I OVERVIEW

In 1999, the Act on Promotion of Private Finance Initiative (Act No. 117 of 1999, the PFI Act) was enacted, and introduced the private finance initiative in Japan on a full-scale basis.2 Since then, the PFI Act has been revised a few times in furtherance of the promotion of PFI projects in Japan. For example, in 2011, the PFI Act was revised to allow the government to grant the concession rights of public facilities to the private sector. In 2013, a public-private fund called the Private Finance Initiative Promotion Corporation of Japan (PFIPCJ) was established by the revision of the PFI Act to provide new sources of financing and consultation support for PFI projects. In 2015, further revision was made to enable secondment of experienced public officials to private sector concessionaires to share the expertise of the public sector in operating the public facilities.

In December 2015, the Council for the Promotion of Private Finance Initiatives of the Cabinet Office (the PFI Promotion Council) established a guideline for the preferential consideration of diverse methods of PFI/PPP to induce local governments to preferentially examine the adoption of the PFI/PPP scheme when planning construction, operation or maintenance of public facilities.3 As a result, as at 31 March 2018, there have been 666 PFI projects announced under the PFI Act, amounting to approximately ¥5.8 trillion.4 The Japanese government aims to accelerate efforts to adopt the PPP/PFI method in order to tackle the increasing demand to maintain and renovate aged infrastructure, reduce the fiscal burden on impoverished local governments and cope with population decline in Japan.5

II THE YEAR IN REVIEW

In light of the government's above-mentioned strategy, in June 2018, the PFI Promotion Council announced the revised Action Plan for Promotion of PPPs/PFIs for fiscal year 2018 (the 2018 Action Plan)6 to further the efforts by the national and local governments to promote the PPP/PFI scheme by: reinforcing the existing measures to achieve the plan; and adding two areas (hydroelectric power generation facilities and industrial water systems) to the existing priority areas for concession projects (airports, water and sewage systems, roads, educational facilities, public housing, passenger terminal facilities for cruise ships and MICE7). To achieve the goals set forth in the Action Plans, the PFI Act was amended in 2018.8 The amendment aims to strengthen national government's support for PFI projects, and introduce a new system to facilitate the concession type PFI of public facilities and further incentivise PFI projects in the area of water business (see Section VIII).

i Airports

Among the priority areas for concession projects, airports are one of the growth areas with increasing demands for PPP/PFI transactions in Japan. In 2013, the Act for the Operation of Government Controlled Airports by Private Sector Entities was enacted to enable the central and local governments to privatise airports through concession, and the Ministry of Land, Infrastructure, Transport and Tourism (MILT) announced the Basic Policy on the Operation of Government Controlled Airports by Private Section Entities, which provides for the basic framework for all concessions of national airports.9

Against this backdrop, in 2016, Sendai Airport in Miyagi Prefecture started operation through concession,10 and New Kansai International Airport Company, a private concession company, started the operation of Kansai International Airport and Osaka (Itami) International Airport.11 In 2018, airport concession projects continued to be initiated in the local areas of Japan, with the process to grant concession rights in respect of seven airports in Hokkaido area being announced in March by the government.12 In addition, the operation by the private sector of Kobe Airport in Kobe City,13 Takamatsu Airport in Kagawa Prefecture14 and Tottori Airport in Tottori Prefecture15 have started in 2018. Fukuoka Airport in Fukuoka Prefecture, Mt Fuji Shizuoka Airport in Shizuoka Prefecture and Nanki-Shirahama Airport in Wakayama Prefecture are aiming to commence operation with the private sector in April 2020.16

ii Water and sewage

As opposed to airports, water and sewage is a mature area in Japan, with decreasing demands paralleling the decline in local population. Nevertheless, there are urgent needs to renovate the rapidly aging existing water facilities, especially by the municipal governments who have traditionally provided the water supply services to their local residents. Therefore, the national government is placing specific emphasis in promoting the concession-type PFI projects in the area of water and sewage system.17 Hamamatsu City, Shizuoka Prefecture signed a concession agreement with a private company to operate the city's sewage system in 2017, and in April 2018, the system commenced operation as scheduled.18 However, despite the efforts by the national government, the progress to privatise the water and sewage system by the municipalities in Japan has been slow. In response, the PFI Act and the Water Supply Act were amended in 2018 (see Section VIII).

