Yongin City Cuts Costs by 4 Billion KRW for 14 Privately Funded Sewage Treatment Facilities

Amendment to Implementation Agreement Passes Ministry of Economy and Finance Review
City to Pay Electricity Costs Directly Instead of Operator

Yongin City in Gyeonggi Province has reduced costs by approximately 4 billion KRW through changes in the operation method of 14 sewage treatment facilities managed under private investment projects.

On the 16th, Yongin City announced that the 'Yongin City Sewage Treatment Facility Private Investment Project 4th Amendment Implementation Agreement' passed the Ministry of Economy and Finance's private investment project review.

The amendment includes the city directly paying the electricity costs for 14 sewage treatment facilities in Suji, Giheung, Gugal, Mohyeon, and others, which are operated under the BTO (Build-Transfer-Operate) method, instead of the private investment company.

Previously, in 2005, the city signed an 'Implementation Agreement for Sewage Treatment Facility Private Investment Project' with Yongin Clean Water, a special purpose corporation (SPC), and from March 2010 to February 2030, for 20 years, operated 13 public sewage treatment facilities and one sewage and manure treatment facility under the BTO method. The BTO method involves a private investment company building SOC facilities, transferring ownership to the state or local government, and then receiving the right to manage and operate the facilities for a certain period.

The city's decision to change the project method to direct payment of electricity costs stems from conflicts with the operator over operating expenses. The operator demanded an increase in operating costs from the city in 2018, citing electricity cost hikes and increased sewage inflow concentration, and after losing a lawsuit, the city had to pay an additional 7.7 billion KRW for the increased operating costs over five years from 2013 to 2017.

Since then, to enable efficient facility operation despite changes in operating conditions and other factors, the city pursued an amendment to the implementation agreement. After three years of negotiations, it agreed to adjust operating costs by having the city directly pay electricity costs, which are considered public utility charges, for the remaining operation period and reduce the usage fee unit price.

With the agreement passing the Ministry of Economy and Finance review, the city expects to save about 4 billion KRW until the private consignment management ends in 2030. The city plans to report the amendment to the city council next month and conclude the implementation agreement with the operator around June.