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ENFORCEMENT DECREE OF THE ACT ON PRIVATE PARTICIPATION IN INFRASTRUCTURE

ENFORCEMENT DECREE OF THE ACT ON PRIVATE PARTICIPATION IN INFRASTRUCTURE


INTRODUCTION

Details of Enactment and Amendment

- Enactment: This Decree was enacted by the Presidential Decree No. 14419, on November 30, 1994, for the purpose of prescribing the matters delegated by the Act on Private Participation in Infrastructure and those necessary for the enforcement therof.
- Amendment: This Decree has arrived at its present form as a result of being wholly amended 14 times, including the latest amendment made on June 23, 2005. Its title was changed to the Enforcement Decree of the Act on Private Participation in Social Overhead Capital following the whole amendment made on March 31, 1999 and to the Enforcement Decree of the Act on Private Participation in Infrastructure on March 8, 2005.


Main Contents

- The basic program for private investment project shall be set up and amended after consultation between the Minister of Planning and Budget and head of relevant central administrative agency, and deliberation of private investment project deliberation committee, and where there are matters that the head of relevant central administrative agency intends to include in the basic program for private investment project, the intent shall be informed to the Minister of Planning and Budget by October 31 of every year.
- Where the private sector intends to propose projects that can be promoted by means of private investment method, it shall submit a proposal with the contents of feasibility study of the proposed project, contents of proposed project, contents of the overall business site and plan of raising fund to the competent administrative agency. Where the competent administrative agency finds the submitted proposal has the formal requirements and complies with Acts and subordinate statutes, and policy of the competent administrative agency, it shall hear the opinion of the public investment management center for infrastructure facilities and decide whether to promote as a private investment project, and inform the proponent in writing. Where the proposed project has been informed to promote as a private investment project, gist of the proposed project shall be announced in public and make possible proposal by a third person and select person to negotiate among proponents, however, if there is no additional proposal during the period of time set in the announcement, it shall designate the proponent concerned as the person to negotiate with.
- Where the project operator intends to get approval and approval of change of the action plan, he shall submit to the competent administrative agency an application for approval of action plan with the location and area of the intended project site, method of execution and technological matters of the construction, construction plan by progress, etc., and the competent administrative agency shall inform the project operator whether the action plan is approved within 3 months after receipt of the application for approval of action plan.




ENFORCEMENT DECREE OF THE ACT ON PRIVATE PARTICIPATION IN INFRASTRUCTURE

Wholly Amended by Presidential Decree No. 16220, Mar. 31, 1999
Amended by Presidential Decree No. 16326, May 24, 1999
Presidential Decree No. 17093, Dec. 30, 2000
Presidential Decree No. 17854, Dec. 30, 2002
Presidential Decree No. 17928, Feb. 24, 2003
Presidential Decree No. 18736, Mar. 8, 2005
Presidential Decree No. 18873, Jun. 23, 2005



CHAPTER I GENERAL PROVISIONS


Article 1 (Purpose)
The purpose of this Decree is to regulate matters delegated by the Act on Private Participation in Infrastructure and those necessary for the enforcement thereof.

Article 2 (Scope of Financial Institutions)
The term person determined by the Presidential Decree in subparagraph 16 (k) of Article 2 of the Act on Private Participation in Infrastructure (hereinafter referred to as the Act ) means any of the following subparagraphs:
1.Specialized credit financial businesses under the Specialized Credit Financial Business Act; and
2.The Infrastructure Fund established under Article 41 of the Act.

Article 3 (Composition of Private Investment Project Committee)
(1)The ex officio members of the Private Investment Project Committee (hereinafter referred to as the Committee ) as referred to in Article 6 (1) of the Act shall be the Vice Minister of Finance and Economy, Vice Minister of Education and Human Resources Development, Vice Minister of National Defense, Vice Minister of Government Administration and Home Affairs, Vice Minister of Science and Technology, Vice Minister of Culture and Tourism, Vice Minister of Agriculture and Forestry, Vice Minister of Commerce, Industry and Energy, Vice Minister of Information and Communication, Vice Minister of Health and Welfare, Vice Minister of Environment, Vice Minister of Gender Equality and Family, Vice Minister of Construction and Transportation, and Vice Minister of Maritime Affairs and Fisheries.
(2)The term of the commissioned members shall be two years, and the members may be reappointed for only one more term.
(3)The Committee shall have a secretary who shall be nominated by the chairman of the Committee (hereinafter referred to as the chairman ) among public officials of Class or higher in the Ministry of Planning and Budget.

Article 4 (Operation of Committee)
(1)The chairman shall represent the Committee and manage the overall affairs of the Committee.
(2)When the chairman is unable to perform his duty for an inevitable reason, a member of the Committee appointed in advance by the chairman shall perform his duties on his behalf.
(3)The chairman shall convene and preside over the meetings of the Committee.
(4)The meeting of the Committee shall convene with the attendance of a majority of all members, and decisions shall be made with the consent of a majority of the members present. In this case, the meeting of the Committee may be held by means of a remote video meeting for which the members attend different places equipped with the devices of sending and receiving video and audio signals in real time, and where there is no time to convene the Committee or otherwise it is deemed especially necessary by the chairman of the Committee, the meeting may be replaced with a written resolution.
(5)The Committee may request the attendance of experts in relevant fields or the authorities and organizations concerned to submit necessary documents and give an advice, if necessary for the work of the Committee.
(6)Allowances and travelling expenses may be paid, within the limit of the budget, to the commissioned members and experts who attend the Committee meetings.
(7)Matters necessary for the management of the Committee other than those provided for in this Decree shall be determined by the chairman through a resolution of the Committee.
(8)The provisions of paragraphs (1) through (6) shall apply mutatis mutandis to the operation of the deliberation committee of the competent authority under Article 6 (4) of the Act.
(9)Matters necessary for the composition, operation, and procedures of the deliberation committee of the competent authority under Article 6 (4) of the Act other than those prescribed in this Decree shall be determined and announced by the competent authority: Provided, That if the competent authority is the head of a local government, such matters shall be determined by the Municipal Ordinance of the local government.



