Valuation of the Minimum Revenue Guarantee in the Urban Railway PPP Project
By Kang-Soo Kim, Korea Development Institute (KDI), December 2013 (Korean with English summary).
With the revised Act on Private Participation in Infrastructure, Korea introduced a public-private partnership (PPP) framework that is designed to reduce the traffic forecasting risk by guaranteeing a minimum revenue. Accordingly, large-scale PPP transport projects that have been initiated include the option of the Minimum Revenue Guarantee (MRG). This study aims to calculate the economic value of the MRG within a PPP urban railway project.
The MRG system has been indeed a significant contributor to the promotion of the large-scale Build-Transfer-Operate (BTO) projects, but the system has its own structural problem that the private concessionaire might try to intentionally overestimate the traffic flow.
Related information:
Act on Private Participation in Infrastructure
Tracking Number: South Korea_Valuation of MRG in Urban Railway PPP Project_Korean.pdf
Find more @ Public-Private Partnerships for Transport
