LAHORE, May 2: The Asian Development Bank (ADB) is said to be contemplating to set up a $300-500 million credit line for private investors interested in undertaking infrastructure projects in the Punjab under the public private partnership initiative. “Negotiations in this regard are already under way between the ADB and the federal government, but it is premature to say anything about their final outcome at this point in time,” said a person, who asked not to be named, involved in the drafting of a law entitled the Punjab Private Participation in Infrastructure Development Act to encourage public private partnership in infrastructure development.

In any case, the source said, the bank would set up the credit facility only after the draft law was put in place following its approval by the provincial legislature. The proposed law lays down statutory framework and procedures for formalising the participation of private sector in building infrastructure in the province. It is proposed as the governing legal framework for encouraging public private partnership in the province.

“The ADB is setting up the credit line in order to advance low-cost credit to the private businessmen interested in making investments in infrastructure development in the province under the public private partnership initiative,” the source said. “It will be an additional source of financing for private investors in addition to the commercial banks,” he said.

The public private partnership is said to be the contractual arrangement under which a private entrepreneur agrees with the government or a public agency to finance, construct, and operate a facility for an agreed period of time, and transfers it to the government, or the other public agency concerned on the expiry of the stipulated period.

The contractual agreements may be entered into on the basis of BOT (build, operate, and transfer), BOO (build, operate, and own) or ROT (rehabilitate, operate, and transfer), etc.

The provincial government’s economic growth strategy envisaged 8 per cent GDP growth per annum in order to reduce rampant poverty and unemployment.

The absence of modern infrastructure in the province is believed to be the main bottleneck in the way of rapid industrial growth. Since there is a yawning gap between the province’s increasing infrastructure needs and the resources available with it to spare for the same, the government is forced to look toward private sector and involve it in the infrastructure development activity.