CHAPTER II INFRASTRUCTURE PROJECTS


SECTION 1 BasicPlanforPrivateParticipationin Infrastructure


Article 5 (Procedures for Formulation of Basic Plan)
(1)The basic plan for private participation in infrastructure under Article 7 (1) of the Act shall be formulated by the Minister of Planning and Budget through deliberation by the Committee in consultation with the head of the related administrative agency. The same shall apply to the modification thereto (excluding the modification of such insignificant matters as determined by the Committee).
(2)Deleted.
(3)The head of the related administrative agency shall notify the Minister of Planning and Budget of any matters which he intends to include in the basic plan for private participation in infrastructure by October 31 each year.

Article 6 (Solicited Projects to be Deliberated by Committee)
The term solicited projects of the scale as determined by the Presidential Decree or larger in Article 8-2 (2) of the Act means infrastructure projects which require a total project cost (referring to the total project cost calculated under Article 22 (1); hereinafter the same shall apply) of 200 billion won or more.

Article 7 (Implementation Process for Projects Proposed by Private Sector)
(1)A project proposal containing each of the following subparagraphs shall be submitted to the competent authority when a party in the private sector intends to propose a private investment project under Article 9 (1) of the Act:
1.Outcome of the feasibility study of the proposed project;
2.Details of the project proposal;
3.Details of total project cost necessary and finance procurement plan;
4.Details regarding determination of periods for free use, ownership and profit-making operation of the completed facilities (limited to revertible facilities);
5.Facility management and operation plan;
6.Income and expenditure plan including such items as the user fee;
7.Details of and reasons for the implementation of supplementary facilities, if any; and
8.Other matters which the proposer deems necessary for the implementation of the project concerned.
(2) The competent authority may, in case where the entered items on the project proposal submitted under paragraph (1) are omitted or their contents are obscure, request the proposer to supplement them within a specified period.
(3)Where the competent authority deems that the project proposal submitted under paragraph (1) meets the formal requisites and coincides with Acts and subordinate statutes and the policies of the competent authority, it shall ask the Director of the Public and Private Infrastructure Investment Management Center (hereinafter referred to as the PIMAC ) under Article 23 (1) of the Act to review the contents of the project proposal before deciding upon whether the proposed project is to be implemented as a private investment project. In this case, the competent authority shall ask the review of the contents within 15 days from the date of the receipt of the project proposal, except in the case of request for supplements under paragraph (2) or in other inevitable circumstances, and if it is impossible to ask the review of the contents within the said period, the competent authority shall notify the proposer of the reasons therefor and the scheduled date of asking the review.
(4) The Director of the PIMAC may, in case where the related data required for the review on the contents of a project proposal asked under paragraph (3) are incomplete, request the competent authority to supplement them with fixing a specified period.
(5)With respect to the proposed project, among those requested for review under paragraph (3), a total project cost of which is 300 billion won or more, the Director of the PIMAC shall conduct the investigation of propriety thereof such as the appropriateness of estimated facility use volume, the analysis of costs and benefits compared with the implementation thereof as a financial project, etc.
(6)The Director of the PIMAC shall submit his opinion regarding the project proposal to the competent authority and the Minister of Planning and Budget within 60 days after the receipt of the request for review of the proposal from the competent agency, except in the case of the investigation of propriety thereof under paragraph (5) or in other inevitable circumstances, and if it is deemed that the project is appropriate for being implemented as a private investment project, he may present different opinions from those stated in the original project proposal about various conditions on the implementation of the project such as optimum project cost, user fee, profit rate, etc.
(7)The competent authority shall notify the proposer in writing within 60 days after the receipt of the opinion of the Director of the PIMAC on the contents of the project proposal such as whether the proposed project will be implemented as a private investment project, taking into consideration the opinion of the Director of the PIMAC, except in special cases, and if the notification can not be made within the said period, it shall notify the proposer of the reasons therefor and the scheduled date of the notification. In this case, if it intends to implement the proposed project falling under any subparagraph of Article 8 as the private investment project, it shall submit the matter to deliberation by the Committee regarding the proposed contents, etc.
(8)Where the competent authority has notified the proposer of the plan to implement the project proposed under paragraph (7) as a private investment project, it shall announce the details of the concerned proposal in the Official Gazette and not less than three daily newspapers, as well as on its Internet homepage, so that a proposal by a third person other than the original proposer shall be possible. In this case, the competent authority may announce different details from those of the concerned proposal about various conditions on the implementation of the project such as optimum project cost, user fee, profit rate, etc., and the original proposer may submit a modified proposal within the time limit set in the announcement.
(9)If a third party submits a proposal which meets the conditions under paragraph (1) within the period specified in the announcement under paragraph (8), the competent authority shall review and assess the proposal of the original proposer and that of the third party in accordance with the method in Article 13 to determine a potential concessionaire from among proposers. In this case, the competent authority may, in reviewing and assessing the proposal, give the original proposer preferential treatment within the limit set in the following subparagraphs and then shall designate two or more potential concessionaires according to the order of priority by the results of project proposal assessment unless there exists any special reason:
1.Where the original proposer does not submit any modified proposal: 10% of his total assessment points; and
2.Where the competent authority announces different details from those of the proposal made by the original proposer under the latter part of paragraph (8) and accordingly the original proposer submits a modified proposal: 5% of his total assessment points.
(10)If there is no other proposal within the period specified in the announcement under paragraph (8), the concerned proposer shall be designated as the potential concessionaire.
(11)The competent authority shall designate the concessionaire by concluding a concession agreement with the potential concessionaire designated under paragraphs (9) and (10) which includes the conditions, etc. for project implementation such as the total project cost. In this case, the concessionaire for the projects falling under any subparagraph of Article 14 shall be designated through deliberation by the Committee.
(12)The competent authority shall, with respect to the project proposal submitted under paragraph (1), not open to the public the detailed matters of such proposal contrary to the proposer s intent from the date of acceptance of relevant project proposal to the time prior to the public notice of the contents of such proposal under paragraph (8), and shall not include in the contents of public notice, at the time of such notice under paragraph (8), any matters which infringe on the proposer s interests, except for the matters necessary for the proposal by the third party.


