KS KIM Presentation

8/6/2019 KS KIM Presentation

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The views expressed in this paper/presentation are the views of the author and do

not necessarily reflect the views or policies of the Asian Development Bank (ADB),

or its Board of Governors, or the governments they represent. ADB does notguarantee the accuracy of the data included in this paper and accepts no

responsibility for any consequence of their use. Terminology used may not

necessarily be consistent with ADB official terms.



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Public and Private Infrastructure

Investment Management Center



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1. Procurement Procedure

2. Procurement Steps of a Solicited Project

3. Procurement Steps of an Unsolicited Project

4. Improvement for Procurement Procedure



1. Procurement Procedure



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Procurement Schemes

47 types of facilities in 15 categories are eligible for PPP

Road

(3)

Port

(3)

Railway

(3)

Welfare

(4)Forestry

(2)

Energy

(3)

WaterResources

(3)

Communication

(5)

Environment(5) Logistics

(2)

15 categories

(facility types)

Education

(1)

Military Housing

(1)

Culture & Tourism

(10)

Airport(1)

PublicHousing

(1)

Eligible Facility Types



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Procurement Schemes

Sector Facility Type

Road(3) Road, Ancillary Facilities, Non-road Parking Facilities

Rail(3) Railway, Railway Facilities, Urban Railway

Port(3) Port, Fishing Port Facilities, New Port Construction Facilities

Communications(5)Telecommunication Facilities, Information Communication System,

Information Super-highway, Map Information System, Ubiquitous City Infrastructure

Water Resources(3) Multi-purpose Dam, River-affiliated Ancillary Structures, Waterworks

Energy(3) Electric Source Facilities, Gas Supply Facilities, Collective Energy Facilities

Environmental(5)

Waste Treatment Facilities and Public Livestock Wastewater Treatment Facilities,

Waste Disposal Facilities, Wastewater Treatment Facilities, Recycling Facilities,

Public Waste-water Treatment Facilities

Logistics(2) Distribution Complex, Cargo and Passenger Terminals

Airport(1) Airport

Culture and Tourism(10)

Tourist Site or Complex, Youth Training Facilities, Public Sports Facilities,

Libraries, Museums and Art Galleries, International Conference Facilities,Culture Centers, Science Centers, Urban Parks, Professional Training Facilities*

Military Housing (1) Military Housing

Education(1) Schools

Forestry(2) Natural Recreational Resorts, Arboretums

Public Housing(1) Public Rental Housing

Welfare(4) Child-care Facilities, Senior Homes, Medical Facilities, Facilities for the Disabled*

Eligible Facilities



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BTO (Build-Transfer-Operate) Scheme

Both solicited and unsolicited projects are eligible

Roads, seaports, and railway projects, etc

User-fees, Minimum Revenue Guarantee (MRG) for solicited projects

BTL (Build-Transfer-Lease) Scheme

Only solicited projects are eligible

School, dormitory, military housing, etc

Government payments (Lease rent +operating costs)

Low risk-low return

Other Schemes

BOT (Build-Operate-Transfer)

BOO (Build-Own-Operate), BLT, ROO, RTL

Procurement Schemes



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Type

Step

BTO*

BTL* * TotalNational

Projects**

Competent

Authority Projects

Under Operation 22(10.6) 75(3.5) 33 130

Under Construction 34(28.2) 12(0.8) 88 134

Preparing to construct 10(5.2) 4(0.2) 45 59

Under Negotiation 15(11.5) 8(0.8) 79 102

Under Review 2(1.7) 3(0.5) 45 50

Subtotal 83(57.2) 102(5.9) 290(16.6)

475(79.7)Total 185(63.1)

(unit: number (Trill. KRW))

* as of Jun. 2008, ** as of Dec. 2007*** Large-scale projects whose total costs are 200bill. or more are monitored by the PPP Committee organized by theMinistry of Strategy and Finance.

