This presentation was made by Seungwook LEE, Korea, at the 11th Annual Meeting of the OECD Network of Senior PPP and Infrastructure Officials held at the OECD, Paris, on 27 March 2018

3. PPP Policy Division in MoSF
3
Total government expenditures will be managed to increase at an
average of 5.8 percent every year in 2017-2021.
SOC will be managed to decrease at an average of 7.5 percent
every year in 2017-2021.

4. Prudently manage SOC budgets and
significantly expand spending on welfare and job creation
Carry out strong fiscal restructuring
PPP Policy Division in MoSF
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6. Public-Private Partnership (PPP) is a framework under which
public infrastructure and services are funded, constructed, and
operated by private sector companies.
To make available necessary public infrastructure and services
promptly without delay and to take advantage of private sector’s
efficiency and ingenuity.
PPP Policy Division in MoSF

7.  Through revision of the PPP Act in 2005, the focus of PPP shifted
from transportation facilities to social infrastructure.
 Legal framework is the most important government’s support in reducing
risks and uncertainties surrounding PPPs.
Enactment (Aug. 1994) Revision(Jan. 1999) Amendment(Jan. 2005)
The Act on Promotion of
Private Capital into Social
Overhead Capital Investment
The Act on PPP in
Infrastructure
The Act on PPP in
Infrastructure
 Introduction of PPP legal
framework
 Government support
measures
 Risk sharing mechanism
 Unsolicited proposals
 Introduction of BTL
 Diversification of PPP
Project facility types*
*school, waste, sewage,
military APT etc.
7

8. PPP Act
Enforcement Decree on PPP Act
Basic Plan for PPP
Implementation Guidelines
 The PPP Act and its Enforcement Decree
regulate PPP projects
 The Basic Plan for PPP gives direction to
government policy.
• Implementation procedures, rights and
obligations, risk sharing mechanism
 The PPP Act is a special act that
precedes other acts.
• Exempts PPP projects from strict
regulation
PPP Policy Division in MoSF
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9.  702 projects implemented (worth 100 bil $)
 PPP investments has contributed to overcoming economic
crisis by bridging the funding gap for needed infrastructure.
9
1.5
0.3
2.8 2.7
0.8
5.1 5.0
2.8
5.1
5.6
8.1
6.2
11.2
9.4 9.5
7.3
5.4
4.8
3.6
2.8
4.9
1.6
2 2
14
4
13 13 15 14 16 18
26
82
120
77
98
49
40
28
19 27
16
16
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0
20
40
60
80
100
120
140
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
(trillion won)Investment Number

10. 10
44.3
19.6
6.2
0.6
14.3
6.1
10.3
2.1
0.5
1.6
91
15 17
11
187
77
235
42
15 12
0
5
10
15
20
25
30
35
40
45
50
0
50
100
150
200
250
300
Road Railway Seaport Airport Environment Defense Education Culture Welfare etc
Investment Number
(trillion won)

12.  In line with the longer-term infrastructure plan and priorities in the
national investment plan
 Bankability to attract private sector participation
 PPP projects are subject to F/S test as publicly financed projects
 1st stage(Feasibility Study) : Economic Feasibility (B/C>1)
 2nd stage(VfM 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.
PPP Policy Division in MoSF

13. Risk cost
Interest paid
Operation cost -
Operation revenue
Construction cost
Risk cost
Rate of profit
Operation cost
Construction cost
VfM
< When to choose PPP >
[Publicly
financed=PSC]
[PPP=PFI]
Return on
investment
during operation
PPP Policy Division in MoSF

14. 7) Termination
6) Operation
5) Construction
4) Concession Agreement & Designate Concessionaire
3) Review Project Plan, Evaluation Negotiation
2) RFP Draft & Announcement /
Announcement for the 3rd person proposal
1) Designate Project as PPP
PPP Policy Division in MoSF

15. PPP Policy Division in MoSF
Lower user fees without compromising “benefit principle”
Less burden on users
Higher employment rate and support for SMEs via PPPs
Social value perspective
Increased provision of public facilities in the sectors of
education/culture/welfare/environment
Expansion of community facilities