Dhaka, Bangladesh (BBN) – The Investment Promotion and Financing Facility Project (IPFF) has entered into second phase with US$357 million fund to finance infrastructure sectors through public-private participation process, officials said.
An agreement was signed by Kazi Shofiqul Azam, Secretary, Economic Relations Division, Government of Bangladesh and Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan, and Nepal, on behalf of the Bangladesh government and the World Bank respectively in the capital Dhaka on Sunday.
The second phase of the project will build local financial institutions’ capacity to provide long-term financing to private companies to undertake infrastructure projects in diverse sectors, including power and energy, ICT, waste management, water treatment, energy saving equipment, container terminals, land ports, roads, and bridges.
“Due to limited capacity and market constraints, local financial institutions traditionally could not meet the longer-term financing demand for building infrastructure,” the World Bank said in a statement.
It also said built on the success of an earlier project, IPFF II will help local financial institutions to lend to private sector infrastructure ventures through the Bangladesh Bank (BB) for a longer term of 8 – 20 years, beyond the usual term of 5 to 7 years.
In 2007, the central bank of Bangladesh launched the five-year-term IPFF project with $50 million fund, provided by the WB through public-private participation process.
Under the existing provisions, the fund will be disbursed on the basis of 75:25 debt equity ratio to the entrepreneurs while the central bank will provide 60 per cent of the total debt and the rest 15 per cent will have to be invested by the banks or the non-banking financial institutions (NBFIs) concerned.