JAPAN EXPRESSWAY HOLDING AND DEBT REPAYMENT AGENCY JAPAN EXPRESSWAY HOLDING AND DEBT REPAYMENT AGENCY 2016 Japan Expressway Holding and Debt Repayment Agency Yokohama Mitsui Bldg. 5F, 1-1-2, Takashima, Nishi-ku, Yokohama City, Japan 220-0011 TEL. +81-45-228-5977 http://www.jehdra.go.jp November, 2016 Contents ■Agency Overview ■Comparison of Debt Repayment Plan and １ About the Agency ………………………………………… 1 Performance ２ Establishment of the Agency ……………………………… 1 １ Comparison of FY 2015 Debt Repayment Plan and ３ Operation of the Agency ………………………………… 2 Performance ………………………………………………… 11 ４ Agreements with Expressway Companies and ２ Transition of the Debt Repayment Plan and Business Implementation Programs ……………………… 3 Performance (Since the Agency was established) ……… 14 ５ Procedural Flow …………………………………………… 4 ６ Expressway Management ………………………………… 4 ■Overview of FY 2015 Financial Statements １ Profit and Loss Statement ………………………………… 15 ■Status of Business Execution in FY 2015 ２ Balance Sheet ……………………………………………… 16 １ Holding and Leasing of Expressway Assets ……………… 5 ２ Status of Debt Repayment ………………………………… 6 ■Present Condition of Expressways ３ Interest-free Loans to Companies ………………………… 8 ………………………………………………………………… 17 ４ Arrangements to Facilitate Reduction in Costs for New Construction, Reconstruction, Maintenance, ■Appendix Repairs and other Expressway Maintenance …………… 8 ………………………………………………………………… 20 ５ Exercise of Statutory Authority on Behalf of Road Administrators ……………………………………… 9 ■Expressway Network ６ Management of Railway Facilities Connecting ………………………………………………………………… 27 Honshu and Shikoku ……………………………………… 10 Cover Photos ①Minatooohashi（Route 4 & 5 Bayshore Line・ Hanshin Expressway Co., Ltd. Route 16 Osaka Port Line） ●① ●② ②Rainbow Bridge（Route 11 Daiba Line） Metropolitan Expressway Co., Ltd. ③Shin-Sanagawa Bridge（Shi-Tomei Expressway Central Nippon Expressway Co., Ltd. ●③ ●④ Okazaki Higashi IC ～ Shijo IC） ④Seto Bridge（Seto-Chuo Expressway Kojima IC Honshu-Shikoku Bridge Expressway Co., Ltd. ～Sakaide IC） ●⑤ ●⑥ ⑤Moji-ko IC, Kanmon Bridge（Kanmon Expressway） West Nippon Expressway Co., Ltd. ⑥Kuki-Shiraoka JCT（Ken-Ō Expressway） East Nippon Expressway Co., Ltd. President's Message The Japan Expressway Holding and Debt Repayment Agency was established in October 2005 with six privatized expressway companies within the privatization framework of the highway public corporations. The missions are to hold and maintain the expressway assets in a good condition and to repay inherited debts from the highway public corporations as well as incremental debts due to new construction of expressway assets. We commit to the steady and full repayment of the debts as well as maintaining the safety and high quality of expressway assets by working closely with the six expressway companies. The repayment scheme is based on utilization of the fees paid by the expressway companies for the lease of the expressway assets. Further, in cooperation with the expressway companies, we exercise our authority as road administrator in a timely and appropriate manner to ensure the safe and efficient operation of the expressways. For regional assets we also oversee the detailed maintenance and management works appropriate to local conditions thus ensuring that we hand over safe and high quality expressways to the next generation. Interest rate rises are the most critical risk for long-term repayment schedules. We have dealt carefully with this risk by effective liability management such as issuing ultra-long-term bonds during the recent historically low interest rate period in Japan. As a result, we have been outperforming the debt repayment with the current balance well below the original forecast. Through our website we actively disclose business and operational information such as debt repayment plans, performance comparison tables, annual maintenance reports, as well as the revenue and expenditure results of each route. Our conscientious disclosures exceed the statutory requirements to ensure the transparency and accountability of our operation. The Shin Tomei Expressway between Hamamatsu-Inasa junction and Toyota-Higashi junction was opened in February, 2016. The opening made us to extend double expressway networks of Tomei Expressway and Shin Tomei Expressway by 200 km, and has significantly reduced the congestion of Tomei Expressway. New expressway toll system was established in Tokyo metropolitan area in April, 2016. The system accompanying with the development of network in a beltway around greater Tokyo area have led to a decrease of the heavy traffic in central Tokyo. Additionally, these have led to a positive outcome such as an increase of many new distribution facilities built along the beltway. We will do our utmost to realize a successful and efficient operation of the expressway business to enrich everyone's lives. With your continuous support and guidance, every efforts will be made to meet our commitments. Hirotada Seyama President, Japan Expressway Holding and Debt Repayment Agency October 2016 Agency Overview Agency Overview １．