Interim Report of the Promotion Committee for the Privatization of the Four Highway-related Public Corporations (Summary)

August 30, 2002

  1. Significance and purpose of reform

  2. Basic awareness
    (1) Limitations on expressway construction under the current system
    (2) Lack of managerial autonomy
    (3) Inefficiency and lack of transparency in business operations
    (4) Severe financial situation

  3. Basic policy of privatization
    (1) With the basic principle of minimization of burden on the people, steadily implementing the earliest possible repayment of debt within a maximum of 50 years
    (2) Securing independence as private enterprises
    (3) Increasing managerial efficiency and improving user service including tolls

  4. Measures to be taken immediately by the Government and Four Highway-related Public Corporations
    (1) Reconsideration including a freeze and a review of specifications on full enforcement of orders for implementation
    (2) Recruitment of private sector managers and creation of financial statements in accordance with business accounting principles
    (3) Suspension of toll increases
    (4) Suspension of recruitment, in principle, for new staff for FY2004
    (5) Cooperation by the Four Highway-related Public Corporations in disclosing the actual conditions of family enterprises
    (6) Creation of a cost-cutting plan incorporating a plan to control total personnel costs and including the elimination or review of retirement benefits for directors within this fiscal year

  5. Handling of the Metropolitan Expressway Public Corporation and Hanshin Expressway Public Corporation
    (1) Considerations covering the freeze of some ongoing expressway-route construction and the review of specifications, and the creation of new rules for cost burden and others
    (2) Making the greatest possible effort toward the repayment of debts within 50 years
    (3) Instead of raising tolls, dealing with financial difficulties with the responsibility of national and local governments

  6. Debt disposal of Honshu-Shikoku Bridge Authority
    (1) Consideration of the burden of government road budget and relevant local governments, and the utilization of toll revenues
    (2) Not requesting debt write-offs for private borrowing

  7. Modality of new organizations
    (1) Creation of new companies
    • Establishing as special company and aiming for eventually listing stocks on the stock market
    • Minimizing government involvement as necessary
    • Scope of businesses: Administration of highway-routes already in service. The construction of new routes and development of related business based on its own managerial decisions
    • Rigorous contractual relationships on equal terms with the national government in the construction of new routes
    • Keeping the burden of the new company below the level which the management can be responsible for when undertaking new construction

    (2) Establishment of "Holdings and Debt Repayment Corporation" (Provisional name)
    • Establishment of a public corporation (independent administrative institution) for a fixed period for early debt repayment to avoid an outflow of funds through tax and public dues
    • Holding road assets and repaying debt owned by the Four Highway-related Public Corporations
    • Consideration of the use of a method of partially covering new investment funds for a fixed period based on the principle of no increase in total debt
    • Consideration of separate accounting of each of the Four Highway-related Public Corporations and tax exemption measures for fixed asset tax, and others

  8. Pool system
    Elimination of the current public corporation's national toll-pooling system

  9. Tolls
    Capping tolls at current levels, while taking the current debt repayment situation into account, lowering tolls

  10. Cost reductions
    (1) Set targets for construction and administrative costs and make considerable reductions
    (2) Review structural design standards, reduce construction costs without affecting safety
    (3) Review methods of ordering and contracting, lower construction and management costs

  11. Tasks remaining for future consideration
    The specific institutional design of the new corporation and the new company, criteria for routes to be built by the new company, the method of separation, etc.