Procurement Process of PPP Projects in Korea

Transcription

1 Procurement Process of PPP Projects in Korea December, 2007 Public and Private Infrastructure Investment Management Center (PIMAC) Korea Development Institute

2 1. PPP Project Types in Korea 2. Procurement Steps of a Solicited Project 3. Procurement Steps of an Unsolicited Project 4. PIMAC [Public and Private Infrastructure Investment Management Center] of KDI 1

3 2 1. PPP Project Types in Korea

4 Legal Framework of the PPP System Hierarchy of legal and administrative framework of the PPP System PPP Act PPP Act Enforcement Decrees Annual PPP Plan PPP Guidelines The characteristics of the institutional arrangements The PPP Act and the PPP Act Enforcement Decrees are the principal components of the legal framework of PPP The PPP Act directs the MPB and PIMAC to issue an Annual PPP Plan that provides detailed and practical outline for implementing PPP projects PIMAC has developed PPP Guidelines to deliver transparency and objectivity in PPP project implementation 3

5 Procurement Schemes BTO (Build-Transfer-Operate) Scheme Both solicited and unsolicited projects are eligible Economic infrastructure: roads, ports, environmental facilities and railway projects, etc User-fees, Minimum Revenue Guarantee (MRG) for solicited projects BTL (Build-Transfer-Lease) Scheme The private sector Builds a infrastructure facility, Transfers ownership to the government/local municipalities and get operational rights in return, and Leases the property to the government/local municipalities to get return on investment Only solicited projects are eligible Social infrastructure: school, dormitory, and military housing, etc Government payments (Lease rent +operating costs) Low risk-low return BOT (Build-Operate-Transfer) and BOO (Build-Own-Operate) schemes are also available 4

6 Project Initiative Solicited Projects A solicited project is that the competent authority identifies a project for private investment and announces a RFP to select preferred bidders Unsolicited Projects For an unsolicited project, a private company (initial proposer) submits a project proposal, and then the competent authority examines and designates it as a PPP project 5

7 6 2. Procurement Steps of a Solicited Project

8 Procurement Steps of a Solicited Project Stop No Application for Preliminary Feasibility Study of a Project Designation of Projects for Preliminary Feasibility Study Government Financed Project Conducting Preliminary Feasibility Study No Yes Review of VfM Yes Application for PPP Project Designation Prior Deliberation by the PPP Committee The Head of Central Government Agency The Minister of MPB MPB PIMAC Competent Authority (PIMAC) Competent Authority MPB MPB Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Designation of PPP Project Request for Proposals (RFP) Submission of Project Proposals Tender Evaluation/Selection of Preferred Bidders Negotiation & Contract Award (Designation of Concessionaire) Prior Deliberation by the PPP Committee Approval of Detailed Engineering and Design Plan for Implementation Construction and Operation Competent Authority Private Sector Competent Authority Competent Authority Competent Authority (PIMAC) Potential Concessionaire MPB Concessionaire Competent Authority Concessionaire

9 Prior STEP : Pre-feasibility Study (PFS) PFS is a short and brief evaluation of a project to enhance fiscal efficiency by producing information for budgetary decision as stipulated by the National Finance Act Introduced in 1999 Owned by the MPB and conducted by PIMAC All new large-scale projects with total costs amounting to 50 billion Won ($50 million USD) or more are subject to PFS Before the NF Act, PFS was centered on infrastructure projects PFS has expanded to non-infrastructure (e.g. R&D) projects Local government and PPP projects are also subject to PFS if central government subsidy exceeds 30 billion Won Typical building projects and legally required facilities are exempted from PFS If a solicited PPP project is subject to PFS, the PFS should be conducted before it is designated as a PPP project 8

10 Step 1: Designation of PPP Project Competent Authority Small Project Designate a PPP project at its own discretion Large Project Conduct a feasibility study and report result to PIMAC in addition to VfM test result and basic design documents PIMAC Review feasibility study & VfM test results and draft design documents for large scale project Prior to designating a PPP Project, the competent authority must conduct a feasibility study and VfM test For projects with total project cost of KRW 200 billion or more, the competent authority shall submit results of the feasibility study and VfM test, and draft design documents, and shall request for review to PIMAC 9

11 STEP 2: Request for Proposals (RFP) Competent Authority Negotiate in advance to avoid environmental issue if necessary Formulate and announce the request for proposal for PPP In the RFP, the terms of the following components should be outlined as clearly as possible: The purpose and the detailed scope of the project, and responsibilities of the competent authority and the concessionaire The conditions and terms of implementation for a concessionaire The contents and procedure of subsidy provision Standards for preparing proposals and evaluation 10

