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Osaka City Plans to Sell Thirty-Year Water Treatment Concession

Nov. 12 (Bloomberg) -- Osaka city, Japan’s third-most populous, plans to sell the right to operate its water treatment and supply services for 30 years.

The city of about 2.67 million people will sell the water treatment and supply concession to a separate entity, initially owned by the city government, by March 2016, it said in a statement on its website today. It then plans to sell a stake in that business to private companies at a later date, according to the statement.

Osaka, led by Mayor Toru Hashimoto, joins other Japanese cities in privatizing the operations of state-run infrastructure from airports to water supply. The moves are part of Prime Minister Shinzo Abe’s plan to reduce Japan’s debt and boost investment by private companies.

The city will set out a detailed plan for the concession sale by March next year, according to the statement. Osaka’s Waterworks Bureau, which currently provides the services, earned net income of 10.3 billion yen ($103 million) in the year ended March 31 on revenue of 65.4 billion yen, according to data compiled by the bureau.

Partially privatizing the city’s water services will promote collaboration between the government and private companies, as well as prepare water businesses to expand overseas to offset declining domestic demand, the government said in the statement.

Fukuoka prefecture on Japan’s southern Kyushu island is considering a sale of rights to operate the nation’s fourth-biggest state-owned airport, which could raise more than 120 billion yen, people with knowledge of the matter said last month. It would follow Sendai, in Japan’s northeastern Miyagi prefecture, in seeking money from an airport concession sale.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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