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Diet asked to approve total sell-off

01 Jan 2001

THIS MONTH may be decisive for the future of the three JR companies on Honshu. Following a government decision on December 7, the Diet is being asked to approve a bill authorising sale of the remaining government-held shares in the three companies - just 12·5% of East Japan Railway's shares are state-owned, whereas in the case of Central Japan Railway the figure is 39·7% and of West Japan Railway 31·5%.

Assuming that the bill is passed, the government will relinquish management control to the railways, although it is not clear how willing it is to accept that the companies could set their own fares and levels of service. Both are politically sensitive areas, and some form of regulation is almost certain to remain in place. No doubt line closures too would be subject to political approval.

Yoshiyuki Kasai, President of JR Central, has in the past voiced much concern about the government moving to full privatisation. Among the problems to which he has drawn attention are the effective subsidy granted to the troubled JR Freight business, which struggles to compete against road and coastal shipping but pays very low access charges to the JR passenger companies for use of their tracks. Kasai also criticises the arrangements for the 'management stabilisation fund' set up so as to keep the JR companies on the islands of Hokkaido, Shikoku and Kyushu in business, suggesting that this distorts the logic of the market.

He has also addressed strong criticism at the way that the profitable Tokaido shinkansen between Tokyo and Osaka effectively subsidises the shinkansen routes operated by JR West and JR East. Speaking to Railway Gazette International in Nagoya at the end of November, he suggested that if JR East and JR West agreed willingly to a full sell-off (without the problems being resolved), they would be either 'ignorant or irresponsible'.

Kasai has suggested that JR Central would be better placed for full privatisation if its liabilities were reduced to a more manageable level, and there are indications that the government will address some, if not all, of his concerns. 'The problems will be solved before privatisation', suggested one commentator at JR Central. n