12 STEP 3: Submission of Project Proposals Private Sector Prepare proposal and submit it to the competent authority Any party intending to implement a PPP project shall prepare a proposal in accordance with the laws and regulations concerning PPP projects, and submit it to the competent authority Key elements of the project proposal: 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 Expenditure plans and revenue estimations including user fee, etc Contents of supplementary projects, if any Level of government subsidy requested, if any Contents of and grounds for modifying the request for proposal, if any Other matters deemed necessary by the competent authority 11

13 STEP 4 : Tender Evaluation Competent Authority Set the evaluation criteria Examine and evaluate the project proposal Designate preferred bidders Two-stage tender evaluation 1 st Stage: PQ (Pre-Qualification) evaluation 2 nd Stage: Main evaluation (Technical Excellency + Pricing) Tendering process When requested (not mandatory) by the competent authority, PIMAC organizes a evaluation committee randomly chosen from its expert pool Evaluation are carried out in isolated environment for 1~3 days PIMAC staffs manage the evaluation process and representatives of the competent authority may stay in the place as observers The committee writes evaluation report and PIMAC reports the tendering results to the competent authority 12

14 STEP 5 : Negotiation & Contract Award Step 5 Negotiation & Contract Award (Designation of Concessionaire) Competent Authority (PIMAC) Potential Concessionaire Prior Deliberation by the PPP Committee MPB The competent authority shall take efforts to complete the negotiation in a timely manner while maintaining consistency and increasing the effectiveness of negotiations The competent authority shall consult with PIMAC when concluding the concession agreements on projects with a total project cost of KRW 200 billion or more or that require deliberation by the PPP Committee For concession agreements that include central government support, the competent authority must consult the Minister of Ministry of Planning and Budget in advance When negotiations fail to be finalized within the scheduled time period, necessary countermeasures shall be taken such as initiating negotiations with the second preferred bidder, reannouncing the request for proposal, nullifying the designation as a PPP project, etc. 13

15 STEP 6 : Approval of Detailed Engineering and Design Plan for Implementation (DEDPI) Concessionaire Apply for the approval of the DEDPI Competent Authority Notify the concessionaire its decision on the approval of the DEDPI 14

16 STEP 7 : Construction and Operation Concessionaire Submit a construction completion report and obtain confirmation from competent authority upon completion of construction Upon confirmation, operation begins 15

17 Roles of Participants in a Solicited Project PIMAC No End No PSC PFS VfM MPB Yes KRW 50billion or more Yes PFS Designation PPP Candidate PPP Designation RFP Evaluation Competent Authority Apply KRW 50billion or below Negotiation project No VfM (FS) No Yes PPP Designation RFP Approval Private Sector PSC 16 Plan Submit Construction and Operation

18 17 3. Procurement Steps of an Unsolicited Project

19 Step 1 Procurement Steps of an Unsolicited Project Project Preparation & Submission of Proposal Private Sector Competent Authority Step 2 Step 3 Consultation for Review of the Contents of Project Proposal VfM Review of the Project Proposal Submission of Opinion regarding the Proposal Yes No Prior Deliberation by the PPP Committee Request for alternate proposals Competent Authority PIMAC PIMAC Notification not to implement the project MPB Other Proposals Tendered No Third Party Proposals Step 4 Tender Evaluation/ Selection of Preferred Bidders Competent Authority Designation of the Preferred Bidder as Potential Concessionaire Designation of the Proponent as Potential Concessionaire Step 5 Step 6 Step 18 7 Negotiation & Contract Award (Designation of Concessionaire) Prior Deliberation by the PPP Committee Approval of Detailed Engineering and Design Plan for Implementation Construction and Operation Competent Authority (PIMAC) Potential Concessionaire MPB Concessionaire Competent Authority Concessionaire

20 STEP 1 : Project Preparation & Submission of Proposal Private Sector Submit a project proposal to the competent authority The proposal consists of the following components: Results of feasibility study conducted by the proposer itself Total project costs and financing plan Concession period and procurement scheme Level of user fee and expected revenue schedule Operation and maintenance plan and other details for implementation of the project The competent authority shall not accept similar proposal until request for alternate proposal is notified The initial proposer cannot modify the original proposal until the request for alternate proposal unless requested by the competent authority 19

