The FSA midterm review (footnote 5) highlighted private sector development as one of the seven areas of emphasis for ADB’s work in FCAS and SIDS during the final 2 years of FSA implementation (2024–2025).
The review noted that “a clearer approach to private sector development and attracting capital to higher-risk environments is needed.”

Noting that the that private sector investment levels in FCAS-classified DMCs and SIDS have been decreasing and that the FSA provides limited guidance on support for private sector investment and development in fragile contexts, the FSA midterm review called for ADB to do more to promote an enabling environment for private sector investment in FCAS and SIDS. This can include promoting reforms that tackle barriers to entry for market competition, or supporting public–private partnerships (PPPs).

ADB’s Strategy 2030 midterm review also highlighted the need for ADB to provide more targeted private sector development support for FCAS and SIDS clients. Responding to the Strategy 2030 midterm review, ADB in 2024 introduced private sector development as one of five strategic focus areas for priority alignment of ADB operations.

Approved in 2024, the Renewable Energy Development Project in Solomon Islands is an example of how a sovereign infrastructure project in the energy sector can support ADB’s private sector development thrust in an FCAS-classified SIDS. An entire output of the project is dedicated to strengthening the enabling environment for more private sector participation and investment in the renewable energy subsector.

Under this output, the project team is supporting the Ministry of Finance and Treasury, as the executing agency, to prepare at least one renewable energy project for private sector participation, with commercial close projected for 2027. ADB’s Office of Markets Development and Public–Private Partnership (OMDP) is supporting this component.

In 2023, OMDP had provided technical assistance from the Asia Pacific Project Preparation Facility to the Ministry of Finance and Treasury to further support private sector participation in the economy of Solomon Islands. The objectives of the TA were to:

• (i)

  define the role, function and accountabilities of a proposed PPP unit under the ministry, and the allocation of responsibilities for PPPs between the PPP unit and line agencies,

• (ii)

  establish the proposed PPP unit through attention to defining its institutional and/or organizational arrangements,

• (iii)

  assist in building the capacity and capability for PPP projects of all government line agencies and state-owned enterprises likely to be involved in PPPs,

• (iv)

  undertake advocacy and awareness campaigns, and

• (v)

  support the operationalized PPP unit within the Ministry of Finance and Treasury.

The project also aligns with resilience and empowerment—another ADB strategic focus area with particular relevance to FCAS and SIDS—through its support for increased generation of climate-resilient renewable energy. This includes the commissioning of two solar photovoltaic power plants and a battery energy storage system, and connecting them to the grid.

The project’s infrastructure components are complemented by a comprehensive package of support for energy sector reforms to modernize and transform the country’s electricity utility, Solomon Power (also an implementing agency).