iii Other areas

Another notable area for the PPP/PFI projects is in the area of utilisation and improvement of public properties. In May 2017, a successful bidder for the concession project to renovate a former prison into a hotel was selected. A part of the new facility is scheduled to open in 2019, and the hotel is expected to be in full operation by 2021.19

In addition, in relation to another priority area, Aichi prefecture and Yokohama City (Kanagawa Prefecture) have signed concession agreements to operate MICE facilities, which are scheduled to start operation in September 2019 and April 2020, respectively.20

III GENERAL FRAMEWORK

i Types of public-private partnership

In the past, approximately 70 per cent of the PPP/PFI projects were conducted by build–transfer–operate (BTO) methods, which rely on the 'services fees' or 'availability payments' from the government to construct social infrastructures (typically, government buildings and public schools). However, we may see an increasing number of concession-type PFI projects, especially in the area of economic infrastructures, such as airports, roads and port facilities.

In the 2018 Action Plan, the national government categorises the PPP/PFI projects into the following four types. Type I is a concession scheme introduced by the revision of the PFI Act in 2011, where a public authority confers on a private entity the right to operate public facilities for a certain period of time. Type II is a scheme to attach an income generating facility, which may produce revenues to cover the costs associated with the project, to the existing facility. Type III is PPP projects to make use of unused or underused publicly owned real properties. Type IV is other traditional PPP/PFI projects, which typically rely on 'services fees' or 'availability payments' from the government. Although the national government believes that traditional type projects serve as a first step for the municipal governments, it ultimately hopes to see more concession-type PFI projects. The 2018 Action Plan (which has a target of reaching the total size of ¥21 trillion over the 10-year period from 2013 to 2022) allocates ¥7 trillion to Type I projects, ¥5 trillion to Type II projects, ¥4 trillion to Type III projects and ¥5 trillion to Type IV projects.

ii The authorities

In Japan, PFI projects are implemented, not only by the central government, but also by the municipal government at the prefecture, city, town and village level.21 At the national level, the sector ministries that govern the public facility will conduct the procedure to select the private business operator (e.g., the Ministry of Justice conducted the procedures for the Nara Prison PFI as it is in charge of national prisons and rehabilitation facilities,22 and MILT is sponsoring the Takamatsu Airport PFI as it is in charge of national airports). In addition, the Private Finance Initiative Promotion Office within the Cabinet Office plays a principal role in the PFI market in Japan, setting the general policy on PFI projects by issuing bills and guidelines and establishing action plans, among others, to support the promotion of the implementation of PPP/PFI projects.

iii General requirements for PPP contracts

The PFI Act sets out the general framework of the PFI projects, which governs most PPP projects in Japan. It requires that, when considering the implementation of public facility development projects, such services shall be procured from the private sector to the extent possible and suitable,23 and a publicly open procedure is in principal required when selecting the private business operator for the project.24

To quantitatively assess the suitability and appropriateness of procuring the PPP/PFI method over other traditional options, value-for-money (VFM) analysis is conducted prior to selecting the PFI project by the relevant government. This analysis, which compares the life-cycle cost of the PFI project with the public sector comparator, helps the government to determine the model under which the public facility would be delivered at a greater VFM.

Public infrastructure facilities that are subject to PFI transactions under the PFI Act include the following:

  1. public infrastructures: for example, roads, railways, ports, airports, rivers, parks, water, sewage and industrial water facilities;
  2. public facilities: for example, government buildings and housing for government workers;
  3. public housing, and educational or cultural, waste treatment, medical, social welfare, rehabilitation, parking and underground facilities;
  4. telecommunication, heat supply, new energy, recycling, tourist and research facilities; and
  5. transportation facilities of vessels and aircrafts, etc., and satellites.

