel in Cox's Bazar but it got delayed at least six months following court's orders," Mr Bashar told the FE.
The government wants to develop an international-standard tourism complex at the existing motel in the Upal Compound in Cox's Bazar through public-private partnership (PPP) initiative.
"The verdict came in favour of the government, but we lost at least six months," he said.
The PPP Authority is in the final stages of formulating another provision called national-priority-project guidelines meant for speeding up projects.
A high-powered committee will be formed under the guidelines and there will be a short-cut and one-stop mechanism for a priority project.
However, 15 of the projects are under development which means they are under studies whether viable or not. Eight remained under tendering.
Agreements with the relevant government agencies were signed only on six projects. They are three blocks in hi-tech park in Gazipur, Mongla port project, Mongla Economic Zone, and Mirersarai Economic Zone in Chittagong.
There is no development on the remaining 15, though approved by the cabinet committee on economic affairs.
However, the government has taken a number of measures to facilitate the PPP activities.
Last year, it issued a 'procurement guideline for PPP projects 2016' providing for unsolicited proposals meant for speeding up the projects.
The government formed PPP Authority in 2015 through converting the previously PPP Office to empower it further.
A financial organization named Bangladesh Infrastructure Finance Fund Limited was also established to mobilize funds for PPP projects.
Earlier, the government had amended the private-sector infrastructure guidelines under the name of policy and strategy for public-private partnership 2010 to encourage PPP investment in the country as the model is widely popular across the globe. [Read More]

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Source: The Financial Express