An independent entity should be set up to manage the liabilities and assets of four debt-saddled expressway firms, a government panel discussing the privatization of the companies said Friday.

The seven-member panel has agreed on a basic framework to reform the controversial road-building public corporations and is expected to release an interim report on the issue by the end of the month.

Under the panel's proposals, Japan Public Highway Corp., Metropolitan Expressway Public Corp., Hanshin Expressway Public Corp. and Honshu-Shikoku Bridge Authority will be privatized and reorganized into several bodies.

The new liability-management entity will then lease road assets to the privatized firms, which will continue operating tollways across the country.

The panel has yet to agree on the precise makeup of the reformed entities, panel chairman Takashi Imai told a news conference after Friday's meeting.

Panel members agreed, however, that the new privatized companies should no longer accept new road construction projects if they are going to add to the existing liabilities, which stand at around 40 trillion yen.

Members also agreed that if the central or prefectural governments want new expressways, a scheme should be established to increase their financial burden, rather than shifting the responsibility to the new privatized bodies.

Debts stemming from each of the four public firms should be separately managed by the new debt-management body, Imai said, adding that the issue of whether one account should be allowed to compensate another has yet to be resolved.

The panel will also ask the central and local governments to shoulder further financial burdens if they want to continue ongoing construction of certain sections of planned expressway networks in the Tokyo metropolitan and Hanshin areas.

In a statement, panel members said they agree that the privatized entities set to replace Metropolitan Expressway Public Corp. and Hanshin Expressway Public Corp. will not able to repay increasing debts within 50 years, a deadline set by Prime Minister Junichiro Koizumi, if traffic demand does not grow.

The panel thus called for a "review" of current construction plans, saying a new scheme is necessary if the government and prefectural governments want to continue the projects.

Simulations by the panel show that both privatized entities to be created from the two public firms would go bankrupt under snowballing debts if they were to pay taxes and traffic demand did not increase.

If the central and prefectural governments assume a higher traffic growth rate, they must also assume responsibility for the risks in case the projections are false, the panel said.

The central and prefectural governments, including the Tokyo Metropolitan Government and Osaka Prefecture, have regularly injected billions of yen into the two public firms to help road construction.

The panel also demanded that expressway tolls not be hiked to help the two entities.