ADB mobilises $261m for new expressway in Bangladesh

The Asian Development Bank (ADB), as a transaction advisor for the Government of Bangladesh’s Rampura Amulia Demra Expressway public-private partnership (PPP) project, has mobilised $261 million of private sector capital for a four-lane, 13.5-kilometre expressway.

This expressway will ease traffic congestion and provide better connectivity between the capital and other major cities, reads an ADB news release issued Thursday.

The project is being funded through a $193 million senior loan from the Asian Infrastructure Investment Bank; Bank of China; DBS Bank Limited; and Infrastructure Development Company Limited, a nonbanking financial institution based in Bangladesh.

Meanwhile, the remaining $68 million is provided by sponsors as equity contributions. ADB assisted in project structuring, negotiation, tender execution, and provided support for commercial award and financial closure.

“We worked with the public authorities in Bangladesh to prepare, market, and attract private sector partners to design, build, finance, operate and maintain this expressway,” said Head of ADB Office of Markets Development and PPP Cleo Kawawaki.

“It will provide commuters with quicker access to their destinations by improving connectivity between Dhaka and eastern and southeastern districts of Bangladesh, including the cities of Chattogram, Narayangonj, and the northeastern city of Sylhet,” she added.

Kawawaki also said that the Rampura Amulia Demra PPP project was delivered under an availability payment mechanism with partial revenue linked to US Dollar and Taka exchange rate movements, whereas the first road transaction, the $370 million Dhaka Bypass Road PPP, was structured as a minimum revenue guarantee.

“ADB has therefore helped establish the pathway for both types of payment mechanisms in Bangladesh for future private sector investments in the infrastructure sector,” she said.

The deal—part of a programmatic approach taken by ADB to develop road PPPs as an asset class for investments—is the second successful financial closure of a PPP transaction with ADB as a transaction advisor in Bangladesh.

ADB is currently advising the government on the Joydebpur Mymensingh Expressway PPP project, which will improve connectivity to 10 special economic zones.

The Rampura Amulia Demra Expressway will be designed, constructed, financed, operated, and maintained during a 25-year concession period by a consortium comprising China Communications Construction Company Limited and China Road and Bridge Corporation.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region, the news release adds.

/KN/