Global Economic Times

“Government must pay 100 billion won in compensation for losses every year due to delay in opening GTX-A Samsung Station”: Global Economic Times Reporter / Updated : 2024-10-31 06:24:27

The National Assembly Budget Office predicted that the loss compensation that the government must pay to private operators due to the delay in opening the Seoul Metropolitan Rapid Transit (GTX)-A Samseong Station could exceed 100 billion won per year. The government's position is that it is premature to estimate compensation for losses, as most of the GTX-A routes have not yet opened.

In the ‘2025 Budget Analysis’ report published on the 28th, the National Assembly Budget Office stated, “The Ministry of Land, Infrastructure and Transport underallocated compensation for losses due to the delay in opening Samsung Station.”

The Ministry of Budget and Policy estimated that next year's loss compensation that the Ministry of Land, Infrastructure and Transport must pay to SG Rail, a private operator of GTX-A, due to the delay in opening Samseong Station is 118.526 billion won. This is a value that reflects the inflation rate in the amount calculated by subtracting ‘net operating profit when all sections of GTX-A are fully opened (estimated value)’ from ‘net operating profit when the remaining sections excluding Samsung Station are opened separately.’ The calculation method follows the provisions of the concession agreement concluded between the Ministry of Land, Infrastructure and Transport and SG Rail.

However, the loss compensation allocated by the Ministry of Land, Infrastructure and Transport in next year's budget was only 16.4 billion won. This amounts to only 13.8% of the loss compensation to be paid according to the plan. According to the implementation agreement signed between the Ministry of Land, Infrastructure and Transport and SG Rail, the Ministry of Land, Infrastructure and Transport must pay loss compensation every year for the decrease in operating profit due to the non-opening of Samseong Station from the moment the private section, Unjeongjungang ~ Seoul Station, is opened.

GTX-A is a route connecting Unjeong Jungang Station (Paju, Gyeonggi) to Dongtan Station (Hwaseong, Gyeonggi). Among them, Unjeong Jungang Station - Samsung Station is operated as a finance section, and Samseong Station - Dongtan Station is operated as a private section. The Suseo-Dongtan section opened and began operation last March, and the Unjeong Jungang Station-Seoul Station section is scheduled to open in December this year. However, due to the delay in the opening of the Samseong Station section, which is the key stop of GTX-A, the business feasibility of the entire route is poor.

The problem is that it is unclear when Samsung Station will be completed. The Ministry of Land, Infrastructure and Transport decided to open Samseong Station in connection with the development of Yeongdong-daero in 2016 at the request of Seoul City, and set the target completion date for 2021. However, due to delays in the Seoul Metropolitan Government's Yeongdong-daero mixed-use development project, the opening of Samsung Station has been postponed to 2028, and there are predictions that even this may be delayed further.

The Ministry of Budget and Policy predicted, “The exact size cannot be determined, but assuming a similar level to 2025, loss compensation of about 400 billion won will occur over three years (2025-2027).” On the other hand, the Ministry of Land, Infrastructure and Transport maintains that the Ministry of Budget and Policy's estimates are more exaggerated than the actual figures. It is difficult to predict the estimated net profit resulting from the separate operation of the financial and private sectors.

An official from the Ministry of Land, Infrastructure and Transport said, “In 2026, the fiscal section and the private section will be connected by passing through Samseong Station without stopping, and if a separate opening is achieved using the existing Line 2 entrance at Samseong Station in 2027, the demand pattern may change.” “Afterwards, we will recalculate the actual net operating decrease and settle the shortfall afterwards,” he said. Currently, the government's expected loss compensation is around 60 to 70 billion won per year.

However, this does not change the fact that the government must pay huge compensation for losses to SG Rail due to the delay in opening Samseong Station. The Ministry of Budget and Policy said, “If the government unilaterally pays a reduced amount of compensation for losses without consulting with private businesses, it is fully expected that it will lead to legal disputes in the future, and various litigation costs and interest on delays are likely to arise.” “A large-scale budget allocation is required,” he said.