OECD
International Transport Forum
Public Private Partnerships for Funding Transport Infrastructure:
Sources of Funding, Managing Risk and Optimism Bias
(27-28 September 2012)
The Nature of The Japanese Toll Road PPPs
Kazuaki MIYAMOTO
Tokyo City University
miyamoto@tcu.ac.jp
Purpose of Presentation
• To explain the privatization of Japan Highway
Public Corporations after 2005
• Contents
–
–
–
–
–
–
–
–
Objective
Outline
Roles of Agency and Companies
Lease Fees
Trend of Debts, Plan & Performance
Business Conditions
Toll and Affiliated Business Revenues of Companies
Concluding Remarks
Main Sources for this Presentation
Reference 1
http://www.jehdra.go.jp/panfu2011_english.html
Reference 2
http://global.c-nexco.co.jp/en/aboutus/index.html
Objective of Privatization
• To secure the repayment of interest-bearing
debts amounting to about 40 trillion Yen.
– 40 trillion Yen (US$ 500 billion): 8% of GDP
• To construct, without delay, genuinely needed
expressways with minimum fiscal burden on the
general public, while paying due respect to the
autonomy of the Companies.
• To offer diverse and flexible prices and services to
expressway users by utilizing the private sector’s
know-how.
Outline of Privatization
Metropolitan-wide /Trans-island Networks
Nation-wide Network
NEXCOs
East
Central
West
Reference 1
Reference 2
Reference 2
Scheme for the Implementation of Expressway
Business Activities by Agency and Companies
Efficient implementation
of business activities
Secure repayment of
debts within 45 years
Reference 1
Flow of Expressway Assets/Debts
between the Agency and Companies
Refinance
20% is not
guaranteed
by the
government.
Disclosure
Market
Modified from Reference 1
Initial Setting of Lease Fees
• Tolls are determined by the following principles;
– Tolls should be reasonable and acceptable by the public in
comparison with other transport prices
– The debt should be paid back within a limited term
– Debts of individual routes are “pooled” into those of the
network to which they belong.
• A term of 45 years is set to pay back all the debts
within the toll road scheme.
• Lease fees are determined basically,
Lease fee= (planned) toll revenue
– (planned)(operating and
maintenance costs)
Within the agreement
term: 5 years
Floating Rent System
(Lease Fees)
Source: Japan Expressway Holding and Debt Repayment Agency
Update of the Agreements
• Lease fees are to be updated by around 5
years, based on the performance in the
previous years.
• Toll may be changed according to the
performance with the condition that all the
debts are to be paid back within 45years (by
2050).
Trend of Debts, Plan & Performance
Source: Japan Expressway Holding and Debt Repayment Agency
Reasons for the Recent Performance
in Debt Repayments
• Successful finance with lower interest rates.
• Reductions in construction costs (by incentive
scheme to be explained in the next slide).
Business Conditions
• Expressway companies are not expected to earn
profits or make losses through expressway
construction and operation.
(Act on Special
Measures concerning Road Construction and
Improvement)
• However, expressway companies are eligible for
– certain incentive payments if construction is
completed at a lower cost than originally estimated,
as and when the Agency recognizes that such cost
reductions are due to the companies’ efforts.
– Also, the companies may earn profits through other
activities, such as the operation of rest areas.
Revenues from other activities
Reference 2
Toll and Affiliated Business Revenues
of NEXCOs (Billion Yen)
East
Toll Revenue
Affiliated Business Revenue
SAs and PAs
Others
Total Sales in SAs and PAs
(including tenant shops)
Central
West
562.9
476.7
568.0
61.9
51.7
52.7
43.5
36.1
34.5
18.3
15.5
18.1
150.1
161.3
141.3
150.1
1
562.9
4
(Sources: each NEXCO’s publicized information)
Sales Revenues from Non-transport Businesses
in the cases of Railways
Life-Style Business Development Headquarters, East Japan Railway Company: Overview of JR East’s LifeStyle Business–Present Situation and Future Prospects–October 13, 2011
Concluding Remarks
• The scheme was devised in order to fit to the
conditions of toll highway network in Japan.
• The privatization program has been well
managed so far.
• When the sources of funding are discussed,
affiliated businesses cannot be neglected as
the cases in Japan show.