SECTION 2 ImplementationofInfrastructure Projects


Article 8 (Scope of Instruction for Proposal for Private Participation in Infrastructure Projects Requiring Deliberation by Committee)
The term instruction for proposal for private participation in infrastructure projects which meet the requirements as prescribed by the Presidential Decree in subparagraph 3 of Article 5 of the Act and instruction for proposal which meets the requirements specified in the Presidential Decree in the main sentence of Article 10 (2) of the Act shall mean the instruction for proposal for private participation in infrastructure projects (hereinafter referred to as instruction for proposal ) which fall under any one of the following subparagraphs:
1.Infrastructure projects requiring total project cost of not less than two hundred billion won;
2.Projects the competent authorities of which are two or more, or those which are conducted over two or more special metropolitan cities, metropolitan cities, or provinces: Provided, That the same shall not apply to projects which have two or more competent authorities and an agreement between the authorities has been reached with regard to jurisdiction over the project; and
3.Other projects for which the competent authority or the chairman acknowledges that deliberation of the Committee is necessary.

Article 9 (Insignificant Modification of Instruction for Proposal)
The term insignificant modifications as determined by the Presidential Decree in the proviso of Article 10 (2) of the Act refers to any one of the following subparagraphs:
1.Changes in the total project cost of the infrastructure project concerned within the scope of 30 percent of the total project cost; and
2.Other modifications deemed insignificant by the Committee.

Article 10 (Public Announcement of Instruction for Proposal)
Where the competent authority formulates or modifies the instruction for proposal under Article 10 (3) of the Act, it shall announce the details in the Official Gazette and at least three daily newspapers: Provided, That the same shall not apply where it is deemed that the modification was made under the provisions of Article 11 (3).

Article 10-2 (Solicited Projects Whose Basic Design Drawings, etc. should be Offered for Inspection)
The term such solicited projects as prescribed by the Presidential Decree in Article 10 (5) of the Act refers to other infrastructure projects than those in which the competent authority has the persons intending to perform such infrastructure projects or the persons designated as their concessionaires make the basic design drawings to reduce the construction cost, to curtail the period of construction, or to introduce new technology or construction method.
[This Article Wholly Amended by Presidential Decree No. 18736, Mar. 8, 2005]

Article 11 (Proposal for Modification of Instruction for Proposal by Private Sector)
(1)Where a party in the private sector proposes an amendment of the instruction for proposal under Article 12 of the Act, it shall include an explanation of, the grounds for, and expected effects of such changes in the project proposal pursuant to Article 13 of the Act and submit it to the competent authority.
(2)The competent authority shall make written notification of the result of its review of the proposal for amendment under paragraph (1) within three months from the date of its receipt. In this case, the proposal for amendment of the instruction for proposal formulated and notified through the deliberation of the Committee shall be adopted through a prior consultation with the Minister of Planning and Budget.
(3)When the competent authority adopts the proposal for amendment pursuant to paragraph (2), the instruction for proposal shall be deemed to be amended according to the specifications of the adopted proposal for amendment.
(4)When the competent authority adopts the proposal for amendment under paragraph (2), the competent authority may give a maximum of five percent bonus points to the relevant proposer at the time of review and assessment of the project proposal under Article 13 (2) of the Act.

Article 12 (Submission of Project Proposal)
Any party that intends to be designated as a concessionaire under the provisons of Article 13 (1) of the Act shall submit a project proposal to the competent authority containing the following matters, along with the documents as determined by the authority:
1.Contents of the project proposal (including the basic design);
2.Details of the total project cost and funding plan;
3.Grounds for estimated time of free use, ownership, and profit-making operation of the completed facilities (limited to revertible facilities);
4.Management and operation plan of the facilities;
5.Revenue projections including user fee and expenditure plans;
6.Contents of and grounds for any supplementary project, if any;
7.Contents of and grounds for request for a government subsidy, if any;
8.Contents of and grounds for any amendments to the instruction for proposal, if any; and
9.Other matters which the competent authority deems necessary.