About the Agency The objectives of the Agency are to reduce the burden of the general public relating to expressways and to support the successful implementations of the expressway business by the Companies, by holding and leasing expressway assets related to expressways and repaying debts in a reliable and swift manner. ２．Establishment of the Agency The Japan Expressway Holding and Debt Repayment Agency (hereafter referred to as “the Agency”) was established on October 1, 2005, along with six expressway companies (hereafter referred to as “the Companies”), under four laws regarding the privatization of four highway public corporations, which were enacted in accordance with the Japanese Government's policy of privatizing the four public corporations, as spelled out in the Reorganization and Rationalization Plan for Special Public Corporations (approved in a Cabinet meeting on December 19, 2001) ◆ Framework of the Privatization of Highway Public Corporations Objective of Privatization ● To secure the repayment of interest-bearing debts amounting to about 40 trillion ● To construct, without delay, genuinely needed expressways with minimum fiscal burden on the general public, while paying due respect to the autonomy of the Companies ● To offer diverse and flexible prices and services to expressway users by utilizing the private sector’s know-how Companies: Construction, renewal and management of expressways and collection of tolls −1− −2− Agency Overview ３．Operation of the Agency The Agency concludes agreements with each of the Companies, receives approval by the Minister of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), and formulates business implementation plans that include lease fees and a debt repayment plan. On the basis of this agreement, the Agency will fully repay the debts inherited from the public corporations and new debts accepted from the Companies before the expiration date of toll collection duration*, with the lease fees paid by the Companies. Upon full repayment of the debts, the expressways will be transferred to the Companies, which are the original road administrators. Until the handover of expressway management, the Agency will exercise statutory rights on behalf of them. ◆ Scheme for the Implementation of Expressway Business Activities by Agency and Companies Funds raised Authorization by the minister of MLIT *Partial revision of the Road Law, etc. that was executed on June 30, 2014 changed the expiration date of collection duration of expressway tolls leasedby the Agency to before September 30, 2065, to allow prompt and deliberate renewals(construction such as specified renewal)corresponding to the aging of expressways. ◆ Scope of Business Activities (prescribed in Article 12 of the Japan Expressway Holding and Debt Repayment Agency Law) 1. Holding of expressway assets and their leasing to the Companies 2. Repayment of inherited debts 3. Acceptance of debts borne by any the companies to pay the cost of new construction, reconstruction, repair or restoration of expressways following disasters under the Agreement, and the repayment of such debts 4. Provision of interest-free loans, financed with subsidies granted by the national government or local public entities as prescribed by Cabinet order, to Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co.,Ltd., to partially cover funds to pay the cost of new construction or reconstruction of the Metropolitan Expressway and/or Hanshin Expressway 5. Provision of interest-free loans, financed with subsidies granted by the national government, to the Companies to partially cover funds to pay the cost of the restoration of expressways damaged by disasters 6. Provision of interest-free loans, financed with subsidies granted by the national government, to the Companies to partially cover funds to pay the cost of construction of junctions connecting the said expressways and roads(excluding expressways) specified by the Ordinance of the Ministry of Land, Infrastructure and Transport and Tourism. 7. Provision of interest-free loans, financed with subsidies granted by local public entities, as prescribed by Cabinet order, to Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co., Ltd., to partially cover funds to pay the cost of new construction, reconstruction, repair or restoration of Metropolitan Expressway Co., Ltd., and/or Hanshin Expressway Co., Ltd., following disasters 8. Subsidization required to facilitate a reduction