Ryuchi Kaga, Head of the Office of Public-Private Partnerships of the Asian Development Bank (ADB) and Datuk Hj. Kamarudin Bin Md Shah, CEO of Melaka Green Technology Corporation, signed a transaction advisory services agreement on 12 July 2016 in Singapore that will pave the way for a public-private partnership (PPP) project to install energy efficient road lights in the Malaysian state of Melaka.
The signing agreement was witnessed by ADB President Takehiko Nakao and Datuk Seri Ir. Haji Idris Bin Haji Haron, Chief Minister of Melaka. The project is being supported by ADB Office of Public-Private Partnership (OPPP).
The Melaka Road Lighting project plans to install over 100,000 smart light-emitting diode road lamps across the state using a digital networked lighting system. The project is expected to improve lighting, lower energy costs, reduce carbon dioxide emissions and strengthen road safety. It will support Malaysia’s drive to cut its greenhouse gas emissions intensity by 40% by 2020, and will be an important initiative under the Sustainable Urban Development Program for the Indonesia-Malaysia-Thailand Growth Triangle. The project is expected to cost around $50 million and will be financed using private capital.
“We are very pleased to support the initiative of the state of Melaka to improve the efficiency of public services with the advanced technology and public-private partnerships,” said Mr. Nakao. “We hope that this project will become a leading new business model for energy efficiency that can be replicated in other parts of Asia and the Pacific.”
Under the advisory agreement, ADB will carry out a detailed project study, develop a bankable PPP structure, design a procurement strategy to identify and select a suitable private sector partner, and advise on the selection of and negotiation with the private sector partner. A key feature of the project is a planned “pay through savings” model with the financing costs to be reimbursed over time as a result of reduced spending on lighting through the replacement of older, more energy-intensive lamps.
In September 2014, ADB established the OPPP to provide independent transaction advice on specific deals and to develop broader PPP knowledge in the region.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.