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An agreement seen as a test of Prime Minister Junichiro Koizumi’s promised reforms of inefficient government-linked corporations appears to be back on the negotiating table.

Trade minister Takeo Hiranuma said Tuesday he “is ready to discuss” draft legislation related to the restructuring of the Japan National Oil Corp. with a senior Liberal Democratic Party official who opposes the move.

Hiranuma’s remark came after Mitsuo Horiuchi, chairman of the LDP Executive Council, earlier in the week threw a road block in front of the planned reform by asking Prime Minister Junichiro Koizumi to carry out a fundamental review of the bills drafted by the Ministry of Economy, Trade and Industry.

Horiuchi is apparently concerned that a section of the legislation is inconsistent with policy hammered out by the Cabinet in December.

Koizumi instructed Hiranuma to discuss the matter with Horiuchi, apparently out of concern that METI’s plans may erase that initial first step toward reform.

Last year, the Cabinet decided to abolish the JNOC and transfer part of its operations to another public entity under the drive to consolidate inefficient state-affiliated firms.

In order to secure a steady oil supply, the JNOC provides oil development firms with risk funds via investment programs and loans.

In the process, the public corporation has accumulated huge debts.

METI now hopes to submit during the current Diet session its bills that would restructure the JNOC.

Under the drafts, the government would still be allowed to guarantee loans extended to oil development firms, while the JNOC would still be allowed to manage and dispose of its assets.

Under the policy approved by the Cabinet, however, the government’s involvement in terms of risk funds would be limited to investment, and there is no mention of guaranteeing loans to oil development firms.

Koizumi remains adamant about the intended reform.

“I expect (the JNOC bills) to be in line with the Cabinet decision,” he said.

Said Nobuteru Ishihara, minister in charge of administrative and regulatory reform, “We should stick to the most important point of making clear that the plan is in line with the Cabinet decision, no matter who reads it.”

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