Japan May Offer $210 Million Loan for Florida High-Speed Train to Help Bid
Japan may offer as much as $210 million in loans to help pay for a Florida high-speed railway as a Central Japan Railway Co.-led group competes against Asian and European companies to build the first U.S. bullet-train line.
State-owned Japan Bank for International Cooperation may lend as much as 60 percent of the Florida project’s overall funding shortfall as part of JR Central’s bid, Tadashi Maeda, head of corporate planning, said in an interview in Tokyo yesterday. The project has a funding gap of about $350 million, according to Florida Rail Enterprise, the state agency responsible for it.
Japan’s offer may help JR Central compete for the $2.7 billion Florida contract against possible bids from Alstom SA, Siemens AG, South Korea’s Hyundai Rotem Co. and a venture between General Electric Co. and China’s CSR Corp. Florida Rail is due to release bidding details for the line, linking Tampa and Orlando, as early as this month, said Chief Operating Officer Nazih Haddad.
“Government support is vital for getting this kind of big contract,” said Masayuki Kubota, who oversees the equivalent of $1.9 billion in assets in Tokyo at Daiwa SB Investments Ltd. “Any big project has its own risk, but I think JR Central will manage the risk properly.”
JBIC may consider taking an equity stake in the Florida project, said Maeda. It isn’t planning to ask the U.S. government to guarantee any loan, he said.
Kinya Tani, a spokesman for Nagoya-based JR Central, parent of Japan’s largest bullet-train maker, declined to comment on how much funding the company may need for a Florida bid.
The state is looking for bidders to design, build, operate and maintain the high-speed train link, according to Florida Rail’s website. Construction is due to start in 2012 and be completed by 2015. So far $2.35 billion has been arranged for the project, including about $2 billion of federal funds.
“We are looking at all possible sources to fill the funding gap, including federal and private participation,” Haddad said.
JR Central, Japan’s largest high-speed train operator, was little changed at 668,000 yen as of 10:35 a.m. in Tokyo trading. It has gained 7.2 percent this year, compared with a 2.7 percent decline for the Nikkei 225 Stock Average.
The company and its Nippon Sharyo Ltd. trainmaking unit have teamed up with Mitsubishi Corp., Sumitomo Corp., Hitachi Ltd., Mitsubishi Heavy Industries Ltd. and five other Japanese companies to bid for high-speed rail projects in the U.S.
Japan earlier this year agreed to allow JBIC to lend to developed countries to help Japanese companies boost exports. The lender has traditionally only supported developments in emerging markets.
Nippon Sharyo’s N700 high-speed bullet train can travel at a top speed of 330 kilometers per hour (205 miles per hour). That compares with Amtrak’s Acela Express, the U.S.’s fastest train, which is capable of 241 kilometers per hour between Washington and Boston.
JR Central operates the high-speed line linking Tokyo and Osaka, Japan’s oldest high-speed train line, which was used by 138 million passengers in the year ended March 31. Japan hasn’t had a fatal bullet-train accident since services began in 1964.
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