ISLAMABAD, May 12: The Asian Development Bank (ADB) will offer $600 million to Pakistan to help start a comprehensive Public Private Partnership (PPP) programme in the country.

The ministry of finance and the ADB on Friday reached an understanding over the structure and financing plan, envisaging $300 million programme loan for second generation reforms in the infrastructure, utilities and basic public service sectors and a $300 million multi-tranche financing facility for public private infrastructure projects.

This was agreed during a meeting held between Juan Miranda, Director General Central and West Asia Department of the ADB and Dr Salman Shah, Adviser to the Prime Minister on Finance and Revenue. State Minister for Finance Omar Ayub was also present on the occasion.

The ADB team that accompanied Mr Miranda included Noy Siackhachanh, Director Governance, Finance and Trade Division, Peter Feldon, Country Director and Rainer Hartel, Senior Finance and Infrastructure Specialist.

Dr Salman Shah was assisted by Mr Aijaz Ahmad, Chief Executive Officer (CEO), Infrastructure Project Development Facility and representatives from the Economic Affairs Division.

The implementation will be undertaken by two special purpose vehicles. The first vehicle is the recently incorporated Infrastructure Project Development Facility (IPDF) that will serve as the coordination cell for PPPs.

The second vehicle, the Infrastructure Project Financing Facility (IPFF), will provide ‘viability gap financing’ as explicit targeted subsidy for capital or operational expenses to projects where cost recovery tariffs may not be affordable for certain segments of the population. It will also co-finance projects with the private sector where private financiers require an extra cushion of long term fixed rate local currency financing.