Lao PDR: Assessment of the Enabling Environment for PPPs in the Road Sector

In order to develop its highway network with PPP arrangements, the GoL requested Public- Private Infrastructure Advisory Facility (PPIAF), housed at the World Bank, to conduct a sector needs assessment study in 2012. The study identified the upgrading of the country’s National Road 13 (NR13) as a priority investment project through PPP arrangements. As a result of the PPIAF’s support, the government identified the NR 13 as a potential PPP project and reached the consensus to develop the NR 13 as the pilot PPP in the transport sector. In 2013, PPIAF provided a subsequent assistance for the GoL to undertake a PPP options analysis study that assessed the viability of using a PPP model for delivering the NR13 project. The study recommended that the GoL develop a full-scale feasibility study which will be financed by International Development Association (IDA) credit and to seek a transaction advisor to undertake a full structuring and market sounding to prepare the project for investment. The study also recommended the GoL to establish the institutional readiness and capacity that is required for GOL to become an effective grantor to a PPP project for the NR13 and other future PPP projects. In line with the recommendations from the PPIAF-supported study, the GoL recently decided to develop the NR13 as a first road PPP transaction in the country. Accordingly, the GoL has retained the IFC PPP advisory as a transaction advisor to prepare the NR13 for investment and to promote the project to private investors while IDA-financed full feasibility study is conducted (starting from early 2014). The GoL has also requested PPIAF for further assistance on developing the institutional framework and strengthening the government’s capacity which can help promote the NR13 and other future projects in transport sector.