ADB calls on Govt. to create a PPP framework

By Charumini de Silva

The Asian Development Bank (ADB) Office of Public-Private Partnership (OPPP) Head Ryuichi Kaga last week called on the Government of Sri Lanka to secure a sound business environment coupled with a Public-Private Partnership (PPP) framework to bridge the sizeable infrastructure gaps in the country.

Noting that PPPs are booming, he said disagreements between public and private parties over risk allocation can arise during tendering, negotiation, construction or operation potentially triggering protracted delays, increased costs and failure to deliver critical services and urged the need for Sri Lanka to have a PPP framework.

“Sri Lanka needs to create a PPP policy framework, not just a regulated framework, but an institutional framework,” he told the Daily FT on the sidelines of the 50th ADBAnnual Meeting in Yokohama, Japan.

Kaga also emphasised on the importance of adopting international best practices to attract more foreign company participation in PPP projects to mobilise external capital flows.

“At present we are supporting the Government on setting up a PPP policy framework, while assisting private and public sector to structure individual projects,” he said, adding early stage project strategy is critical for success of PPPs.

Thereby Kaga suggested the Government consider the ADB’s recently-announced Infrastructure Referee Program (IRP), which is first-of-its-kind in the PPP market, as a guideline in drafting the PPP framework for Sri Lanka.

The IRP program will allow ADB to provide independent third-party advice through qualified consultants to help public and private parties resolve disagreement that may arise over the life of a PPP project. In addition the PPP Monitor – a new ADB publication that tracks development of PPP business environment across member countries and provides insight for the public sector on structuring a sound environment for PPPs – was announced.

The PPP Monitor’s first edition includes information on Bangladesh, China, Indonesia, Kazakhstan, Papua New Guinea, Philippines, Thailand and Vietnam and expects to launch the publication in June this year.

Kaga said the PPP Monitor would provide country-specific information critical not only for sound policy formulation, but also for the private sector to make informed business decisions.

ADB keen to complete bidding process for Colombo Port’s East Terminal

The Asian Development Bank Office of Public-Private Partnership (OPPP) Head RyuichiKaga confirmed that it is keen on completing the bidding processes of the Colombo Port East Container Terminal (ECT) by the end of this year.

ADB and Sumitomo Mitsui Banking Corporation (SMBC) is providing co-advisory services in relation to preparing, structuring, and procuring the $500 million project, which includes operationalisation of the existing 440 metres of deep water berth and the full design, build, finance, operation, and maintenance of the entire 1,200 metres of berth.

“At present we are engaged in the bidding process. We need to evaluate all the proposals, which is time consuming. We are trying to complete the bidding process by end of this year,” he added.

Kaga said the project proposals recommended by the ADB will then be put forward to the Government for selection.

 “ADB will continue to proactively create advisory opportunities for private sector advisors,” he added.

On 23 February 2016, the Sri Lanka Port Authority (SLPA) and ADB executed a mandate letter setting out the terms of ADB’s appointment as transaction advisor to SLPA in relation to the project. ADB selected SMBC to act as its co-advisor.

SLPA released the Invitation for Expression of Interest (EoI) for prequalification to bid on 5 June 2016, and deadline for submission of EoIswas 21 July 2016. (SDS)