May 26, 2016 3:08 am JST

Tokyo-Osaka maglev train may start sooner than planned

JR Tokai's maglev train will significantly cut travel time between Japan's two major cities.

TOKYO -- The Japanese government and Central Japan Railway may launch high-speed maglev train service between Tokyo and Osaka as much as 8 years earlier than the initial 2045 target date.

The planned Linear Chuo Shinkansen bullet train will connect Tokyo to Nagoya in 40 minutes, and the capital to Osaka in just 67 minutes. The first leg of the magnetic-levitation line is already under construction and is expected to start running in 2027.

The second leg between Nagoya and Osaka was not scheduled to start operating until 2045. But government officials and the railway, better known as JR Tokai, have been discussing shortening the timeline since spring, in response to calls from the ruling Liberal Democratic Party and municipalities along the line for an earlier start date.

Construction of the Tokyo-Nagoya line alone is expected to cost 5.5 trillion yen ($49.8 billion), which JR Tokai plans to finance itself through bank loans and corporate bonds. But the entire project, including the extension to Osaka, will likely cost about 9 trillion yen. The railroad company had planned a roughly eight-year break between building the two sections to avoid taking on too much long-term debt too quickly.

The government will include plans to assist JR Tokai in its basic policy of economic and fiscal management to be drawn up as early as the end of May. It will likely take advantage of the fiscal investment and loan program, issuing bonds over several years in order to provide long-term, low-interest loans to JR Tokai through a state-tied fund. It is seen lending the rail company the just over 3 trillion yen needed for the Osaka extension.

"JR Tokai won't need an eight-year break" if it can fund the project with government assistance, a senior LDP official said.

But the government would expose itself to business risks from the maglev project by providing JR Tokai with such a massive long-term loan. The government and the ruling coalition will carefully iron out details of the aid proposal.

Discussions over loan terms and a new business plan for an earlier start date will begin in earnest after the upper house elections in July. An LDP committee will likely head these talks with the goal of reaching a conclusion by the end of the fiscal year in March.

JR Tokai President Koei Tsuge told reporters Wednesday that he would be open to moving up the timeline if the government provides an effective assistance plan. "We also want to start operations early," he said.

Several government sources have also said that there is growing momentum to push up the start date.

The new maglev line will lead to greater travel between Tokyo and Osaka, and could significantly boost tourism, business and other fields. The Kansai Economic Federation estimates an annual economic benefit of 670 billion yen from the project. And success domestically would provide a tailwind for maglev train exports to North America.

Flexible fiscal policy will likely be a major topic at the Group of Seven summit starting in Japan on Thursday. The government is planning to point out the shortened timeline, citing it as an example of efforts to bolster infrastructure investment and domestic demand. 

(Nikkei)

Central Japan Railway Co.

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