Posted : 2012-04-25 14:43
Updated : 2012-04-25 14:43

Metro trouble

The Seoul Metropolitan Government has spent more than 70 billion won (about $61.5 million) to compensate the operating losses for Subway Line 9 since 2009. Municipal authorities are opposing plans by the transit system’s private operator to raise ticket prices by 50 percent. / Korea Times

Should Macquarie bear blame for‘Line 9 fiasco’?

By Kim Tong-hyung

It’s a fact that Seoul’s newest subway network is economically not feasible. But the debate on how it came to this and who should shoulder the financial responsibility to keep the transit system running is hardly clear-cut.

The Seoul Metropolitan Government, led by civic activist-turned-mayor Park Won-soon, obviously prefers a simplified argument: Metro 9, a consortium of 12 firms that operates Subway Line No. 9, is displaying excessive greed in attempting a 50 percent fare hike from the current 1,030 won to 1,550 won. Taxpayers burdened much of the constructions costs and are also paying for most of the operation losses.

City officials also wouldn’t mind Macquarie Korea Infrastructure Fund, the main shareholder of Metro 9, to be labeled as the next Lone Star Funds, a ``meoktwi’’ (eating and fleeing) foreign capital exploiting opportunities to make a killing off Korean assets on the least amount of investment input.

The Texas-based private equity firm earned that reputation after its disputed acquiring of the Korea Exchange Bank (KEB) in 2003, despite questions over its eligibility as a financial investor. After years of regulatory delays and political debacles, Lone Star punched its ticket out of Korea after selling KEB to the Hana Financial Group in the Korean banking industry’s biggest merger and acquisition (M&A) deal ever.

No matter how hard city officials try to paint the picture in black-and-white, the controversy over Line No. 9, which opened in 2009 and connects southern Seoul with Yeouido and Gimpo Airport, is not what one would call plain as a pikestaff.

The contract between Seoul city and Metro 9 has a so-called minimum revenue guarantee (MRG) clause that requires the municipal government to protect the company from excessive losses.

For the first five years of operation, Seoul city will ensure that Metro 9 earns at least 90 percent of a previously-agreed level of forecasted income, compensating the rest of the money if revenue falls below that line. The MRG base is drawn at 80 percent between the sixth and 10th year then 70 percent in the five years after that.

The Seoul city government said it has so far spent more than 70 billion won (about $61.5 million) to plug Metro 9’s losses, a fact municipal authorities repeatedly bring up as they ask the company ``how dare you?’’

But preventing Metro 9 from raising fares would mean that the rest of the city’s taxpayers will continue to be forced to finance cheaper rides for commuters in southern Seoul.

And enough with all the talk about Macquarie Korea Infrastructure Fund and the evilness of foreign capital _ the contribution of the Australian financial group is barely beyond lending its name.

Macquarie owns only 3.9 percent of the fund, while Korean financial companies and institutions like the Shinhan Financial Group, Korea Life Insurance, Military Mutual Aid Association and the Government Employees’ Pension Service combine for a 60 percent stake. Individual investors own 20 percent of the fund.

It seems inevitable that the feud between Seoul city and Metro 9 revisits an old debate about the user-pays principle in public services: Should all citizens share an equal burden to keep Line No. 9 up and running or should users accept expensive tickets?

One Seoul city official, who didn’t want to be named, admitted that keeping Line No. 9 fares at the current price could be a hard sell to taxpayers in the northern part of the city when they are rarely sympathetic for their wealthier southern neighbors.

``Line No. 9 will eventually be expanded to the Jamsil district, making a transit system that penetrates all of the Gangnam (southern Seoul) area. So it’s hard to deny that the presence of the new transit system benefits the people in Gangnam exclusively, both in transportation convenience and the rise in property prices in residential areas around the stations,’’ he said.

``So when people in Gangbuk (northern Seoul) ask why we are taking money from them and pouring it over there (Gangnam), it’s hard to come up with a convincing response.’’

The debacle over Line No. 9 also raises further questions on whether private financing schemes are a reliable method for expanding and operating public systems and social infrastructure.

While Line No. 9 was billed as a private financing scheme, critics ridicule that the term ``private financing’’ has been used rather liberally as taxpayers funded more than 80 percent of the 3 trillion won-plus project. Subways are never to be confused with a highly profitable business, and it would have been impossible for the city to lure private investors without absorbing most of the costs.

This also assured that the city government would have a dominant say over ticket prices. While the original contract set ticket prices at 1,400 won a person for 2009 and 1,800 won for 2012, city authorities have suppressed fares at a much lower level to counter consumer price inflation.

This explains why Line No. 9 earns just 50 percent of the profit predicted in the contract despite the number of riders reaching 95 percent of expected commuters.
관련 한글 기사

지하철 9호선에 수익자 부담 원칙 적용해야하나

서울시 지하철 9호선의 요금인상을 둘러싸고 서울시와 민자사업자 간의 마찰이 심해지고 있다. 현재 서울시는 9호선의 운영적자를 보존하기 위해서 700억원이 넘는 세금을 투입한 상황이다.

이렇게 시민의 세금을 쓰는데 9호선을 운영하는 민자사업자가 요금을 1030원에서 1550원으로 올리려는 것은 지나친 탐욕이라는게 서울시의 설명이다.

그러나 9호선 논쟁을 공공서비스에 대한 수익자부담원칙을 어디까지 적용해야하는가에 대한 근원적인 논의로 발전시켜야한다는 지적이 있다. 강남 시민들이 주로 이용하는 지하철 노선의 요금을 싸게 유지하기 위해 서울시민 전체의 세금이 들어간다는 불만이 있기 때문이다.

우리금융 외국 투자자들 입질 할까?

한국정부가 우리금융지주 매각에 대해 국제 경매를 통해 외국인에게도 내국인과 동등한 입찰 기회를 주기로 했다고 김석동 금융위원장이 서울의 한 포럼에서 말했다. 우리금융 매각은 지난해 8월 예비입찰에서 입찰사가 단 1곳으로 유효경쟁 요건을 채우지 못해 모든 절차가 중단됐었다. 김 위원장은올해 안에 우리금융 민영화를 재추진할 의지를 밝혔었다.

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