Procurement Schemes

Number of PPP Projects by Procurement Scheme



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Solicited Projects

A solicited project is that the competent authority identifies a project

for private investment and announces a RFP

Principle of selecting solicited projects

Limited to eligible facilities set by Act on PPP

Consistent with priorities set by SOC related mid to long term plans and nationalinvestment projects

Consistent with PPP project selection principle set forth above

BTL : solicited project only

Project Initiation



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Unsolicited Projects

For an unsolicited project, a private company (project proponent) submits a

project proposal, and then the competent authority examines and

designates it as a PPP project

Principles of selecting unsolicited projects

Private entities may select facilities prescribed by each of the items under the PPP act

Whether it is appropriate to pursue the project in view of the cost-benefit analysis for

national economy

Whether the government burden is reduced while the quality of service is increased, in

comparison to the case when the unsolicited project is pursued

Not eligible for BTL

Project Initiation



2. Procurement Steps of a Solicited Project



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Designation of PPP projects (CA, MOSF)

Formulation and Public Notification of RFP (CA)

Committee deliberation : Total cost >=200 bil KRW, receiving a subsidy

Submission of the Project Proposal (Private Sector)

Examination and Evaluation of Project Proposal (CA, PIMAC)

PQ, Project Evaluation Team, Two or more potential concessionaire are selected

Designation of Concessionaire including Conclusion of Concession Agreement (CA, PIMAC)

To verify total project cost, evaluation on the appropriateness of unit price andValue Engineering (VE) by specialized organizations ( the Public ProcurementService, KHC etc)

Total project cost, concession period, user fee

Deliberation by the Committee

Procurement Steps of a Solicited Project



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Application for Approval of Detailed Engineering and Design Plan

for Implementation (DEDPI) (Concessionaire, CA) Notify review results within 3 Months

Construction and Operation (Concessionaire, CA)





Step 1 Designation of PPI Project

Small Project – Self designate the project

Large Project – Conduct a feasibility study and reportresult to PIMAC in addition to VfM testresult and basic design documents.

Competent

Authority

Review feasibility study & VfM test results and

basic design documents for large project

PIMAC

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Prior to designating a PPI Project, the competent authority

must conduct a feasibility analysis(FS) through a specialized

research organization.

However, for the project with total project cost of KRW 50

billion or more and requiring KRW 30 billion or more as

government subsidy, the competent authority shall apply inadvance to the MOSFfor a preliminary feasibility study(PFS) of

the project concerned. The PFS shall be carried out by PIMAC.

For projects with total project cost of KRW 200 billion or more,the competent authority shall submit feasibility study result,VfM tests result, and basic design documents, and shall make arequest for review to PIMAC.

Step 1 Designation of PPI Project

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Step 2 Request for Proposals (RFP)

Negotiate in advance to avoid environmental issue if necessary.

Formulate and announce the request for proposal for PPI.

Competent

Authority

Competent Authority

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Step 3 Submission of Project Proposals Private Sector → Competent Authority

Prepare proposal and submit it to the competent authorityPrivate

Sector

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Any party intending to implement a PPI project shall prepare aproject proposal in accordance with the laws and regulations

concerning PPI projects, and the notified contents of the requestfor proposal and submit it to the competent authority.

Key elements to be included in the project proposal (Article 12 of the Enforcement Decree of the Act on PPI):

Contents of the project proposal (including the basic plan); Details of the total project cost and financing plan;

Grounds for estimated periods of concession, ownership, and profit-making

operation of the completed facilities (limited to revertible facilities);

Management and operation plan for the facilities;

Contents of and grounds for expenditure plans and revenue estimationsincluding user fee, etc;

Contents of and grounds for implementing supplementary projects, if any;

Contents of and grounds for subsidy request, if any;

Contents of and grounds for modifying the request for proposal

Step 3 Submission of Project Proposals

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Step 4 Evaluation/Selection of Preferred Bidder Competent Authority

Set the criteria for PQ.

Examine and evaluate the project proposal.

Designate a potential concessionaire.

Competent

Authority

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Step 5Negotiation & Contract Award

(Designation of Concessionaire)

Competent Authority (PIMAC)

↔

Potential Concessionaire

Designate a concessionaire by finalizing all negotiations of

a concession agreement

Competent

Authority

MOSFPrior Deliberation by the Committee

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The competent authority shall strive to complete all negotiations in

a timely manner while maintaining consistency and increasing theeffectiveness of negotiations.

The competent authority shall consult with PIMAC whenconcluding the concession agreement on projects with a totalproject cost of KRW 200 billion or more or that require deliberation

by the Committee. For concession agreements that include an agreement of

government support, the competent authority must refer to theopinion of the MOSF in advance.

When negotiations fail to be finalized within the specified timeperiod, necessary countermeasures shall be taken such asinitiating negotiations with the next preferred potentialconcessionaire, reannouncing the request for proposal, nullifyingthe designation as a PPI project, etc.

