Korea weighs restricting Build-Transfer for bottlenecks
A seminar at the National Assembly discussed that the Build-Transfer (BT) method, introduced under the Special Act on Power Grid Expansion, should only be applied to extreme bottlenecks where it can secure economic feasibility.
Our take
Is private build-transfer of Korea's transmission lines an opening for infrastructure investors?
Private build-transfer of Korean transmission lines offers infrastructure investors a narrow financing role on a fixed list of 95 projects, and its scope, cost settlement and returns wait on an enforcement decree not yet written.
KEPCO plans lump-sum contracts within a reference project cost to stop cost growth, so returns depend on how risk is priced inside that cap. The enforcement decree on scope, cost settlement and risk sharing decides this, and most seminar speakers argued for limiting build-transfer to the worst bottlenecks.
For investors — Infrastructure funds should treat build-transfer as pre-financing on a fixed project list, not an open grid market, and wait for the enforcement decree before pricing it.
Construction contractors bidding with equity partners should be ready to show a credible schedule advantage over KEPCO-funded construction, because the case for build-transfer rests on finishing earlier.
Watch: The ongoing discussion and expert recommendations at the National Assembly seminar regarding the limited application of the Build-Transfer method for power grid projects.
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