The terms of contracts under which the national government owes an obligation to pay for more than one fiscal year is limited to 30 years.25 Local governments and governmental organisations are not subject to such regulation. Notwithstanding, the Accounting Act and Preliminary Financial Results and Accounting Ordinance require that the deadline for the performance period be specified in the project agreement.26

When a municipal government enters into a project agreement that involves an estimated project amount for the purchase or lease of the public facility above a certain threshold amount, the government is required to obtain an approval of the local council in advance.27

In addition, a public bid is required for deals that are subject to the Agreement on Government Procurement of the World Trade Organization (AGP), and foreign entities may not be excluded from participating in procurement of PPP/PFI projects by the national government or local governments in accordance with the AGP.

IV BIDDING AND AWARD PROCEDURE

The Cabinet Office has issued a Guideline on PFI Project Implementation Process (the Procurement Guideline) to provide explanation on the process and practical guidance for participating in the selection process.28 Most PFI projects are awarded to private business operators either through competitive public bid or open proposal procedure. The general steps to be taken in the selection process are as follows:

  1. the decision to initiate a PFI project is made after the relevant government examines the possibility of procuring PFI projects from the private sector;
  2. the implementation policy is announced by the relevant authority to the public;
  3. the relevant authority conducts a VFM analysis and determines the project to be conducted by the PFI method;
  4. the opening of a public bid is announced or a formal request for proposal is issued by the relevant authority and a formal selection process begins; and
  5. evaluation of the response or proposal from the bidders is conducted and the preferred bidder is selected and announced.

i Expressions of interest

If the relevant authority intends to procure PPP/PFI projects, it must publish an implementation policy of the PFI project that outlines the selection process for the PFI business and private business operator, allocation of responsibilities and risks among the parties, information on the public facility (such as location and size), financial aid or support to be provided, and other items necessary for the implementation of the PPP/PFI business.29 To procure information in relation to the implementation policy, the relevant authority may conduct market hearings or soundings prior to or after the announcement of the policy.30

Sometimes, services and technical specification requirements are announced as early as concurrently with the announcement of the implementation policy to provide a better picture of the requirement to the interested parties at an early stage.

Publication of the implementation policy provides an important opportunity for the government to invite and assess expression of interest, and often comments and questions from the interested parties are solicited through the internet, and the government conducts hearing sessions.31

ii Requests for proposals and unsolicited proposals

Invitation to bid and requests for proposals

In order to invite private sector parties to take part in the public tender or submit a proposal in response to the formal request for proposal (RFP) by the public sector sponsor, public bid documents or the RFP is generally made available to the public on a relevant procurement website. To communicate a clear intention of what is required in the evaluation process, the bid document or RFP package will normally include detailed requirement for services and technical specification and the evaluation criteria, and the basic terms and conditions of the project agreement (or the draft itself). The authority normally provides opportunities to the participants to pose questions and receive answers through the procurement website or hold a question and answer session. Participants are normally requested to submit with the RFP responses their funding plans and measures to ensure the effectiveness of the proposals.32

Unsolicited proposals

The PFI Act was revised in 2011 to clearly define that unsolicited proposals of implementation policy for the PFI projects from private sector companies are permitted. Even before the revision, unsolicited proposals were allowed. However, as a result of the revision, the government is now obliged to promptly review the proposal and notify the proposing company of the result of such review without delay.33 This does not mean that the private party that made the proposal will necessarily be awarded the project. The government must separately initiate the public selection process and select the winner, provided that, when selecting the preferred bidder, the government must properly evaluate the contribution made by the proposing party.34

iii Evaluation and grant

The PFI Act requires that a private business operator to implement the PFI project be selected through an open procedure.35 Upon selection, objective evaluation (including evaluation on the effectiveness and efficiency of the project) must be carried out, and not only the price, but also the quality of the services to be provided to the public must be taken into account so that the technology and managerial expertise and innovation of the private business operator will be fully utilised.36 Accordingly, most PFI projects are awarded to private entity either through public competitive bid or open proposal procedure (or competitive dialogue procedure). Evaluation of the responses or proposals will be in accordance with the scoring formula contained in the procurement document, with the participants' response or proposal evaluated based on the price they propose (quantitative points) and other aspects of the responses or proposals they submit (qualitative points), and the participant with the highest accumulated points selected as the preferred bidder.