Article 13 (Examination and Evaluation of Project Proposal)
(1)When the competent authority examines and evaluates the submitted project proposal pursuant to Article 13 (2) of the Act, it shall focus on the following matters:
1.Matters regarding the composition of the parties implementing the project, including the form of composition of the concessionaires and the relationship between the project investor and the concessionaire;
2.Matters regarding the feasibility of the project, including the total investment cost, the period, location, and content of construction;
3.Financing plan including equity and loan procurement capacity;
4.Matters regarding the economic feasibility of the project, including the user fee, volume of use, period of free use, duration of ownership or profit-making operation, discount rate, and scale of any supplementary project;
5.Land purchase plan, including details such as the area of land already acquired and the feasibility of the purchase plan;
6.Matters regarding the applicable technology for construction, including details such as whether the minimum technology necessary has been secured and whether high technology shall be used;
7.Matters regarding management ability, including the reasonability of any repair and management plan;
8.Matters regarding the service to the public interest such as the provision of convenience to the facility users; and
9.Other matters which the competent authority deems necessary.
(2)The competent authority may adjust the matters stipulated under paragraph (1) according to the special needs of the project concerned and give more weight to some criteria than others.
(3)In evaluating the project proposal under paragraphs (1) and (2), the competent authority shall establish and operate a project evaluation task force, and a person designated by the Director of the PIMAC may participate in its deliberations.
(4) Unless there exists any special reason, the competent authority shall designate two or more potential concessionaires according to the order of priority by the results of project proposal assessment in designating them under Article 13 (2) of the Act.

Article 14 (Designation of Concessionaire Requiring Deliberation of Committee)
The term designation of a concessionaire who meets the requirements determined by Presidential Decree in the latter sentence of Article 13 (3) of the Act refers to any one of the following subparagraphs:
1.Designation of the concessionaire of an infrastructure project, the total project cost of which is not less than 500 billion won;
2.Designation of the concessionaire of a project for which the total project cost required for the supplementary business of which is not less than 300 billion won; and
3.Designation of the concessionaire of a project, the deliberation of which is considered necessary by the competent authority or the chairman.

Article 15 (Application Period for Approval of Detailed Engineering and Design Plan for Implementation)
The term within the period specified by the Presidential Decree in the main sentence of Article 13 (5) of the Act means within one year, unless otherwise specified by the competent authority.

Article 16 (Approval of Detailed Engineering and Design Plan for Implementation)
(1)The concessionaire of a project seeking to obtain approval for the detailed engineering and design plan for implementation of the project (including approval for any modification thereto) under Article 15 (1) of the Act shall submit to the competent authority an application for approval of the plan, including the following details:
1.Location and total area of the project site;
2.Method of construction and technical details of the project;
3.Implementation plan by work progress (in case of construction conducted by sections or stages, this refers to the implementation plan by stage);
4.Plan for acquisition and use of land;
5.The detailed engineering and design plan for implementation of or the contents of a supplementary project, if any; and
6.Other matters which the competent authority deems necessary.
(2)In applying for approval of the detailed engineering and design plan for implementation pursuant to paragraph (1), the following materials shall be submitted:
1.A location map;
2.A district map based on cadastral map;
3.Plans and detailed design documents (in case of construction conducted by sections or stages, this refers to the detailed design documents by stages);
4.Construction specifications and documents providing for the grounds for construction costs and financing plan;
5.Documents on the purchase of and compensation for land, buildings, and other possessions in the construction site, and documents concerning the resettlement of residents;
6.Plan for free use of public facilities and lands;
7.Documents containing the names and addresses of the owners of land, buildings, or rights to be used or expropriated, and of the related party under subparagraph 5 of Article 2 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor;
8.Documents containing the location, lot number, classification, size, and details of rights other than ownership of buildings and land to be used or expropriated;
9.Environmental impact assessment (limited to a project selected for environmental impact assessment under Article 2 (3) and the attached Table 1 of the Enforcement Decree of the Act on Assessment of Impacts of Works on Environment, Traffic, Disasters, etc.);
10.Traffic impact assessment and certificate of examination (limited to a project selected for traffic impact assessment under Article 2 (3) and the attached Table 1 of the Enforcement Decree of the Act on Assessment of Impacts of Works on Environment, Traffic, Disasters, etc.);
11.Plan for use of energy (limited to projects selected under Article 6 and the attached Table 1 of the Enforcement Decree of the Energy Use Rationalization Act); and
12.Other matters which the competent authority deems necessary.
(3)The competent authority shall notify the concessionaire in writing of its decision on whether to approve the detailed engineering and design plan for implementation of the project within three months from the date of receipt of the application for approval which was submitted under paragraph (1), except in cases under special circumstances, and if the decision may not be made within the said period, it shall notify the concessionaire in writing of the reasons therefor and the scheduled date of the decision.

Article 17 (Insignificant Modification of Detailed Engineering and Design Plan for Implementation)
(1)The term insignificant changes as determined by the Presidential Decree in the proviso of Article 15 (1) of the Act means any of the following subparagraphs:
1.A modification of the project area within the scope of 5 percent (limited to where the total project cost is not affected by the change in the project area);
2.A modification of the duration of the project within the scope of one year (limited to where such duration does not exceed the construction period determined in the concession agreement); and
3.A modification of the location of any insignificant facility or equipment (limited to where such modification will not affect the total project cost).
(2)In case of modifications falling under any subparagraph of paragraph (1), the concessionaire shall notify the competent authority in writing of the details of the modification.

Article 18 (Entrustment of Tasks such as Land Purchase)
The concessionaire of the project seeking to entrust the task of land purchase, compensation for loss, resettlement of local residents, and other comparable matters to the competent authority or the head of the concerned local government according to Article 20 (3) of the Act shall enter into an agreement with such authority or the head of the relevant local government stating in detail the contents, terms, and fees for the performance of such task.

