1. Definition of PPP Funding Facility
A PPP Funding Facility is a specialized form of Public–Private Partnership contract executed between a Facilitator (service or funding provider) and a Project Owner/Client for the purpose of completing SDG‑17 aligned humanitarian and development projects.
Under this model:
– The Client provides a bank guarantee or any internationally recognized PPP‑compliant security instrument (SBLC, BG, MT760, etc.).
– Based on this guarantee, the Facilitator releases non‑refundable grant funds into the project account in scheduled tranches.
– The project is executed under strict internal and international monitoring to ensure maximum quality.
– After full completion of the project, the Client’s guarantee is returned in full without any deduction.
– The Facilitator does not obtain ownership, equity, or profit‑sharing rights; 100% of the funds are treated as grants.
This model is most effective for:
1. Health sector projects
2. Water management and public utilities
3. Agriculture and food security
4. Renewable energy projects
5. Other SDG‑aligned humanitarian infrastructure
2. Concession Contracts
Concession contracts are generally awarded under two main structures:
2.1 Build Operate Transfer (BOT)
A BOT contract allows a private entity to finance, construct, and operate a large‑scale infrastructure project for 20–30 years. After the concession period, the project is transferred back to the public authority.
2.2 Franchise Concession
Under a franchise arrangement, the concessionaire provides services strictly defined by the franchising authority. Service standards, pricing, and obligations are fully regulated.
3. Build Own Operate Transfer (BOOT)
The private company finances, builds, owns, and operates the project for a long period to recover its investment. Ownership is transferred to the government at the end of the contractual term.
4. Build Own Operate (BOO)
The government grants the private sector the right to build and operate the project. Ownership remains with the private party for the duration specified in the agreement.
5. EPC and EPC+F (Engineering, Procurement, Construction & Finance)
Widely used in complex industrial and infrastructure projects such as power plants, bridges, and dams.
Key features:
– The PPP Facilitator submits technical experience and financial capability documents.
– A performance security is placed in favor of the project owner.
– The owner pays 20%–40% advance payment.
– The Facilitator completes the project within a fixed timeline.
– The owner provides adequate security to ensure repayment of the Facilitator’s principal investment.
6. Bank Instruments Service Agreement (BISA)
A legal Doing Business As {DBA} contract enabling public or private entities to obtain financing through bank instruments. It governs the issuance, management, and utilization of instruments for project funding.
7. Bank Securities Management and Utilization
The entity converts its cash into instruments such as MTN, LTN, SBLC, BG, or CD. Ownership remains with the entity, while management rights are granted to a PPP Facilitator to generate project funds.
Advantages:
– Instruments can be purchased at 30%–40% of face value.
– Instruments are placed under a management contract for humanitarian projects.
– Profits finance the project.
– The instrument is returned to the owner at maturity.
8. BBO (Buy–Build–Operate)
The government sells an existing facility to a private entity, which then renovates and operates it.
9. DB (Design–Build)
The private party designs and builds the project. This reduces time and cost but increases responsibility on the private sector.
10. DBF / DCMF (Design Build Finance / Design Construct Maintain Finance)
The private party designs, constructs, finances, and often maintains the project. The completed asset may be leased back to the public entity. Considered a modern PPP model.
11. Management Agreements
The public entity transfers management of an asset or service to a private party for a defined period.
12. O&M (Operations and Maintenance)
The private party operates and maintains a public asset under a formal O&M agreement with defined obligations.
13. Non‑Refundable Project Funding
The project owner delivers a bank instrument to the PPP Facilitator, who obtains a credit line, completes the project, and returns the instrument after execution. Funds used are treated as non‑refundable humanitarian financing.
14. CFD Contracts (Contract for Difference)
Financial contracts between investors and institutions where profit or loss is determined by the difference between opening and closing prices of an asset. Cash‑settled.
15. Subsidy PPP Contracts
The PPP Facilitator supplies strategic goods to public or private entities at 20%–50% subsidized rates.
Eligible products:
– Wheat/flour
– Sugar
– Edible oil
– Student supplies
– Rice
– Beans
– Peas
– Gas, diesel, petrol (for social use only)
Structure:
– The public entity provides a one‑year and one‑day payment guarantee.
– The Facilitator supplies goods under the agreed subsidy terms.
16. PPP Union
A cooperative PPP platform or consortium formed to coordinate facilitators, project owners, and financial institutions for large‑scale humanitarian and development initiatives.
PPP Union