powerpoint 프레젠테이션€¦ · construction subsidy 556 land acquisition 1,544 mrg 528 etc....

Land Acquisition Construction Subsidy

MRGCredit Guarantee Fund

Rent and Operation Subsidy(esp. BTL)

Dispute Mediation Committee One-shot Permission

Termination Payment

PPP related budget amount(KRW 5.4 trillion) is about 1.38% of total

budget amount of central and local government

procure type type of infra. Budget Item ‘15 Budget

BTO + BTL 5,420

BTO

Total 3,031

Roads,

Railroads,

Seaports,

Environment

Construction Subsidy 556

Land Acquisition 1,544

MRG 528

ETC. 402

BTL

Total 2,389

Defense, Environment,

Education, Others

Rent 1,947

Operation Cost 399

Bil. KRW

PPP Policy Division in MoSF

PPP projects usually last more than 30 years and new projects keep

launching every year.

The total number of projects and investment keeps increasing,

resulting future fiscal burden to the government

75

80

85

90

95

100

105

110

540

560

580

600

620

640

660

680

700

2011 2012 2013 2014 2015

Investment

No. of PPP Pjs

Tril. KRW


0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

0

1

2

3

4

5

6

2010 2011 2012 2013 2014 2015

PPP related budget BTO BTL Percentage PPP/Total budget(%)

Percentage of PPP related budget in total budget is increasing

from 0.72% in 2010 to 1.38% in 2015

%Tril. KRW


PPP Policy Division in MoSF8

PPP projects are subject to the same F/S test as publicly financed projects.

1st stage(Feasibility Study): Economic and Political Feasibility (AHP≥0.5)

2nd stage(Value for Money Test): Decide whether PPP procurement is better

than government procurement(VfM>0)

3rd stage(Design PPP implementation alternative): Calculate reasonable

project cost, user fee level, budget support amount etc.

AHP

≥0.5PFS

Fiscal

ProjectPPPs(BTO)

PPPs(BTL)

User-feeApplicability

VFM>0

Cancel

YesYes

No No No Yes

First Stage of Test

(Economic Feasibility)

Second Stage of Test

(Suitability for PPPs)


Risk cost

Interest paid

Operation cost

Construction cost

Risk cost

Rate of profit

Operation cost

Construction cost

VfM

< When to choose PPP >

[Publicly financed] [PPP]

Return on

investment

during operation


11

3) RFP draft Announcement

2) Designate project as PPP

1) PFS and Feasibility evaluation

4) Announcement for the 3rd person proposal

3) Decide unsolicited project

2) Feasibility evaluation

1) Proposal from private sector


Termination

Operation

Construction

Concession Agreement and designate Concessionaire

Review plan, evaluation and negotiation

Basic Plan Art40 Guidelines Written

1. F/S & VfM Test ① Research on VfM Test for BTO (revised in 2012, unpublished) 2010.06

2. Formulation of Master

Plan for Projects and

Standard Master Plan

② Research on Standard Master Plan Formulation for Light rail

BTO project

2008.02

③ Standard Basic Plan(Draft) for BTO project (roads) 2010.03

3. Project Evaluation on

RFP

④ Project Proposal Evaluation on RFP 2009.03

4. Refinancing ⑤ Detailed Research on Refinancing(2013) 2013.02

5. BTL facility operation &

management

⑥ Detailed Research on the operation and management for BTL

facility

2013.08

6. Standard concession

agreement

⑦ Standard concession agreement for environmental projects 2008.06

⑧ Standard concession agreement for road projects 2010.03

⑨ Standard concession agreement for BTL projects 2011.03

7. F/S for BTL project ⑩ F/S guideline for BTL projects 2012.04

8. Formulation of Master

Plan(Project proposal) for

BTL projects

⑪ Research on Standard RFP for BTL school complex project 2006.12

⑫ Formulation of master plan for BTL project 2011.03

9. Others -


Mid term : Manage PPPs as a part of MTEF

(Mid-Term-Expenditure-Framework)

Long term : In 2007, Korean government set 2% fiscal rule on PPP

project related fiscal expenditure.

2% rule is to maintain the percentage of PPP related budget in

total government budget under 2%

< PPP related budget vs. Total govt. budget >

(trill. KRW, %)

Item 2009 2010 2011 2012 2013 2014 2015 2016

Total expenditure(A) 324.1 319.3 330.7 348.5 374.5 383.5 397.1 414.8

PPP related expenditure(B) 2.8 2.3 2.8 3.7 4.3 5.8 5.0 5.1

Ratio of PPP expenditure(B/A) 0.9 0.7 0.8 1.1 1.2 1.5 1.3 1.2


Macro-

economic

forecasting

Sectoral Budget

Preparation

Sectoral

Ceiling

Setting for

multi-year

Fiscal

Target

Total

Expenditure

Setting for

multi- year

Annual Budget

Formulation

Updated costestimate of existing

policy/program

New sectoral demand

for t+4 (priority/cost)

Medium term spending guide lines introduced in 2004

Integrates policy priorities into annual budgeting

5-year horizon, Annually updated reflecting policy changes

Intensified the Top-down approach

Program based Budgeting

16PPP Policy Division in MoSF

Every 3 years, a comprehensive evaluation of the PPP projects are

conducted and the evaluation results are fed back in major policy

directions.