Article 19 (Confirmation of Construction Completion)
The party seeking to obtain confirmation of construction completion of the project according to Article 22 (1) of the Act shall submit to the competent authority a report on construction completion required by the competent authority along with the documents stating matters falling under each of the following subparagraphs:
1.Construction completion report (including final plans and photographs);
2.Survey report issued by mayor, county magistrate, or ward head;
3.Plans of lands and facilities before and after construction completion;
4.Comparison charts of lands and facilities before and after construction completion; and
5.Other documents stating such details as required for the confirmation of construction completion.

Article 20 (Role of PIMAC)
(1)The PIMAC shall conduct the following tasks:
1.Support for work relating to the formulation of the basic plan for private participation in infrastructure under Article 7 (1) of the Act;
2.Support for work regarding the formulation of the instruction for proposal under Article 10 (1) of the Act;
3.Support for work regarding the designation of the concessionaire such as the review, assessment on the project proposal, and conclusion of the concession agreement under Article 13 (2) and (3) of the Act;
4.Review and assessment of the project proposal by a party in the private sector under the provisions of Article 7 (2) through (7);
5.Vicarious work of various applications for such matters as the approval and permission regarding private investment projects;
6.Support services for foreign private investors such as investment consultation and other activities to induce foreign investment in private investment projects;
7.Review of potential private investment projects and feasibility studies thereof;
8.Development and operation of education programs related to the implementation of private investment projects;
9.Improvement of private investment systems and research of related fields;
10.Support for work related to finding potential private investment projects; and
11.Other work related to the implementation of private investment projects.
(2)The Director of the PIMAC may seek service from an outside professional service agency when necessary for duties provided for in paragraph (1) 7.

Article 21 (Organization, etc. of PIMAC)
(1)The Director of the PIMAC shall be appointed by the President of the Korea Development Institute from among experts in a field related to public and private infrastructure investment management.
(2)The Government may cover the costs necessary for the management of the PIMAC within the budget allocated.
(3) The Director of the PIMAC shall submit a report on the results of its operation to the Minister of Planning and Budget every year.
(4) The President of the Korea Development Institute shall establish regulations in relation to the organization, the standards of business conduct, etc. of the PIMAC, other than those stipulated herein, after prior consultations with the Minister of Planning and Budget.
[This Article Wholly Amended by Presidential Decree No. 18736, Mar. 8, 2005]


SECTION 3 ManagementandOperationof Infrastructure


Article 22 (Assessment of Total Project Cost)
(1)The total project costs pursuant to Articles 13 (3) and 25 (3) of the Act refer to the costs for the establishment, expansion, and reformation of infrastructure revertible to the State or a local government, including the following costs:
1.Cost of survey: Cost for survey on the implementation of the project (based on the pricing standards for engineering projects under Article 10 of the Engineering Technology Promotion Act);
2.Design cost: Cost of design of the project (based on the pricing standards for engineering projects under Article 10 of the Engineering Technology Promotion Act or the pricing standards under Article 19-3 of the Certified Architects Act);
3.Construction cost: Sum of material cost, labor cost, general expenses, management cost and profits for the implementation of the project (based on the estimated pricing standards, government standard pumsem and unit price (this refers to the price announced by the Government, if any) under Article 9 of the Enforcement Decree of the Act on Contract to Which the State is a Party);
4.Compensation cost: Cost for purchase of lands (including cost for purchase of buildings and trees), resettlement of residents, and compensation for goodwill, fishing and mining rights for the implementation of the project;
5.Incidental cost: All costs including cost for feasibility study, environmental impact assessment and supervision of the implementation of the project;
6.Cost for operation of equipment: Cost for materials and equipment invested for the first time for operation of facilities;
7.Taxes and public utility rates: Taxes including acquisition tax, registration tax, and VAT on the implementation, completion, registration of the project and transfer of ownership, and others levied by the Acts; and
8.Reserves for operation: Necessary expenses for operation of facilities such as cost for establishing a private investment project corporation and cost of starting a project.
(2)The period of free use, ownership, and profit-making operation under Article 25 (1) and (2) of the Act shall be determined within the range of the total project cost based on paragraph (1), taking into consideration the benefits obtained during such a period, the estimated net profit obtained from any supplementary project, and effects of financial support under Article 37.
(3)The total project cost in the concession agreement concluded under Article 13 (3) of the Act shall not be amended except for the following reasons:
1.Adjustment of total project cost as a result of changes in construction costs, etc. which markedly exceed or fall short of the rate of price fluctuations during the construction period; and
2.Adjustment of total project cost resulting from inevitable causes determined by the concession agreement.

Article 23 (User Fee)
(1)The user fee under the provisions of Article 25 (4) of the Act shall be determined in the concession agreement, taking into consideration the total project cost, appropriate profit ratio, period of free use, possession, and profit-making of the infrastructure project.
(2)When the concessionaire intends to collect the user fee under paragraph (1) from the user of the facility concerned, he shall submit to the competent authority the following documents sixty days before the period of collection of user fees: Provided, That where it is intended to collect rental fees from the State or a local government with respect to a facility which is concerned with the project implemented in such a manner as provided for in subparagraph 2 of Article 4 of the Act, the same shall not apply:
1.Method of use and the rate of user fees;
2.Basic materials for the calculation of user fees;
3.Method of collection of user fees;
4.Reduction and exemption of user fees or extra charges and the parties to which they shall apply;
5.Level of user fees for similar facilities; and
6.Other necessary matters with regard to user fees.
(3)The user fee determined under the provisions of paragraph (1) may be adjusted by the methods and procedures outlined in the concession agreement for causes as determined by the concession agreement, such as price fluctuation.

