Posted December. 12, 2008 04:31,
The Gyeongin canal project that will connect the Han River in Seoul to waters off Incheon will be awarded to the Korea Water Resources Corp. instead of the private sector to start the project sooner.
The project will signal the implementation of infrastructure policies of the Lee Myung-bak administration to overcome the economic downturn. The move is an attempt to release the projects projected cost of 2.25 trillion won (1.65 billion U.S. dollars), an amount to be financed by the corporation, into the market as soon as possible by starting construction next month.
The Land, Transport and Marine Affairs Ministry yesterday reported the unofficial proposal on the project to a national policy meeting chaired by Prime Minister Han Seung-soo at Central Government Complex in downtown Seoul.
If construction companies fund the project through project financing, they must pay more than 10 percent in interest to financial institutions because of huge debts. In contrast, the state-run water corporation has small debts and can borrow money at interest of six to seven percent. The ministry said that if the corporation takes over the project, financing will come sooner to allow the quicker launch of the project.
The ministry will make the proposal to the Private Investment Deliberation Committee next week to exclude the Gyeongin project from the list of private investment projects. This will allow skipping of environment analysis and project feasibility tests and enable the start of drainage construction to prevent flooding.
The key canal construction process, which is to dig out the ground from north of Incheon to west of Seoul, will start in June and construction will be completed by the end of 2011.
The proposal said the three-year project will create 28,605 jobs and goods and services worth 3.03 billion won (2.41 million dollars). The government said the project will create 1,350 jobs a year for maintenance even after construction ends.
A source of the presidential office told the ministry Sunday before the coordination meeting, The government must assign the Gyeongin canal project solely to the Korea Water Resources Corp. and the four-river cleanup project to the Land, Transport and Marine Affairs Ministry to show that the two projects are unrelated. We can then eliminate the misunderstanding that the public sector-led Gyeongin project is a prelude to the grand canal project.