민간투자 공공개발사업의 프로젝트 금융 도입에 관한 연구 = A Study on the Incorporation of Project Finance into Public Development Projects and Private Investment

국문 초록 (Abstract)

영문초록:Private investment in public projects is no longer a strange concept as more and more countries, including Korea, are adopting such creative strategy to relieve national(federal) governments of fiscal burden and draw on creative energy and efficient practice from the private sector.The incorporation of project finance into a private capital project diversifies the risk that falls on both central and local government and spread it around the private sector, mitigating the fiscal pressure on the public sector and injecting an innovative spirit and efficiency through the combination of the best practices in financial management and cost-saving approach in maintenance and operation of capital investment.Though project finance technique is especially essential to large projects, as compared to general commercial loans, it entails careful consideration that would be required in any long-term and large financial commitment with various risks. It is important therefore that a financial institution should shy away from making an individual financial commitment and undertake a comprehensive assessment on economic and technological feasibility of the projects by means of project finance before forming a syndicate with other financial institutions to share the financing cost. During 1990s it became evident that the majority of SOC projects were based upon BOT (Build-Operate-Transfer) approach, which revolves around a single design-build-operate contract for the entire project with financing secured by the public agency, under which the contractor provides long-term operation and/or maintenance services, with the public sector sponsor retaining the operating revenue risk and any surplus operating revenue. Another new approach that took its shape in 1990s was PFI approach where central/local government plays their role as clients and select a qualified supplier, who in turn takes responsibilities for designing, building, financing, and operating public facilities and services. Despite the seemingly similar nature of the two, there is a subtle difference between BOT and PFI. Under BOT the activities that contractors engage in are limited to managing and operating SOCs before the public sector sponsor retains surplus operating revenue, while PFI allows the contractors to reap income through rents and service charges from government and thereby guarantees an appropriate rate of return that private capital investors demand. PFI formulation, however, should include systematic requirements that are carefully tailored and designed to allow taxpayers to gain the most optimal value for money. Project finance has become a popular choice for construction and maintenance of SOCs in developing and developed nations all alike, with the legislative framework set underway that codifies a unified set of international standard that cut across national boundaries. Thanks to the Private Investment Act, effective since April 1999, the funding mechanism for public projects widened dramatically, ranging from a conventional means such as bank loans to credit guarantees on SOCs and SOC bonds to Infra Fund that exclusively targets SOC projects, all of which indicates that Korean investment market is fully in line with the polices and funding mechanism that are available internationally. Due to the new legislature enacted in 1998, asset backed securitization, emerging as yet another effective funding mechanism, should also play a significant role in project finance, depending on structural similarities and need for new financing resources.These new trends in public-private partnership serve an indicative of how government should shift the direction and creative a new paradigm for sagging private capital investment projects. Since BOTs currently places excessive emphasis on profits instead of on the quality of government services and environmental consequences, it is probably just about time to contemplate the introduction of PFI, which many consider as “an advanced version of BOT.” The shortcoming of BOT is not the only factor that calls for the need for PFI. Once sound financing is secured, PFIs turn out to be more profitable and remain more in tune with the direction of current government policy that focuses on the innovation of public finance. Before PFI is fully integrated with the current government scheme, there are a few important issues that need to be resolved as a preliminary step.First, there should be a clean break from a conventional belief that every aspect of government services should fall within the spheres of central/local government and to more innovative approach that actively promotes an efficient and effective public-private partnership that runs parallel with ever-changing dynamics of today’s world. Second, there must be a reasonable measure that addresses the job security issues for public servants that could inherently arise from the process of such partnership. It is also important that the government eliminates cumbersome regulations and administrative logjam that could get in the way of relegating authorities and responsibilities to private partners. Many have expressed the idea that now that the effect of financial crisis is receding, the government should encourage the private sector to have more meaningful role and initiatives in fostering the growth of the national economy. PFI projects perfectly fit this idea and should serve as a catalyst for the innovation of the public sector that dramatically enhances private capital investment projects, owing in large part to the familiarity of many foreign investors with BOT and PFI, to the accountability for the risks that both public authorities and private contractors must undertake, and to impartial and transparent contracting procedures. Once BOT and PFI methodologies are modified and tailored to meet the country-specific demand in Korea, there is no doubt that they will go a long way toward revitalizing the SOC projects that present themselves as enormously attractive investment opportunities for the private sector