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Issue #592

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2014 Media Kit

Japan opens bidding for Sendai Airport rights in privatization drive

By: | at 02:38 PM | Air Cargo  

Japan has opened the bidding for rights to operate facilities at Sendai Airport, the nation’s 10th busiest, the first step of Prime Minister Shinzo Abe’s drive to increase private investment in public infrastructure as he tackles bloated government debt.

Both foreign and domestic bidders will be eligible to vie for rights to operate the airport’s runways and hangar facilities for up to 65 years, Japan’s Ministry of Land, Infrastructure, Transport and Tourism said in a website posting dated June 27.

The government is also preparing to sell rights to operate facilities at the New Kansai International Airport, a regional hub and the country’s fifth-largest airport, built on reclaimed land in Osaka bay.

Abe’s growth strategy, unveiled last month, reiterated the government’s aim to promote public-private partnerships operating infrastructure, including the Sendai and New Kansai airports.

Last year Abe set a target of tripling private-sector investment in Japan’s infrastructure to 12 trillion yen ($118 billion) over the next decade.

The Japanese government revised its laws on private financing initiatives in 2011 to allow private investor control of airports and other public facilities and Abe stepped up the drive for private sector involvement after he took office in December 2012.

He has said he wants the Japanese economy to be more open to foreign investment, as he seeks to jolt it from a decade-and-a-half of deflationary doldrums.

The municipal government of Osaka, however, late last year blocked a bid by U.S.-based distressed-asset investment fund Lone Star Fund to buy an Osaka-based train and warehouse operator, with some local assembly members voicing concerns about selling a public-oriented operation to funds with a short-term investment horizon.

Osaka Prefectural Urban Development Co was later sold to local railway operator Nankai Electric Railway Co for a price below Lone Star’s bid, raising questions about the openness of Japan’s infrastructure sector to foreign investors.

The Sendai Airport, damaged by the March 2011 earthquake and tsunami, serves the northeastern coastal region that was hit hard by that disaster and is now the centre of a rebuilding boom.

The ministry will hold a briefing for potential applicants on Friday and the first deadline for applications will be Dec. 5. The ministry plans to sign a final agreement with the winner in November of next year, a ministry official said. (Reuters)