Direction of Advanced Reforms for the Seven Special Public Institutions

November 27, 2001

(Four Highway-related Public Corporations)

The Japan Highway Public Corporation, the Metropolitan Expressway Public Corporation, the Hanshin Expressway Public Corporation and the Honshu-Shikoku Bridge Authority shall be abolished. New organizational modalities replacing these corporations and the ways to ensure the economic viability shall be reviewed as a whole by a "third party institution" to be established under the Cabinet based on the following basic policy. The details will be finalized during the course of 2002.

1. Japan Highway Public Corporation

(1) Organization

The new organization shall be presupposed on its privatization, and shall be established as early as possible during a period of intensive reform until FY2005.

(2) Operations

  1. No more government funds shall be injected from FY2002.
  2. Project costs shall be reduced through such means as the revision of standards and the introduction of competition.
  3. The redemption period based on the current toll rate shall be no more than 50 years and is aimed to be reduced by reflecting such factors as cost reduction effects.
  4. Priority for new roads to be constructed under the new organization shall be decided based on thorough cost effectiveness analysis, taking into account the latest demands for roads and future economic circumstances.
  5. Other construction of roads, for example construction through the direct administration method, shall be studied in the budget compilation of each fiscal year.

2. Metropolitan Expressway Public Corporation and Hanshin Expressway Public Corporation

These two corporations shall be privatized at the same time and in similar ways as the Japan Highway Public Corporation. An appropriate cost-sharing between national and local governments shall be ensured.

3. Honshu-Shikoku Bridge Authority

The Honshu-Shikoku Bridge Authority shall be privatized at the same time as the Japan Highway Public Corporation. The debt held by the Authority shall be disposed of through the national highway budget and the budget of local governments concerned. Utilization of road tolls shall also be studied.

(Government Housing Loan Corporation)

The Government Housing Loan Corporation shall be abolished within five years.

1. Loan services shall gradually be reduced.

2. The securitization support services to be undertaken first by the Government Housing Loan Corporation shall be commissioned to a separate corporation that shall be newly established.

3. With regard to loan services, a final decision shall be made upon the establishment of the new corporation, taking into account whether they are smoothly undertaken by private financial institutions.

(Urban Development Corporation)

The Urban Development Corporation shall be abolished during a period of intensive reform.

1. No new construction of public lease housing through acquisition of lands shall be undertaken.

2. Efficiency in management of lease housing shall be improved by expanding the scope of private commission as much as possible.

3. A corporation shall be established with the authority to execute construction work in order to promote private sector participation in Urban Renaissance.

(Japan National Oil Corporation)

The Japan National Oil Corporation shall be abolished.

1. The following functions shall be consolidated into the work of a similar corporation.

(1) Risk money supply functions for petroleum development (Risk money shall be allowed only in the form of equity investment)National support shall be less than 50%.

* Loan services to crude oil and other petroleum producing companies shall be transferred to existing policy finance institutions.

(2) Research and Development (R&D) functions

(3) Functions such as the integrated management of national stockpiles.

2. National stockpiles shall be put under the direct administration of the government.

The existing eight companies responsible for national stockpiles shall be abolished and specific operations will be entrusted to completely private companies.

3. The development related assets currently held by the Japan National Oil Corporation shall be subject to a strict asset evaluation, and shall be appropriately rationalized, for example, items that need to be disposed of shall be disposed of and those that need to be sold shall be sold.

An organization shall be formed to settle the assets of the Japan National Oil Corporation with a limited period of existence (approximately three years) and upon completion a special company shall be established and privatized.

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