Transcript Korea’s Infrastructure Market and PPI System

Korea’s Infrastructure
Market and PPI System
PICKOI KRIHS
Contents
Part 1
Korean Economy
& Infrastructure Market
Part 2
Policy Guideline
Part 3
PPI Incentives
Part 4
Private Investment Project
Implementation Status
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Part 1
Korean Economy
& Infrastructure Market
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Korean Economy
’97
’98
’99
’00
‘01
Growth rate
5.0
-6.7
10.9
9.3
3.0
Inflation rate
4.5
7.5
0.8
2.3
4.1
Interest rate
13.4
15.1
8.9
9.4
7.0
F/X rate
951.1
1398.9
1189.5 1,130.6 1291.1
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Estimated Infrastructure
Investment Needs (2002~2011)
(unit: USD bil.,%)
Sectors
Amount
Ratio
Roads
84
54.9
Railways
44
28.8
Airports
5
3.3
Ports
17.3
11.3
Logistics
2.5
1.7
Total
152.8
100
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Leading Sectors of
Infrastructure

Road

Port

Rail & LRT

Environment
Road
200,000 km of principal roads and 10,000 km
of high-speed arterial network planned by 2020
Annual toll of USD 1.3 bil. collected in 2000
Increased participation by the private sector
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Port
 Growth particularly strong in northeast Asian
trade and coastal trade
 Eased congestion at ocean going container
berths due to expansion of facilities in Busan
and Gwangyang in 1998
 Due to sustained growth in trade, more facilities
needed
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Rail & LRT
 Rail accounts for 30% of transportation mode
in the greater Seoul area.
 The first stage of ‘TGV’ style high-speed line is
under construction between Seoul and Busan
 Gov’t is continuing to invest heavily in Rail &
LRT systems as PPI projects
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Environment
Increased environment budget
Active private participation in wastewater
facilities
Trend toward private participation of water
supply, gas generated power plant, etc.
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Part 2
Policy
Guideline
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History of PPI
1994
Enactment of the Promotion of Private Capital
into Social Overhead Capital Investment Act
1999. 1
Enactment of Act on PPI
1999. 4
Establishment of PICKO
(Private Infrastructure Investment Center of Korea)
2001. 12
Formulation of the Ten-Year Plan for PPI
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Policy Direction

Change to a Private-sector-initiated
scheme in infrastructure

Promotion of creativity and efficiency
from the private sector

Conformity to international standards
for foreign capital inducement
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Eligible Facilities under PPI System
 34 types of infrastructure facilities
in 10 categories
Road
Railway
Harbor
3
2
3
Culture
& Tourism
Water
Resource
7
4
Energy Environment Distribution
3
6
3
Airport
Communi
- cation
1
2
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Solicited Projects
Concerned
Authorities
Selection of Private Investment Project
Concerned
Authorities
Public Notification of Instruction for Proposal
Submission of Project Proposal
Concerned
Authorities /PICKO
Evaluation of Proposals
Concerned
Authorities /PICKO
Negotiation of Concession Agreement
& Designation of Concessionaire
Concerned
Authorities
Plan Approval of DEDPI*
DEDPI:
Detailed Engineering and Design plan for Implementation
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Unsolicited Projects
Proposer
 Concerned
Authorities
Project Preparation & Submission of Proposal
PICKO
Review of Proposal
Concerned
Authorities
Public Notification of Proposal
(No Third Party Proposals)
Award Contract to Initial Bidder
(More Proposals Tendered)
Evaluation of all the Proposals
Award Contract to Winning Bidder
Negotiation of Concession Agreement
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Role of PICKO
Review / Evaluate
Solicited
& Unsolicited Project
Proposals
Provide
Assistance
in Concession
Negotiations
PICKO
Research
& Formulate
PPI Policies
Promote
Various Activities
to Induce
Foreign Investment
Provide
Educational
Programs
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Part 3
PPI Incentives
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Project Financing Criteria
 FIRR (relative to)
• Borrowing Rates
• Risk Premium
• Competitive Rates
 Guideline : 12~16%
• Type of Project
• Level of Risk
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Land Acquisition
 Use of Public Land wherever Possible
 Government Acquisition of Private Land
Prior to Concession
 Use of Eminent Domain where Necessary
to Enable Project Concessionaire to
Complete Land Acquisition
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Revenue Guarantees
 Negotiated as Part of Project Agreement
 Based on Annual Projected Revenues as follows
Government
Subsidy
Proponent
Rebate
Solicited
Unsolicited
< 90%
< 80%
> 110%
> 120%
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Tax Incentives
 No acquisition and registration taxes : BOT
 Application of 0% for value added tax of the
facilities and construction services : BOT, BTO
 Tax reduction for infrastructure bonds
 Reduction and exemption of various appropriation
charges
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Protection against F/X
Risks
 Allowable Fluctuation of ± 20%
 Mitigation Measures
 Adjustment of tariffs
 Direct operating subsidies
 Contract re-negotiation
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Additional Incentives
 Buyouts
• force majeure
• other specific events
 There will be no adjustment in tariffs or
concession period when construction cost is saved.
 For solicited projects, the government covers the
cost of the feasibility study, and preliminary and
final design.
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Part 4
Private Investment Project
Implementation Status
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Projects with Signed
Concession Agreements
 2000~2002 : 25 Projects
( Total : USD 12,248 mil. )
$ 7,331 mil.
(12)
$ 2,061 mil.
(5)
$ 2,392 mil.
(2)
$ 270 mil.
(4)
Roads
$ 194 mil.
(2)
Ports Rail & LRTs Environments Others
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Projects under
Negotiation
 2000~2002 : 23 Projects
( Total : USD 8,310 mil. )
$ 3,412 mil.
(8)
$ 2,485 mil.
(4)
$ 1,291 mil.
$ 984 mil.
(3)
(5)
Roads
$ 138 mil.
(3)
Ports Rail & LRTs Environments Others
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Unsolicited Projects
under Review
 2000~2002 : 10 Projects
( Total : USD 4,305 ml.)
$ 3,764 ml.
(5)
$ 541 ml.
(5)
Roads
Environments
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The Ten-Year Plan
for PPI
2002 ~ 2011
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Part 1
Why the Ten-Year Plan
for PPI ?
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 Increased demand of gov’t expenditure
for welfare and future investment
 Increased needs of private investment
in infrastructure
 Need for a forseeable gov’t investment
policies
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Part 2
Infrastructure
Investment Status &
Prospects
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1. Estimated Amount of Investment
in Infrastructure
 Scale of infrastructure investment
demand in the 10-year plan
- USD 153 billion during the plan period
(Approximately USD 13 to 15.3 billion per year )
 Estimation of government expenditure
in infrastructure during the plan period
- USD 122.5 ~ 138.8 billion
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2. Private Infrastructure
Investment Needs
 Difference of about USD 14.2 ~ 30.5 bil.
(USD 1.5 ~ 3.0 billion annually) needed
as additional investment
: Active participation by private sector in
infrastructure is urgently needed
to resolve the problem of fund shortage
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3.
Appropriate Distribution
of Infrastructure Investment
(USD : bil.)
Sectors
Investment Governmen Private Government
t
Need
Investment Subsidy
Investment
Roads
84
58.2∼71.1
13∼25.9
3.9∼7.8
Rails
44
30∼38.1
5.9∼14
2.4∼5.6
Ports
17.3
11.8∼14.8
2.5∼5.5
1.0∼2.2
Airports
5
4.6~5.0
0.0~0.5
0.0~0.2
Logistics
2.5
1.9∼2.3
0.3∼0.6
0.1∼0.1
Total
152.8
106.5∼131.3
21.7∼46.5
7.4∼15.9
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Part 3
Projects to be Promoted
as PPI scheme
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1. Road
Selection Criteria
 Individual feasibility studies
- IRR, ROE, Toll
- The level of government subsidy
18 Projects : USD 14.5 billion
(USD : bil.)
Type
Projects
Cos
t
Expressway Yangpyeong-Ganam, Seoul-Chuncheon, and 8 others
8.9
Ansandong-Misandong-Mansu, Dunpo-Oseong, and 4
others
1.2
National
Highway
Local Roads The 3rd Circulatory Line, West Coast Beltway
18 Projects
4.4
14.5
2. Rail
Selection Criteria



