The BTL project was introduced to apply the private sector's creativity and efficiency to social infrastructure construction and to accomplish early completion of public facilities which have been postponed due to the government's financial conditions. However, the BTL project might cause financial burden on future generations since it requires long-term government payments.
This report analyses the expense limit on the BTL project for the 2013 fiscal year in order to support the deliberation on the budget in the National Assembly. The expense limit for the 2013 fiscal year amounts to 698.7 billion won. Based on the government's expense limit on the BTL, the National Assembly Budget Office (NABO) forecasts the amount of government payments and evaluates specific facilities included in the expense limit on the BTL projects for the 2013 fiscal year.
According to NABO's projection based on the BTL agreements done in September 2012, the government payments will be 49 trillion and 776.8 billion won (VAT excluded). The government payments will amount to 2 trillion won from 2014 to 2029. In 2026, the government payments are expected to reach their maximum amount, 2 trillion and 522.6 billion won.
The evaluation of the facilities by NABO shows that there are several cases which do not fully satisfy validity and reliability requirements on the value for money test. Dormitories at national universities and drainpipe facilities fall into these cases. Beds at public hospitals should be more precisely assessed; childcare centers for the Police should also be specifically prepared as well. In addition, in the case of military residences and public rental houses, the feasibility test has not been fully conducted; especially for public rental houses, they avoid taking the pre-feasibility test by estimation error of the total program cost.
The BTL projects require more than 2 years from the beginning of construction to resolution. In light of this, the government needs to draw up the expense limit on BTL projects based on the careful examination of project preparation and private sector eligibility.
Social Program Evaluation Division
This report analyses the expense limit on the BTL project for the 2013 fiscal year in order to support the deliberation on the budget in the National Assembly. The expense limit for the 2013 fiscal year amounts to 698.7 billion won. Based on the government's expense limit on the BTL, the National Assembly Budget Office (NABO) forecasts the amount of government payments and evaluates specific facilities included in the expense limit on the BTL projects for the 2013 fiscal year.
According to NABO's projection based on the BTL agreements done in September 2012, the government payments will be 49 trillion and 776.8 billion won (VAT excluded). The government payments will amount to 2 trillion won from 2014 to 2029. In 2026, the government payments are expected to reach their maximum amount, 2 trillion and 522.6 billion won.
The evaluation of the facilities by NABO shows that there are several cases which do not fully satisfy validity and reliability requirements on the value for money test. Dormitories at national universities and drainpipe facilities fall into these cases. Beds at public hospitals should be more precisely assessed; childcare centers for the Police should also be specifically prepared as well. In addition, in the case of military residences and public rental houses, the feasibility test has not been fully conducted; especially for public rental houses, they avoid taking the pre-feasibility test by estimation error of the total program cost.
The BTL projects require more than 2 years from the beginning of construction to resolution. In light of this, the government needs to draw up the expense limit on BTL projects based on the careful examination of project preparation and private sector eligibility.
Social Program Evaluation Division