Step 5Negotiation & Contract Award


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Step 6Approval of Detailed Engineering and

Design Plan for Implementation(DEDPI)Concessionaire→ Competent Authority

Apply for the approval of the DEDPI.Concessionaire

Notify the concessionaire its decision on the approval

of the DEDPI

Competent

Authority

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Step 7 Construction and Operation Concessionaire

Construction completion, submit a construction completion

report and obtain confirmation from competent authority.Concessionaire

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3. Procurement Steps

of an Unsolicited Project



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Submission of the Project Proposal (Private Sector – CA)

Consultation for Review of the Contents of Project Proposal

(CA-PIMAC) Within 15 days from receipt of the proposal

VFM Review of the Project Proposal (PIMAC)

Within 60 days (with an exception for the VFM test)

Notification not to implement the proposal

Submission of Opinion regarding the proposal (PIMAC – CA andMOSF)

Notification of Proposals (CA)

Total Cost >= 200 bil KRW : subject to prior Committee deliberation

Procurement Steps of an Unsolicited Project



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Proposals are submitted (Private)

No other proposals : Designation of the proponent as the potentialConcessionaire

Other proposals : Review and Evaluation of other proposals, Designation of the potential Concessionnaire

Designation of the Concessionaire (CA)

Negotiation and Contract Award (CA- Potential Concessionaire) Approval of Detailed Engineering and Design Plan for Implementation

( Concessionaire – CA)

Construction (Concessionaire)

Confirmation of the completion of Construction (CA)





Step 1 Private Sector → Competent Authority

Submit a project proposal to the competent authority.rivate

Sector

Project Preparation & Submission of Proposal

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Step 2

VfM Review of the Project Proposal

Competent Authority→ PIMAC

PIMAC

Consultation for Review of the Contentsof Project Proposal

Submission of Opinion regarding the Proposal

Yes

Notification not to

implement the proposal

No

Prior Deliberation by the Committee

MOSF

Make a request to PIMAC for review.ompetentAuthority

Review the proposal

Conduct VfM test

Submit an opinion to MOSFPIMAC

Present a review report to MOSF and request prior

deliberation by the committeeCompetent

Authority

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Step 3 Notification of alternate proposals Competent Authority

Announce the content of project proposal for alternateproposals in addition to the bonus points rate awarded

to the initial proposer.

Competent

Authority

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When pursuing an unsolicited project as a PPI project pursuant to

the Act on PPI, the competent authority shall announce theoutlined content of the project proposal concerned in the officialgazette and at least three daily newspapers in addition to postingon PIMAC homepage bulletin to allow for the third parties other than the initial proposer to submit alternate proposals with respectto the project concerned.

In the event the content of the project proposal is announced, itshall be recognized as the formulation of a request for proposal as

stipulated in Article 10 Paragraph 1 of the Act on PPI.

Bonus points rate (within ten percent (10%) of the total assessmentpoints) awarded to the initial proposer upon review of the VfM of the project proposal.

Step 3 Notification of alternate proposals


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Step 4

No Third Party ProposalsOther Proposals Tendered

Evaluation of other Proposals / Selection of Preferred Bidder

Designation of the Preferred Bidder as Potential Concessionaire

Designation of the Proponentas Potential Concessionaire

Competent Authority

Review and evaluate proposals to determine the potential

concessionaire.Competent

Authority

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Negotiation & Contract Award


Approval of Detailed Engineering

and Design Plan for Implementation

Construction and Operation

Concessionaire→ Competent Authority

Concessionaire

Competent Authority (PIMAC)

↔ Potential Concessionaire

MOSF

Step 5

Step 6

Prior Deliberation by the Committee

Step 7

In Step 5, Step 6 and Step 7, the same procedure shall apply as for solicited projects.

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'05 '06 '07'08

(until Sep.)Total

BTO

Number of conducted VFM Tests 20 24 23 8 75

Delivers value for money 12 21 16 4 53

Does not deliver value for money 8 3 7 4 22

Rate of project turn-down 40% 13% 30% 50% 29%

Turn down Rate of Unsolicited Projects




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To promote competition for proposals, it may partiallyreimburse proposal preparation costs of the unsuccessfulproponent

If there is only one unsuccessful bidders : 25% of the basic design cost

If there are two or more unsuccesful bidders : 30% of the basic design

cost for the 2nd contender and 20% of the basic deign cost for 3rd

contender

Year 2000 2001 2002 2003 2004 2005 2006 2007 Total

Number of Projects 4 2 2 6 5 6 7 2 34

Number of

Bidders

1.50 1.50 1.00 1.17 1.80 3.17 1.57 3.501.88

1.42 2.47

Number of Bidders by Year

Competition for Proposals



4. Improvement for

Procurement Procedure





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