The government is poised to offer ¥3 trillion ($29.6 billion) in loans to Central Japan Railway Co. (JR Tokai) in an attempt to expedite high-speed maglev services between Tokyo and Osaka by up to eight years, government sources said.
Under the plan — which involves amending the law to legalize such loans — the government will lend ¥1.5 trillion in both fiscal 2016 and 2017 from the fiscal investment and loan program to private JR Tokai, which was building the magnetically levitated train system with its own money for launch in 2045.
The FILP program, also known as “zaito” and dubbed the nation’s second budget, is intended to supply long-term, low-interest loans for projects that are highly public and for which private companies cannot easily secure sufficient funds. JR Tokai was intentionally building the maglev with its own money to ensure it retains independence from state control.
In June, however, Prime Minister Shinzo Abe asserted that the government would bring the launch date for the private railway’s project forward. He did not elaborate.
But the government and JR Central are now considering launching the maglev eight years earlier than JR Tokai initially planned, the sources claim. JR Tokai President Koei Tsuge has since said that he appreciates Abe’s decision and that his railway will make efforts to begin construction promptly.
Initially, the government planned to provide the ¥3 trillion to the railway over three years. With the Bank of Japan taking the unprecedented step of offering negative interest rates, however, and Japan’s economy stagnating despite the one-sided monetary effort to stimulate it, the government is instead opting to grab as much money as possible for a fiscal stimulus push, the sources said.
With a top speed of 500 kph, the maglev is expected to shorten the travel time from Tokyo to Nagoya to just 40 minutes, which is 50 percent faster than the swiftest shinkansen. It’s economic impact, however, is questionable.
JR Tokai had planned to launch maglev service between Tokyo’s Shinagawa Station and Nagoya in 2027, before extending it further west to Osaka by 2045. It was expected to cost ¥5.5 trillion for the first phase and about ¥9 trillion to finish it.
The railway had said that after the Tokyo to Nagoya section opens, it would take another eight years to start the Nagoya to Osaka section as it would need to assess whether the debt created by the first phase would detrimentally affect its entire business.
The government intends to lend the money to JR Tokai through the Japan Railway Construction, Transport and Technology Agency, an auxiliary body of the Land, Infrastructure, Transport and Tourism Ministry, the sources said.
At an extraordinary Diet session expected to convene in September, the government will submit a bill to amend the law in such a way that it allows the agency to lend to private companies.
The loans will have repayment terms of 40 years, the sources said.
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