If it is difficult to assess the technical component or specification requirement only with the response or proposal submitted by the participant, the government may ask the participants to make a 'technical proposal,37 in which case such requirement will be specified in the procurement document.38

With regard to the negotiations during the selection stage, in the public bid procedure, requirements provided in the bid documents may not be modified or negotiated once the bidding procedure begins (provided that the bidders may be given opportunities to ask questions to the government in the public Q&A session). Whereas, in the public proposal procedure, the process is slightly more flexible, in that the relevant authority may have competitive dialogues with multiple bidders and the requirements and specifications may be amended as a result of such dialogues.39

In selecting the preferred bidder, external consultant may be retained to provide objective advice or an evaluation committee (usually comprised of outside experts and professionals) may be established to ensure transparent and objective evaluation of participants' responses or proposals.40

Once the private business operator is selected through the public procedure, such party must be announced promptly to the public.41 After the announcement is made, the relevant authority and the selected private business operator will enter into the project agreement.

V THE CONTRACT

i Payment

In most traditional PFI projects, a business operator relies on a 'service fee' or 'availability payment' from the public authority for each component of the services (i.e., construction and management of the public facility). Typically, a project agreement provides for the calculation formula of such service fee,42 and the public authority often reserves the right for reduction and withdrawal of payment in the event of failure by the operator to meet the agreed-upon performance standard.43 The payment cycle of the service fee is usually on a semi-annual or quarterly basis.44 The service fee for the construction phase is not necessarily paid by the public authority in a lump-sum amount, but in some cases, the service fee is paid by in equal instalments of principal and accrued interests, in which case the public authority can level its monetary obligation owed to the business operator over a period of time.

In contrast, the revision of the PFI Act in 2011 introduced a new scheme – a 'concession scheme' – in which the business operator is granted a concession right to operate and manage the public facility from the public authority, which includes the right to collect and receive a user fee45 directly from the users of the public facility.46 In a concession scheme, the business operator is expected to ensure profitability of PFI project on its own initiative. In other words, a concession scheme is a 'self-supporting model' or a stand-alone type of PFI project. The business operator in a concession scheme has the discretion to determine the user fee unless otherwise restricted by the implementation policy of the project, the concession agreement or by legislation.

ii State guarantees

In general, the PFI Act, which is the primary source of law governing PFI projects in Japan, does not have legal framework in which the state guarantees the payment obligation of the public authority to the business operator.

iii Distribution of risk

The Cabinet Office has released several guidelines related to PFI projects, including the Risk Allocation Guideline, the Contract Guideline and Concession Guideline. Notably, the Risk Allocation Guideline sets forth the basic principle for risk allocation among the parties that the party who is able to control the risk most efficiently should bear the risk,47 and identifies different types of risk as follows.48 If the distribution of risk is quite unreasonable such that PFI projects will not be performed in a proper and reliable manner, it is possible that the Prime Minister will request reporting from, or provide an advice or a recommendation to, the public authorities in charge of the relevant public facilities. 49

Force majeure

In respect of force majeure events, the Contract Guideline suggests that the business operator incur part of the loss caused by force majeure events to incentivise the operator to minimise the amount of loss.50 In this regard, the Standard Form of the Project Agreement released by the Cabinet Office for use in BTO scheme (the Model Agreement) states that, if the total amount of damage caused by force majeure events exceeds 1 per cent of the service fee, the public authority shall bear such excess amount, meaning that damage below such threshold amount shall be borne by the business operator.51 The Contract Guideline also suggests the business operator should enter into insurance agreement for insurable risk and damages as a measure of risk mitigation. In some cases, extension of the stated contract term can be used as a measure to compensate for loss of profit.

