Title: Valuation of the Minimum Revenue Guarantee in the Urban Railway PPP Project

Languages: English

Type: Document

Published: January 1, 2013

Region: East Asia and Pacific

Country: Global / Non-Specific, Korea, Rep.

Sectors: Transportation

Topics: Financing and Risk Mitigation

Keywords: Rail, Transport, Transport Core


Document Summary:

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.

Document Details:

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

Urban Passenger Transport 

Tracking Number: South Korea_Valuation of MRG in Urban Railway PPP Project_Korean.pdf

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Updated: October 5, 2021