Resentment simmers over JR Tokai loan deal

Updated : 22.02.2017 / Category Capsule

People within the rail industry are reportedly fuming over the "cozy ties" that exist between Prime Minister Shinzo Abe and Central Japan Railway Co. (JR Tokai) Chairman Emeritus Yoshiyuki Kasai in connection with the Linear Chuo Shinkansen project, according to a JR employee. This dissatisfaction stems from the government providing JR Tokai with long-term, low interest, fixed-rate, no-collateral loans to the tune of ¥3 trillion through its Fiscal Investment and Loan Program.

The first payment of ¥500 billion was parceled out in November 2016. An LDP Diet member said of the loan: "A low fixed interest rate of 0.6 percent, with repayment deferred for 30 years! Those are unbelievable conditions in light of the global trend of rising interest rates." Plans to disburse loans—on the same terms—to JR Tokai are proceeding as planned (starting from January), up to a total of ¥3 trillion.

In return for the loans, the Abe administration asked JR Tokai to advance completion of construction on the linear project between Nagoya and Osaka by as much as eight years from 2045. "The clear intention is to appeal to Osaka Ishin no Kai, which has urged the Nagoya and Osaka sections of the line to open simultaneously," the aforementioned LDP member said.

According to a JR Tokai source, Abe and Kasai met eye to eye on the project. "Kasai is quite old at 76, but it's still possible for him to witness completion of work during his lifetime if the work is advanced by eight years," the source said.

This year marks 30 years since the privatization of Japan National Railways, which was broken up into six passenger operators, including JR Tokai, and a freighter operator. "It's unbelievable to see this kind of collusion between government and a JR company after the enormous efforts that were geared toward privatization," an industry insider said. JR Hokkaido, JR Shikoku and other struggling group firms, which have been affected by a line-closure crisis on some routes, are reportedly resentful of the preferential treatment extended to the Linear Chuo Shinkansen project.

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This is a translation of an article from the February 2017 issue of Sentaku. The original article can be found here.