21 Step 2 STEP 2 : Review of VfM Consultation for Review of the Project Proposal VfM Review of the Project Proposal Competent Authority PIMAC PIMAC Submission of Opinion regarding the Proposal To CA & MPB Yes No Notification not to implement the project Prior Deliberation by the PPP Committee Competent Authority PIMAC Make a request to PIMAC for review Review the proposal Conduct VfM test Submit an opinion to MPB 20 Competent Authority Present a review report to MPB and request prior deliberation by the committee

22 STEP 2 (2): VfM test for unsolicited projects VfM test procedure First phase : Feasibility study - Review of cost and demand estimation of initial proposal - Conduct the cost-benefit analysis Second phase : Comparison of PSC (Public Sector Comparator) and PFI (Private Finance Initiative) to determine whether the project should be implemented through PPP scheme Third phase : A PFI implementation alternative is formulated 21

23 STEP 3 : Request for alternate proposals Competent Authority Request for alternate proposal with the contents of project proposal and the bonus points awarded to the initial proposer The competent authority shall announce the outlined contents of the project proposal concerned in the official gazette and at least three daily newspapers in addition to posting them on PIMAC homepage bulletin to allow for the third parties to submit alternate proposals In the event the contents of the project proposal are announced, it shall be recognized as the formulation of a request for proposal as stipulated by the PPP Act Some bonus points (up to ten percent (10%) of the total scores) may be awarded to the initial proposer by the competent authority upon review of the VfM test on the initial proposal 22

24 STEP 4 : Tender Evaluation Step 4 Other Proposals Tendered Evaluation of other Proposals / Selection of Preferred Bidder Designation of the Preferred Bidder as Potential Concessionaire No Third Party Proposals Designation of the Proponent as Potential Concessionaire Competent Authority Competent Authority Review and evaluate proposals to determine the potential concessionaire 23 To promote competition in the situation where some bonus points might be awarded to initial proposer, a fraction of tendering costs (up to 30%) is to be reimbursed to qualified losers in unsolicited project tendering

25 STEP 5-7 of an Unsolicited Project Step 5 Negotiation & Contract Award (Designation of Concessionaire) Prior Deliberation by the PPP Committee Competent Authority (PIMAC) Potential Concessionaire MPB Step 6 Approval of Detailed Engineering and Design Plan for Implementation Concessionaire Competent Authority Step 7 Construction and Operation Concessionaire In Step 5, Step 6 and Step 7, the same procedure shall apply as for solicited projects 24

26 Roles of Participants in an Unsolicited Project PIMAC No End VfM (FS) Yes MPB Request Prior Deliberation by PPP Committee Prior Deliberation by PPP Committee Competent Authority PPI Candidate Notification of alternate proposal Other proposals Evaluation Designation of Preferred Bidder Negotiation Approval Private Sector No other proposals 25 Plan Submit Construction and Operation

27 26 4. PIMAC (Public and Private Infrastructure Investment Management Center] of KDI

28 Organization Chart of PIMAC < 3 Divisions of PIMAC (70 members) and 4 Teams within PPP Division (36 members)> Director Advisory Committee Public Investment Evaluation Division Private Participation in Infrastructure Division Program Evaluation Division PFS Unit 1 PFS Unit 2 FRS Unit PPP Policy Unit BTO Unit BTL Unit PPP Promotion Unit Duties : -Pre-feasibility Studies -Feasibility Re-evaluation Studies -Researches on Public Investment Management Duties : -PPP Annual Plan -PPP Project Evaluation -Support for PPP Project Management -Researches on PPP system Duties : -Program Evaluation -Performance Management 27

29 Duties of PIMAC in PPP System As a statutory organization, PIMAC plays the following roles as stipulated by the PPP Act 1) Researcher Theoretical and policy studies on PPP system Formulation of the Annual PPP Plan 2) Advisor and/or Government Agency in Project Management Development of PPP projects Review and execution of feasibility studies of PPP projects Support for and execution of VfM test Support for formulation of RFP s Assistance in tendering and negotiation Database management 3) PPP Market Promoter Consultation for foreign investors and support for inducing foreign capital to Korean PPP market Development and promotion of education programs on PPP system International cooperation 28

30 Contact Information Website Address Public and Private Infrastructure Investment Management Center Korea Development Institute P.O. Box 113, Cheongnyang, Seoul, KOREA Contact Representative Phone) / Fax)