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Modernization of Waste-to-energy Incineration Plants in Seoul: Public Investment vs. Public Private Partnerships

In Chang Hwang·KoUn Kim·Suhan Ham

The Seoul Metropolitan Government is planing to modernize 3 waste-to-energy incineration plants(Gangnam, Nowon, Yangcheon), starting from the mid-2020s. The total construction cost for all plants is about 2 trillion KRW or 1.5 billion USD, which is far higher than the current level of government budget on waste management. We investigate the socioeconomic feasibility of the modernization project, based on the level of facility-deterioration, Seoul financial outlook, and changes in municipal solid waste(MSW) management policy of Seoul and the resulting surge in demand for incineration. In addition we compare the pros and cons of public investment and public private partnerships(PPPs) with various measures such as value for money(VfM), changes in user charges, and a plant-level business operating balance. One of the main findings is that the Gangnam plant is suitable for PPP, but the other plants are better to be financed by public investment. We should emphasize that our results are sensitive to the technical detail of the modernization project which has not been fixed yet. The city of Seoul should also consider its financial situation at the time of construction.