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Orion Group pioneers PPPs to add drive to national growth

Article - December 16, 2011
The conglomerate is making history by partnering the government on infrastructure and power generation projects
One of the leading industrial corporations in the country, the Orion Group encapsulates true Bangladeshi entrepreneurial spirit. Its chairman, Mohammad Obaidul Karim, has led the company to pioneer a number of firsts in Bangladesh, achieving a level of success unparalleled in the country’s history. From modest beginnings, the group’s operations now span 11 diverse sectors, namely agro products; aviation management; cosmetics and toiletries; construction; energy; hospitality management; infrastructure development; textiles and garments; pharmaceuticals and health care; power generation; and real estate.

Since its inception, the group’s main objective has been to target rural poverty reduction and foster sustainable economic development in its position as a world-class corporation, creating products and services of real value, and generating employment. “I think of our company as a family of 18,000 people,” says Mr. Karim.” We always try to maintain great relations with our employees, and we provide staff with benefits such as loans, donations and our assistance programme.”

The chairman is extremely optimistic about the business possibilities and growth potential inherent in Bangladesh. “When I see something in other countries, I think it can also be possible here. People say things are impossible; however I always ask why something is not possible. I feel there is always opportunity,” he says.

Jatrabari-Gulistan Flyover Project

Such positivity has seen the group make important inroads into developing the nation’s infrastructure. Planned and well-designed connections boost a country’s appeal for both local and foreign investment, as poor, inefficient communications deter investors and frustrate national advancement efforts. Therefore, the government has encouraged private-sector participation to accelerate infrastructure development and the Orion Group has been the first to take up the mantle.

Leading the charge, Orion Group incorporated Belhasa Accom and Associate Ltd and submitted a bid for the Jatrabari-Gulistan Flyover Project. After a highly competitive selection process, the company was awarded the contract to design, construct, maintain and operate the flyover using privately obtained finance on a build-own-operate-transfer (BOOT) basis. The concession agreement was sealed in June 2005 and construction began in June 2010.

The Jatrabari-Gulistan flyover breaks new ground in Bangladesh. “This is the first infrastructure project in Bangladesh under a public-private partnership (PPP) agreement. Previously there was no such type of investment and it was a dream that a private entity would be able to invest in infrastructural development,” says Mr. Karim. “Initially, the flyover was to be seven kilometres long, now it is 10 kilometres. The investment is around $290 million and we are working on raising these funds from completely local sources.”
In addition to entering unchartered financing territory, other challenges facing the Orion Group include the required construction time for the project being shortened by a year, to two and a half years construction time, and the physical constraints imposed by the site being in such a built-up area. “The government is very keen to complete projects such as this flyover and is giving us maximum support. If we need police support for anything, it is provided immediately,” says Mr. Karim. “Presently, we are facing traffic jam issues because we are digging up ground in the middle of a narrow road. There is some inconvenience, however Bangladeshis understand the value this project will bring once completed. We are receiving a lot of support from local people.”

Dhaka is one of the most congested cities in the world. The World Bank predicts its population, currently 13 million people, could rise to 25 million by 2020. After completion of the four-lane flyover, which will be named the Mayor Mohammad Hanif Flyover, the city’s third elevated expressway will greatly improve links between the Dhaka metropolitan area and at least 30 other districts, including the port city of Chittagong, Mongla, Sylhet and Barisal.

Superlative achievements
The Orion Group has not only blazed trails in PPPs, but it has also taken real estate to new heights. It reshaped Dhaka’s skyline when it constructed the country’s tallest building, the 39-storey City Centre, and also has plans to create a new satellite town near the capital.

Its pharmaceutical arm was the first company in Bangladesh to produce amino acids and to manufacture anti-cancer drugs, bringing down the cost of cancer medication from 2,100 taka (£17) to 350 taka (£2.85) per box.

In agriculture, the group is currently collaborating with a Dutch company to grow mushrooms on two large plots of land. “Our location and facilities are ideal,” says Mr. Karim. “European companies have tried going to China for these agro-products, however they have found Bangladesh is a better more cost-effective producer.” The company has plans to develop an agricultural industrial park and produce vegetables targeted at European markets.

Power generation
A reliable, affordable supply of energy is vital to maintaining Bangladesh’s socio-economic development and industrialisation. The government has set a goal of providing electricity to all citizens by 2021, so power generation has been highlighted as another priority area for private-sector involvement.

Through its joint ventures, IEL Consortium and & Ltd and Dutch Bangla Power & Associates Ltd, the Orion Group now has two 100MW power plants in operation. “It is frustrating that our country’s international image is not so good, even though we did not take a single penny from the outside world; we raised the funds here and we completed a 100MW power plant in only 217 days. I challenge you to find another company that can complete such a project in the same timeframe using the particular European technology we have brought over,” says Mr Karim.

The group has been awarded two more concessions to build power stations generating 300MW and 650MW respectively. “The government is serious about power production. We used to have a large natural gas reserve, however, now there is a shortage. So, we are going to set up a coal-based power plant, which will be much cheaper. We are on our way to producing electricity at low cost,” says Salman Obaidul Karim, Orion Group’s managing director and son of the chairman. “In our power sector, demand is significant at the moment, which represents an opportunity for foreign involvement. Our company’s projects have set examples showing foreign investors that infrastructure and power projects are feasible and can be completed quickly.”


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