The Cabinet endorsed contentious legislation Tuesday aimed at privatizing the nation's four expressway corporations.

The move paves the way for the new entities to repay combined debts worth 40 trillion yen over a period of 45 years, while pursuing planned road construction projects with borrowing backed by government guarantees.

The privatization of the expressway firms is a pillar of Prime Minister Junichiro Koizumi's structural reform drive.

The legislation advocates establishment of six privatized entities via the regrouping of Japan Highway Public Corp., Metropolitan Expressway Public Corp., Hanshin Expressway Public Corp. and the Honshu-Shikoku Bridge Authority, as well as a separate asset-holding and debt-servicing administrative organization.

The privatized companies will be given special status and undertake expressway construction, maintenance and toll-collection while leasing expressways from the administrative organ.

The latter will concentrate on debt repayment by using road lease fees from the expressway operators.

The central and local governments will own more than one-third of shares with voting rights that will be issued by the privatized companies.

The process will therefore follow the same format used to privatize the former state-owned corporations that resulted in the creation of NTT Corp.

If the legislation is approved by the Diet during the current session, which runs through mid-June, the expressway corporations will be privatized by the end of fiscal 2005, according to officials at the Land, Transport and Infrastructure Ministry.

Although the privatization scheme was initially expected to prioritize debt repayment and halt the construction of unprofitable routes, some experts charge that the plan will have little impact other than reducing the cost of completing the planned 9,342 km expressway network.

Under the current system,

Japan Highway, the largest of the four expressway firms, undertakes expressway construction when issued administrative orders by the land, infrastructure and transport minister.

Upon privatization, this administrative order system will be abolished and the privatized entities are expected to act at their own discretion.

They will apply to the land minister for new road construction projects after concluding agreements with the administrative organ.

Critics doubt whether the privatized entities will be given real autonomy, as the companies will be able to raise construction funds by issuing bonds backed by government guarantees.

All of these debts and completed expressways will be taken over by the administrative organ -- and eventually by either the central or local governments.

The legislation stipulates that the administrative organ will be disbanded after debt repayment is completed 45 years after privatization.

The expressways will be toll-free thereafter.

Toll-free expressways have been promised by the government for decades, though they have never been realized because of the so-called pool system, in which users of expressways whose construction costs have been paid off must continue paying tolls to cover the construction costs of unprofitable expressways in rural areas.