The Asian Infrastructure Investment Bank (AIIB) is considering financing four more projects for contributing further to the country’s infrastructure development, a top AIIB official said.
The projects are ‘Dhaka and Western Zone Transmission Grid Expansion Project’, ‘Dhaka Sanitation Improvement Project’, ‘Mymensingh Kewatkhali Bridge Project’ and ‘Sylhet to Tamabil Road Upgradation Project’.
However, the multi-donor bank has already approved five projects for Bangladesh amounting to US$505 million for developing infrastructures.
The projects are ‘Distribution System Upgrade and Expansion’ with a cost of $165.0 million, ‘Natural Gas Infrastructure and Efficiency Improvement’ with a cost of $60.0 million, ‘Power System Upgrade and Expansion Project’ with a cost of $120.0 million, ‘Bangladesh Municipal Water Supply and Sanitation Project’ with a cost of $100.0 million and Bangladesh Bhola IPP with a cost of $60.0 million.
In an email interview, AIIB Vice President Joachim von Amsberg said from China that AIIB is open to considering more infrastructure projects from Bangladesh that are aligned with their mandate, thematic priorities and sector strategies.
“AIIB is very positive on Bangladesh. It is an economy that looks set to sustain moderately high growth rates, providing the policy efforts continue. Secondly, there will be opportunities in infrastructure and productive sectors for AIIB to work with and contribute towards Bangladesh’s development,” he said.
The AIIB vice president also informed that AIIB has approved around US$3.0 million grants under the ‘AIIB Special Fund (SF) for Project Preparation’ to prepare two transport sector projects in Bangladesh.
“AIIB approved $813,000 for preparing the ‘Sylhet to Tamabil Road Upgradation Project’ while $2.16 million for the Mymensingh Kweatkhali Bridge Project,” he added.
He said special fund for project preparation is important in the sense that many of AIIB members, especially low-income members, face significant capacity lags in preparing bankable infrastructure projects.
“AIIB has very high standards for project quality, especially for economic, environmental and social sustainability. These are also the areas where many of our members lack capacity. Special Fund grants help our members address these preparation gaps, improve overall quality of these projects and get them ready for AIIB investments,” he added.
Joachim von Amsberg informed that the fund provides support for other preparatory activities, such as preparing legal documents, detailed engineering design, tender documents and review of feasibility studies.
The AIIB vice president said AIIB is open to considering more SF proposals for Bangladesh, if the projects are selected and included into AIIB’s pipeline and meet with requirements as set out in SF Rules and Regulations.
Through these grants, he said, beneficiary countries can hire world class experts or consultants to carry out the required preparation work in accordance with the procurement policy of AIIB.
Preparation activities supported by these grants are critical to improve project quality, bankability in terms of economic, environmental and social sustainability and implementation readiness, he added.
Joachim von Amsberg said special fund grants are primarily meant to help their members ensure economic, environmental and social sustainability on infrastructure projects that AIIB invests in.
“Special Fund can help carry out detailed studies about sustainability of prospective investments. This helps countries develop good infrastructure projects. This is also helpful for AIIB to invest in more bankable opportunities. This is a win-win situation for both the beneficiary of the grants and AIIB,” he added.
He said these grants should be used to address critical preparation gaps, such as reviewing feasibility studies, carrying out environmental and social analysis, preparing tender documents and selecting the right technology.
“These grants can also help Bangladesh mobilize private capital for infrastructure financing by structuring PPP projects,” he added.
The AIIB vice president said these are 100 per cent non-reimbursable grants for preparing projects that AIIB will finance. “Beneficiary countries do not reimburse any money from these grants to AIIB is expected that preparatory activities support by SF grants lead to AIIB’s financing in the end,” he added.