Japan’s Aichi Prefecture Said to Plan Sale of Toll-Road Rights

Aichi prefecture in central Japan plans to raise about 100 billion yen ($1.1 billion) in the country’s first sale of concessions to operate public toll roads, said two people with knowledge of the matter.

Toyota Motor Corp.’s home state is preparing to auction contracts for eight toll roads, said the people, who asked not to be identified as the deliberations are private. The plan is pending an amendment to laws that ban private enterprises from owning rights to operate public roads, one of the people said.

Local governments in Japan are under pressure as an aging population and decades of deflation erode tax income. Aichi’s tax revenue has been falling since 2008, when it reached a record 1.4 trillion yen, according to data compiled by the prefecture’s government.

A spokesman for the Aichi government declined to comment on the concession sale plan. The prefecture expects a response from the central government by May on amending laws that restrict private management of public roads, one person said.

Concessions for the toll roads may last for about 30 years, the people said. Buyers would be responsible for road maintenance as well as toll collection and operating shops and restaurants along the roads, one person said. The Aichi government wants to attract bids from groups comprising local and overseas investors, according to this person.

Under Japan’s current laws governing road construction and improvement, private companies aren’t allowed to operate tollways, according to a report by the Aichi prefectural government’s concession study panel published on Dec. 27.

Airport Sale

The eight tollways generated a combined 8.9 billion yen of earnings before interest, taxes, depreciation and goodwill amortization in the financial year through March 31, 2012, the December report showed.

Aichi’s attempt to sell road contracts follows state-owned New Kansai International Airport Co.’s planned auction of rights to operate two airports in Osaka, which may raise as much as 1.2 trillion yen.

The airport operator has unveiled a plan to hire financial advisers as early as in April for the sale, two people with knowledge of the matter said last month. New Kansai expects to start a global auction of the concession next year and aims to complete a deal in 2015, according to one of the two people.

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