A Controversial Rapid Transit Plan Is Changed

The Seoul Metropolitan Rapid Transit Corporation has changed its ‘S-Biz’ project’ in a way that may generate less profit than was originally planned, stirring controversy. The 1-to-2 trillion-won project aims to develop commercial stores in the 148 stations along subway lines 5 to 8.

Potential losses will be close to 1 trillion won, which are expected to be offset by increases in metro fees and subsidies from Seoul Metropolitan Government, putting more burdens on the public.

According to Seoul City and the logistics industry on April 24, the Seoul Metropolitan Rapid Transit Corporation, a subsidiary of the Seoul Metropolitan Government, held a board of directors’ meeting on March 29. At the meeting, the state-run company announced the disqualification of GS Retail, the preferred bidder selected by an open tender in August last year.

The public agency said, “The Seoul City government noted that a potential preferential treatment allegation may come up if a certain contractor is responsible for too many stations. So we cancelled our contract.”

After the cancellation, the corporation will divide its project into four categories: convenience stores, advertising, brand shops including coffee, telecommunications products and cosmetics, and information technology (IT). The project will be shortened from the previous 20 years to 5 to 8 years and tender offers are expected next month.

One official of the corporation said, “The original project will make a profit of around 1.7 to 2 trillion won over the next two decades. However, if the project goes on separately, projected profit will fall below the 1 trillion won mark during the same period.”

GS Retail responded, “We cannot understand why preferential treatment allegations were raised. Because we were chosen by due process, we are considering legal action against the corporation’s unilateral withdrawal from the contract.”

jinhup@donga.com esprit@donga.com