Enhancing Value for Money through PPPs

ADB and KDI (2011) show the results of several value-for-money tests for private financial initiatives from 66 BTO projects and 11 BTL projects during 2005-2012, valued at a combined W891 billion ($815 million). Table 8.6 shows value-for-money tests for 72 PPP projects during 2005-2012, finding that 48% of the projects provided value for money-a total W2.64 trillion ($2.42 billion).2 Table 8.7 shows value for money by sector, with railways providing by far the most value. Table 8.8 gives the estimated value for money for private financial initiative projects.

Table 8.6: Value-for-Money Results for PPP Projects in the Republic of Korea, 2005-2012

Year

Number of Tests (BTL and BTO)

Number of Projects with Positive Value for Money

Value for Money (won trillion)

2005

15

5

0.37

2006

20

15

5.21

2007

18

10

4.42

2008

35

19

7.37

2009

29

14

7.42

2010

18

4

0.92

2011

11

2

0.13

2012

4

3

0.59

Total

150

72

26.44

BTL = build-transfer-lease, BTO = build-transfer-operate, PPP = public-private partnership. Source: Korea Development Institute. 2014. Comprehensive Evaluation on Public-Private Partnership Projects in Korea. Sejong.

Table 8.7: Value for Money by Sector in the Republic of Korea

Sector

Number of Tests (BTL and BTO)

Number of Projects with Positive Value for Money

Value for Money Amount (won trillion)

Rail

22

11

13.26

Road

52

31

10.45

Environment

52

21

1.48

Culture

11

4

0.54

Port

2

1

0.53

Others

11

4

0.18

Total

150

72

26.44

BTL = build-transfer-lease, BTO = build-transfer-operate.

Source: Korea Development Institute. 2014. Comprehensive Evaluation on Public-Private Partnership Projects in Korea. Sejong.

Table 8.8: Estimated Value for Money for PPPs in the Republic of Korea

Item

Number of Projects

Value for Money Amount (won trillion)

Ex ante VFM for PFI

BTO

66

0.89

BTL

30

0.09

Total

96

0.99

Ex ante (additional) VFM for PFI alternative

BTO

66

1.55

Ex post (additional) VFM

BTO

11

0.14

for PFI

BTL

84

0.17

Total

95

0.31

BTL = build-transfer-lease, BTO = build-transfer-operate, PFI = private finance initiative, PPP = public-private partnership, VFM = value for money.

Source: Asian Development Bank and Korea Development Institute. 2011. Case Studies from Korea on Public-Private Partnership Infrastructure Project. Manila and Seoul.