Article 24 (Registration of Infrastructure Management and Operation Rights)
The Decree on Registration of Port Facilities Management Right shall apply mutatis mutandis with regard to the registration under the provisions of Articles 26 (2) and 28 (1) of the Act.

Article 25 (Management and Maintenance of Facilities)
(1)The competent authority may establish and apply standards for the management and maintenance of the facility under subparagraphs 1 through 3 of Article 4 of the Act during the period of free use, ownership, and profit making.
(2)The concessionaire shall submit management and maintenance plans under paragraph (1) to the competent authority under the terms as determined by the concession agreement.

Article 26 (Change of Facility Use)
(1)The term such use as prescribed by the Presidential Decree in the proviso of Article 29 (1) of the Act means where the competent authority recognizes that public use of the facility concerned is absolutely necessary for the public interest, and the objective of the project can not be achieved by any other way than to change the use of the facilities: Provided, That the change of use of facilities of a project falling under one of any subparagraphs of Article 14, shall undergo deliberation of the Committee.
(2)When the competent authority compensates a concessionaire for any loss incurred under the provisions of Article 29 (2) of the Act, the following losses shall be compensated for through negotiation with the concessionaire:
1.Loss from failure in recovering the total project cost due to the change of the use of facilities, measured at the time of such change; and
2.Other losses incurred in relation to the change of the use of facilities.


SECTION 4 Infrastructure Credit Guarantee Fund


Article 27 (Operation Standard of Management Institution)
The Credit Guarantee Fund under Article 30 (2) of the Act (hereinafter referred to as the management institution ) shall establish a standard for its operation to promote efficiency in the management of the Fund, and submit it to the Minister of Planning and Budget.

Article 28 (Management of Fund)
The term other purposes as determined by the Presidential Decree in subparagraph 5 of Article 32 of the Act means any one of the following purposes:
1.Deposit in financial institutions;
2.Purchase of bonds under Article 2 (1) 1 through 3 of the Securities and Exchange Act, or bonds guaranteed by the State or any financial institution;
3.Underwriting or purchase of stocks (including investment certificates), debentures, or other securities as deemed by the Minister of Planning and Budget to be necessary; and
4. Other purposes which the Minister of Planning and Budget deems necessary for the execution of private investment projects.

Article 29 (Limit on Guarantee)
(1)The ceiling on credit guarantee under the provisions of Article 34 (3) of the Act shall be the amount equivalent to twenty times the sum of the reserves under Article 33 (5) of the Act and the capital investment under Article 31 (1) 1 and 2 of the Act.
(2)The maximum amount of credit guarantee which the management institution may provide the concessionaire, who falls under the same corporation, on the Fund s account under the provisions of Article 34 (4) of the Act shall be 100 billion won: Provided, That if it is deemed inevitable, the head of the management institution may provide such guarantee up to 200 billion won.

Article 30 (Guarantee Fee)
(1)The guarantee fee under Article 36 (1) of the Act shall be determined by the management institution within the scope of 15/1000 per annum on the amount guaranteed.
(2)If the concessionaire fails to perform his guarantee obligation within the time given, the management institution may collect guarantee fee from the concessionaire who received credit guarantee within the scope of 20/1000 per annum on the portion of the amount unpaid, notwithstanding the provisions of paragraph (1).

Article 31 (Claim for Performance of Guarantee Obligation)
The term if the cause as prescribed by the Presidential Decree takes place in Article 38 (1) of the Act means:
1.If six months have passed since the concessionaire, whose pecuniary obligation had been guaranteed under Article 34 (1) of the Act, failed to perform his obligation within the time given (including where the benefit of time was lost); or
2.If the concessionaire, whose private infrastructure bond was guaranteed under Article 34 (1) of the Act, has failed to repay the principal or interest on the bond within the time given.
[This Article Wholly Amended by Presidential Decree No. 17928, Feb. 24, 2003]

Article 32 (Scope of Subordinate Debt)
The term subordinate debts as determined by the Presidential Decree in Article 38 (2) of the Act means the total sum of the amounts in the following subparagraphs:
1.The amount of interest which is calculated by the interest rate applied during the period contracted for the principal obligation, until the management institution performs the guarantee obligation after the date for performance of principal obligation falls due; and
2.Cost determined by the management institution from among the expenses that the financial institution disbursed to recover bad debts.

Article 33 (Damages)
The amount of damages pursuant to Article 39 of the Act shall be calculated by multiplying the rate determined by the management institution in consideration of the loan rate by the amount performed by the management institution.


SECTION 5 Infrastructure Fund


Article 34 (Capital, etc. of Infrastructure Fund)
(1) The term amount as prescribed by the Presidential Decree in Article 41-2 (1) of the Act shall be 10 billion won.
(2) The term amount as prescribed by the Presidential Decree in Article 41-2 (2) of the Act shall be 5 billion won.
[This Article Wholly Amended by Presidential Decree No. 18736, Mar. 8, 2005]

