A consortium of Chinese and local companies on Thursday signed a concession contract with the government of Bangladesh to upgrade Dhaka Bypass road under a PPP arrangement.
The companies are Sichuan Road and Bridge Group from China and Shamim Enterprise Ltd and UDC Construction Ltd from Bangladesh.The Asian Development Bank (ADB) acts as the financial adviser on the transaction to the Public-Private Partnership Authority (PPPA) of Bangladesh.
Under the contract signed with the Ministry of Road Transport and Bridges, a four toll lanes and a two-lane service road will be added to Joydevpur–Debogram–Bhulta–Madanpur Road (N-105) section of the expressway.
The 48-kilometre (km) road project of N-105 section from Joydevpur to Madanpur will provide a major arterial connection between the industrial zones northeast of Dhaka.
It will also benefit national highway N1 connecting to the port city of Chattogram as well as to N2, N3, and N4 highways leading to other major cities.
The consortium will design, build, finance, operate, and maintain the tollway over a 25-year concession period, and will be able to charge toll based on vehicle type.
The government will offer viability gap funding of Tk 3.1 billion and a minimum revenue guarantee to the consortium to optimise the cost of financing.The contract also provides the government with a share of revenues generated by the consortium over a certain threshold.
“This project brings a new dimension to public service delivery in Bangladesh. It is the first access-controlled expressway in the country,” said Chief Executive Officer of Public-Private Partnership (PPP) Syed Afsor H Uddin.
“This landmark transaction will pave the way for a pipeline of national expressways across Bangladesh,” he added.
“ADB aims to accelerate road development in Bangladesh while minimising the financing and operational burden and bringing in a diverse set of internationally renowned infrastructure developers, operators and financial institutions,” said Yoji Morishita, head of ADB’s Public–Private Partnership.
“The government of Bangladesh establishes the objectives of infrastructure as well as some credit supports to tackle the traffic challenge while the private sector takes responsibility for meeting the objectives,” he added.
The Dhaka Bypass is the first step in ADB’s strategy to bring Bangladesh roads to the global market based on the PPP
model, the ADB official noted.
ADB’s OPPP also provided legal support for this transaction and helped to develop a concession contract through the Asia Pacific Project Preparation Facility (AP3F), a multi-donor trust fund managed by ADB.
This project marks the first successful collaboration between ADB’s transaction advisory services and AP3F.
ADB has been working with the Bangladesh government for over five years to transform the country’s roads by making them a bankable asset class attractive to international investors, as has happened in other sectors such as the independent power producer sector.
ADB’s OPPP is also the transaction adviser to PPPA on the 13.5-km Rampura–Amulia–Demra Expressway in Dhaka, and in December 2018 the transaction adviser was appointed for the approximately 210-km Dhaka Chattogram Expressway, the busiest road artery for passenger and freight in the country.
ADB has long supported PPPs, and in 2014, established the OPPP to provide independent transactional advice and develop broader PPP knowledge and expertise in the region.
ADB has also pioneered the AP3F, a $73 million trust fund supported by the governments of Japan, Canada, and Australia to provide project preparation, project definition, and capacity-building support to the governments for PPP projects.