< Main result of 2013 comprehensive evaluation >

class. evaluation

performanceFrom 1995 to 2012 total number of PPP projects is 633, total investment

cost amounts to KRW 93.3 trillion

Effects on national

economy

Analysis proved the effective PPP projects contributed to economic growth,

employment, fiscal soundness, and public welfare

Policy

recommendation

Facilities types eligible for PPP projects need to be expanded to include

public buildings, crematory facility etc

* PPP eligible facilities are defined in the PPP Act on a positive system


As BTL procurement incurs huge government expenditure, government

conducts BTL project performance evaluation to enhance efficiency

Depending on the performance evaluation result, government deducts

from government rent payment and pay back part of the deducted

amount when the performance result improves.

< BTL project performance evaluation criteria >

Grade Score penalty incentive

A 91 and above 100% rent payment

If the evaluation result improves to A grade,

50% of the deducted amount is added up in

thepayment

B 81 ~ 90 90% 〃

C 71 ~ 80 80% 〃

D 61 ~ 70 70% 〃

E less than 60 stops payment


National Assembly deliberates & determines BTL expenditure ceiling

Budget support(rent + operation cost) is paid in equal installment during

operation period

※ Recent expenditure ceiling (bill. KRW): (’12) 757 → (’13) 699 → (’14) 494 → (’15) 536

MoSF annually prepares report (end of May) on the PPP project operation

status and performance analysis of the PPP projects(Y-1) and submit the

report to the National Assembly

PPP project information can be assessed by the citizen thru internet.


0

2

4

6

8

10

year1 year2 year3 year4

Expected revenue

Actual revenue

MRG

Guaranteed

Revenue

Overestimated traffic volume

Overestimated expected revenue

Huge fiscal burden caused by subsidy for MRG

National Assembly and NGOs raised big issues on MRG

Moral hazard by SPCs

No need for improvement in service quality which boosts

actual revenue

In 2009, MRG was abolished in PPP Act.

Subsidy Amount ;

Until 2015, 5.5 trillion won, (2002) 65 → (2015) 528 billion won

0

200

400

600

800

1000

`02 `03 `04 `05 `06 `07 `08 `09 `10 `11 `12 `13 `14 `15

< MRG subsidy >



Concept

When SPC`s revenue increases by Refinancing* government and

SPC share its additional revenue.

* Refinancing: PPP contract changing concerning sponsor’s stake, capital

structure or borrowed capital conditions.

Sharing rate and Usage

Competent authority : SPC = 50:50 (without MRG; 30:70)

Competent authority uses shared revenue to cut user-fee, deduct

MRG subsidy or shorten free-operation period.

Achievement : MRG rate(90% → 46~82%) and cut user-fee


Concept

Existing shareholders sell maintenance & operational rights to new

shareholders, moving from MRG to Cost Compensation(CC) structure

Over the rest of the contract period, compare operating cost with return,

covering or collecting the difference

* Actual income > cost → excess return reduces a toll

Actual income < cost → the government makes up the shortfall

Achievement : adjusted a toll and reduced public spending

•e.g. Bummul~Anshim Expressway(Daegu, July. 2012), Yongin Light Rail(July. 2013),

Seoul Subway Line 9 (Oct.2013), Wonjeok Tunnels (Incheon, April 2014) etc.

Constraints : available with the consent of private partners

Private participants do not prefer any contractual change due to concern

over lower return, negligence, etc.

* BTO contract

(’05) 18, 7.7tril.

→ (‘14) 9, 1.6tril.

Declining number of PPP projects due to the abolition of MRG,

subject limitation, financial crisis

On the other hand, private investors keep searching for

investment opportunities with extra money in hand*

No. of Proj. Tril. KRW

Reinvigoration of Economy thru PPPs

Early land compensation

Corporate Investment Promotion Program

Assisting Project Restructuring

Introduce new procurement models *BTO-rs(risk sharing),BTO-a(adjusted)

Expand project scope *Gov’t building etc.

Introduce‘Competitive Discussion’

Speedy Dispute Settlement by Committee

Etc.


100

Gov.: 50

Private: 50Rev.

60

Gov. 20

Priv. 20

Rev.

120

Priv. 10

Gov. 10

Gov.

Guarantee

70Rev.

60

Private 30

Gov. 10

Rev.

80

Non-Grnt.

30Private 20

Rev.

120

Gov. 14

Private 6


Background

Complex and protracted procurement processes delayed the

commencement of project works in several cases.

Concept

Through competitive dialogue, evaluation coincides with

negotiation, shortening the entire procurement cycle

- applying to solicited projects first

Desired Effect

Shorten the procurement period by 1/3

52

59

Reinvigorate economy thru PPPs

Newly launched PPP projects by new PPP models:

7 trillion won + α

Shorten the projects procedures: fast tracking SOC

Lessen fiscal burden

Convert fiscal projects to PPP projects

ETC.

Increase in creative unsolicited projects

Rapid dispute settlement

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