Article 34-2 (Explanation Note and Subscription Note for Stocks)
(1) With respect to the items to be included in the explanation note, the method of provision thereof, etc. provided for in Article 41-4 (1) of the Act, Article 56 of the Act on Business of Operating Indirect Investment and Assets shall apply mutatis mutandis.
(2) The term important details as prescribed by the Presidential Decree in the latter part of Article 41-4 (2) of the Act shall exclude the matters altered pursuant to any amendment of Acts and subordinate statutes or to any order made by the Financial Supervisory Commission and other simple changes in the wording of the explanation note.
(3) The promoters of an infrastructure fund provided for in Article 41 (1) of the Act (hereinafter referred to as an infrastructure fund ) under Article 41-4 (3) of the Act shall prepare the subscription note for stocks stating the matters set forth in the following subparagraphs and provide it to the person intending to subscribe for acceptance of the stocks:
1.Objectives, trade name, and location of the infrastructure fund;
2.Class and number of stocks to be issued by the infrastructure fund;
3.Total number and issue price of stocks to be issued at the time of establishing the infrastructure fund;
4.Minimum net assets amount to be maintained by the infrastructure fund;
5.Methods of public notification by the infrastructure fund;
6.Duration or reasons for dissolution, if included in the articles of incorporation;
7.Provision that transfer of stocks shall be subject to the approval of the board of directors, if so determined;
8.Name and address of an asset management company;
9.Methods of allocating the stocks to be issued and the date when the subscription price is to be paid;
10.Financial institution in charge of the subscription price paid and the place of payment; and
11.Names and addresses of prospective directors and auditor.
(4) The term ratio as prescribed by the Presidential Decree in Article 41-4 (4) of the Act shall be 10/100 of the equity capital of an infrastructure fund.
[This Article Newly Inserted by Presidential Decree No. 18736, Mar. 8, 2005]

Article 34-3 (Borrowing of Funds and Issuance of Bonds)
The term ratio as prescribed by the Presidential Decree in the main sentence of Article 41-5 (1) of the Act shall be 30/100 of the equity capital of an infrastructure fund.
[This Article Newly Inserted by Presidential Decree No. 18736, Mar. 8, 2005]

Article 34-4 (Report on Assets of Infrastructure Fund)
(1) With respect to the preparation and submission of a business report on the assets of an infrastructure fund under Article 41-6 (2) of the Act, Article 105 (1) of the Enforcement Decree of the Act on Business of Operating Indirect Investment and Assets shall apply mutatis mutandis. In this case, a reference to the Asset Operation Association shall be read as a reference to the Ministry of Planning and Budget.
(2) Where an infrastructure fund submits to the Financial Supervisory Commission a business report on its assets under Article 124 of the Act on Business of Operating Indirect Investment and Assets, a business report under Article 41-6 of the Act shall be deemed to be submitted to the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 18736, Mar. 8, 2005]

Article 34-5 (Conditions on Issuing New Stocks)
The term methods as prescribed by the Presidential Decree in Article 41-7 of the Act shall refer to the methods of calculating the base price of indirect investment securities under Article 96 of the Act on Business of Operating Indirect Investment and Assets: Provided, That the issue price of new stocks calculated by the said methods may be determined taking into consideration the price at which the stocks of the infrastructure fund concerned are traded on the securities market or KOSDAQ market if they are listed on such market, and the fair value of such stocks if not.
[This Article Newly Inserted by Presidential Decree No. 18736, Mar. 8, 2005]



CHAPTER III SUPERVISION


Article 35 (Order for Supervision)
The term cases as determined by the Presidential Decree in Article 45 (1) of the Act means the cases under any one of the following subparagraphs other than those under any subparagraph of Articles 46 and 47 (1) of the Act:
1.Where the competent authority deems it necessary for the prevention of defective construction or for the normal operation of the facilities; and
2.Where it is judged that the concessionaire of a project under subparagraphs 1 through 3 of Article 4 of the Act was negligent in maintaining and managing the facilities to an extent which is substantially detrimental to the convenience and interest of the users.



CHAPTER IV SUPPLEMENTARY PROVISIONS


Article 36 (Investment by Public Sector)
(1)The term where determined by the Presidential Decree in Article 52 (1) of the Act means where a project requires the investment of State and public property by the public sector for not less than fifty percent of its total investment cost or where the profitability is so low that it is difficult for the private sector alone to pursue the project.
(2)The term where determined by the Presidential Decree in Article 52 (2) of the Act means the cases under any one of the following subparagraphs:
1.Case concerning the dissolution or liquidation of a corporation (referring to a corporation as prescribed in subparagraph 7 of Article 2 of the Act; hereinafter the same shall apply);
2.Case concerning the transfer of the whole or an important part of the business; and
3.Where the purpose of business as prescribed in the articles of association has changed.
(3)The term other properties as determined by the Presidential Decree in Article 52 (3) 4 of the Act means any one of the following subparagraphs:
1.Harbor facility management right under the Harbor Act;
2.Toll roads management right under the Toll Road Act; and
3.Other management rights with regard to infrastructure under other related Acts.

Article 37 (Financial Support)
(1)The State or a local government may grant any subsidy or long-term loan to the concessionaire during the construction or operation period of facility within the scope of the budget after deliberation of the Committee, in any case of the following subparagraphs under the provisions of Article 53 of the Act: Provided, That where such subsidy or long-term loan is granted from the budget of a local government, or the project concerned falls under one of a local government to which a subsidy of less than 30 billion won is provided by the State, deliberation of the Committee shall not be required:
1.Where it is inevitable to prevent dissolution of the corporation;
2.Where it is an inevitable measure to maintain the user fee at an appropriate level;
3.Where inducement of private capital is difficult due to a fall in the profitability of the project as a result of a considerable expenditure disbursed as compensation for the use of land;
4.Where the actual operational profit (referring to the amount obtained by multiplying the user fee by the demand for the concerned facility) falls considerably short of the estimated operational profit under the concession agreement, to such an extent that the operation of the facility is difficult;
5.Where it is difficult to actively conduct the private investment project without a long-term loan or subsidy prior to conducting projects which are low in profitability but which can considerably reduce the construction period or the cost of construction of other projects when conducted together with other private investment projects; and
6. Where the losses from exchange rate fluctuations occur, due to the excessive exchange rate fluctuation, in the borrowings in foreign currency for the construction funds which are raised by the concessionaire through outside capital.
(2)In granting a subsidy under the provisions of paragraph (1) 5, the State or a local government shall calculate the amount required for the implementation of the project concerned by applying mutatis mutandis the method of anticipating the price and the method of adjusting the contract amount under the provisions of Chapters II and V of the Enforcement Decree of the Act on Contracts to Which the State is a Party, or Chapter VII of the Enforcement Decree of the Local Finance Act, and shall grant this within the limit of the amount calculated.