Passenger demand
Traffic density
B/C Ratio
23 Projects : USD 10. 2 billion
(USD : bil.)
Type
Main Network
Railway
Metropolitan
Railway
Urban
Railway
LRT
Projects
Cost
Bujeon-Sasang Double Track Railway,
Gyeongeui Line, Gyeongwon Line
0.9
New Bundang Line, New Ansan Line
3.1
Extension of Seoul Subway Line 7, 8, 9
1.0
Yongin LRT, Gangnam PRT, and 13 others
5.2
23 Projects
10.2
3. Port
Selection Criteria
 Consideration of undeveloped projects out of
current harbor development plan
 Projects with high priority and with favorable
private investment conditions
29 Projects : USD 5.4 billion
(USD : bil.)
Type
Trading
Port
Waterfront
Facility
Fishing
Port
Facility
Passenger
Facility
Projects
Cost
Incheon North Harbor Sector 3,
Gwangyang Port Sector 4-1, and 21 others
Busan Dongsam-dong Ocean Park, Ulsan Port
Ocean Park, Masan Port Western Sector
4.7
Daepo Port, Bieungdo Port
0.1
Jeju Harbor Int`l Passenger Terminal
0.02
29 Projects
0.6
5.4
4. Environment
Selection Criteria

Facilities included in Basic Plan for Sewage
Completion and Rehabilitation

Facilities with high profitability

Facilities for which government subsidy plan
has been confirmed or is under consideration
89 projects : USD 3.0 billion
( USD : bil. )
No. of
Projects
Cost
Sewage Treatment Plant
51
2.5
Sewage Sludge Treatment
Plants
17
0.2
Waste Treatment Plant
11
0.2
General Wastes Landfill Gas
Plant
8
0.04
Food-Wastes Recycling Plant
and Refuse Derived Fuel
2
0.07
Type
89 Projects
3.0
5. Others
Selection Criteria
 Logistics : Government’s Basic Plan in Logistics
 Energy : Power plants that are planned
for private participation
 Tourism
- Regions that serve as strategic base for foreign tourism
- Balanced regional development considered
20 Projects : USD 15.4 billion
Type
Logistics
Projects
Central Region Integrated Freight Terminal,
Yeongnam Region Integrated Freight Terminal
( USD : bil. )
Cost
0.7
Energy Dangjin(Coal), Ulsan(Orimulsion), and 11 others
11.0
Tourism Capital Region Lodging, Lake Andong, and 3 others
3.7
20 Projects
15.4
6. Summary
 Total Project Cost : USD 48.4 billion
No. of
Classification Projects
( USD : bil. )
Total Project Government Private
Cost
Subsidy Investment
Roads
18
14.5
4.3
10.2
Rails
23
10.2
4.0
6.2
Ports
Environment
Facilities
29
5.3
2.1
3.2
89
3.0
1.3
1.7
Other Facilities
20
15.4
0.7
14.7
Total
179
48.4
12.4
36.0
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