Article 38 (Issuance of Infrastructure Bond)
(1)The term financial institution as prescribed by the Presidential Decree in Article 58 (1) of the Act means an institution which falls under any one of the following subparagraphs:
1.A financial institution authorized pursuant to the Banking Act;
2.The Korea Development Bank established under the Korea Development Bank Act;
3.The Industrial Bank of Korea established under the Industrial Bank of Korea Act; and
4.Deleted.
(2)The bond as prescribed in Article 58 (1) of the Act (hereinafter referred to as the infrastructure bond ) shall be issued pursuant to the Commercial Act and other related Acts, and it shall be marked as an infrastructure bond.
(3)A person who has issued an infrastructure bond under paragraph (2) shall, within two months after the completion of each business year, report to the Minister of Planning and Budget the matters such as the amount and terms of the infrastructure bond issued during the previous year.

Article 39 (Recognition of Buyout Right)
The concessionaire of a revertible facility may request the State or local government to buyout the concerned facility (including supplementary facilities) under the provisions of Article 59 of the Act in the following cases:
1.Natural disasters, war, and other cases of force majeure by which the construction is suspended for six months or longer or the total project cost increases by not less than 50 percent;
2.Natural disasters, war, and other cases of force majeure by which the operation of the facility is suspended for six months or longer, or where the repair cost or reconstruction cost exceeds 50 percent of the total project cost originally planned;
3.Where the construction or operation of the facility has been suspended for six months or longer because the State or a local government failed to perform its duty under the concession agreement for a year or longer after receiving the notification of the cause for the performance of its duties, or where the duties are simply not performed without a justifiable cause; or
4.Where a cause as determined by the concession agreement occurs and the competent authority determines that it is reasonable to recognize the buyout right of the concessionaire.

Article 40 (Procedure for Exercise of Buyout Right)
(1)When the concessionaire intends to execute his right to request purchase under the provisions of Article 39, he shall notify the competent authority of the grounds for such request within thirty days after the occurrence of such cause. In this case, the concessionaire shall prove that the cause as determined by Article 39 has occurred.
(2)The competent authority shall review the request for purchase by the concessionaire under the provisions of paragraph (1) and notify the concessionaire of whether the request has been accepted within sixty days after receipt of the request through deliberation of the Committee unless there exist any special reasons.
(3)Where the buyout right is exercised under the provisions of paragraphs (1) and (2), matters regarding the standard and method of calculation of the amount payable to the concessionaire and other necessary matters may be determined in the concession agreement, taking into consideration the appropriate value of the infrastructure (including other related operation facilities), supplementary facilities, and the operation rights of the concerned project.



CHAPTER V PENAL PROVISIONS


Article 41 (Imposition of Fine for Negligence)
(1)When the competent authority, the Minister of Planning and Budget, or the head a local government (hereinafter referred to as the party entitled to levy ) imposes a fine for negligence as prescribed in Article 65 (2) of the Act, he shall notify the person subject to the disposition of fine for negligence to pay the fine for negligence by stating clearly in writing the offense, means to object, and the period given for objection, after investigating and verifying the offense in question.
(2)When the party entitled to levy intends to impose the fine under paragraph (1), he shall give the person concerned an opportunity to express his opinion orally or in writing for a period of ten days or more. In this case, if there is no response from the person concerned by the designated date, it shall be deemed that he has no opinion to express.
(3)When the party entitled to levy determines the amount of fine for negligence, he shall take into consideration the cause of the offender and the consequences of the offense.



ADDENDUM


This Decree shall enter into force on April 1, 1999.



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 4 Omitted.










ADDENDUM


This Decree shall enter into force on the date of its promulgation.



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003.

Articles 2 through 8 Omitted.











ADDENDUM


This Decree shall enter into force on March 12, 2003.



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Article 2 (Applicable Cases concerning Propriety Investigation, etc. of Projects Proposed by Private Sector)
The amended provisions of Article 7 (5) through (9) shall be applicable to projects which are proposed by private sector on or after the enforcement date of this Decree.

Article 3 (Applicable Cases concerning Period of Notification about Whether to Approve Detailed Engineering and Design Plan for Implementation of Project)
The amended provisions of Article 16 (3) shall be applicable to private investment projects of which the approval of the detailed engineering and design plan for implementation is applied for on or after the enforcement date of this Decree.

Article 4 Omitted.
Article 5 (Relations with Other Acts and Subordinate Statutes)
Where other Acts and subordinate statutes cite the Enforcement Decree of the previous Act on Private Participation in Infrastructure or its provisions at the time of the entry into force of this Decree and where this Decree includes the provisions corresponding thereto, this Decree or the provisions concerned of this Decree shall be deemed to be cited in lieu of the previous provisions.



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 5 Omitted. ">


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