Fluctuation of price and interest rate

Fluctuation of the price will affect the profitability of the PFI project with longevity. In this regard, the Contract Guideline suggests the parties agree to a mechanism for adjustment of the service fee in the event that fluctuation of a specific index (such as consumer price index) has exceeded a certain threshold or otherwise for adjustment of the service fee at a certain interval.52

If the business operator has procured financing by way of floating rate loan, it is common for the operator to enter into an interest rate swap agreement with a financial institution.53

Reform of legislation

In some cases, legislative reform could affect and increase the project costs. It is quite common that the public authority is required to bear increased cost arising from reform of specific laws that apply to the specific PFI project in question. On the other hand, the business operator is required to bear increased cost arising from reform of laws that apply to the private sector in general.54

Defect of the existing facility

In a concession scheme, the business operator is sometimes granted the concession right in respect of an existing public facility. The Concession Guideline suggests that the parties should make an effort to minimise the loss arising from defect of the existing facility by way of disclosure of information from the public authority to the business operator.55 It is common to have a contractual provision that the public authority should compensate the business operator to a certain threshold amount or otherwise extend the term of the concession scheme if the business operator has suffered any loss because of the physical defect of the existing facility.

Demand risk

In a traditional PFI project, the revenue of the business operator relies on a stable fixed service fee paid by the public authority, which means that if the actual demand for the use of the facility fails to achieve the original expectation, such 'demand risk' is borne by the public authority; whereas, in a concession scheme whereby the business operator is expected to generate profitability on its own, the business operator will have to bear such demand risk.

As a measure to mitigate such demand risk, a 'joint venture model' where the business operator is entitled to receive a user fee directly from the users while the public authority also makes payment of service fee to the business operator may be adopted. It can be especially helpful in PFI projects where revenue from the public facility is expected to be volatile.

iv Adjustment and revision

In traditional availability payment-type PFI projects, it is common to have a contract provision regarding adjustment and revision of the service fee in response to the fluctuation of price (see Section V. iii) or that will take into account of the innovation if any innovation of certain technology is expected that could affect the performance of PFI projects.56

In a concession scheme, the business operator is entitled to adjust user fees at its discretion unless otherwise restricted by the implementation policy of the project, the concession agreement or legislation.

v Ownership of underlying assets

In typical traditional PFI projects, such as BTO schemes, ownership of the public facility is transferred to the public authority upon the completion of construction.

Similarly, in a concession scheme, if the business operator is granted the concession right in respect of an existing public facility, the ownership of the facility remains at the public authority; whereas, if the business operator is asked to construct a new public facility, the ownership of the public facility will be transferred to the public authority upon completion of the construction.

Under the PFI Act, the concession right is deemed as a real property right, and the business owner can create a mortgage on it to secure the monetary obligation owed to the financial institutions. If the lenders intend to transfer the concession right to another party as a part of foreclosure, they must obtain consent from the public authority. The concession rights and mortgage created thereon are registered in a registration system held at the Cabinet Office.57

vi Early termination

The project agreement can be terminated prior to expiration of the stated contract term if there is a cause for early termination set forth in the project agreement. In general, the cause for early termination by the public authority is breach of the project agreement by the business operator. Even in this case, the business operator is usually granted a certain grace period to cure the termination events. If the breach is a failure by the operator to meet a certain performance standard, the public authority can take alternative measures such as reduction or withholding a part of the service fee before resorting to early termination.58

On the other hand, causes for early termination by the business operator include the failure by the public authority to pay the service fee and cure such payment default within a certain period.59

In addition to termination for cause, it is common to have a no-cause termination clause if management or operation of public facility is no longer required as a result of change in the policy or demand for the service provided by the public facility.60 The project agreement can also be terminated if, as a result of force majeure or legislative reform, it has become impossible or impractical to continue the PFI project in the same manner as originally contemplated, and the parties have failed to agree upon the measures to address such adversity.61

The business operator is obliged to compensate for damages to the public authorities if the project agreement is terminated because of reasons attributable to the business operator, in which case, a specific amount as penalty (such as 10 per cent of the construction cost) is commonly provided in the project agreement.62 It is common to have a contract provision adding that the public authority can seek recovery of its loss if the actual amount of loss exceeds the specified amount.

VI FINANCE

The business operator generally raises funds for construction and management of the public facility through project finance where source of repayment derives from project revenue.

If the business operator procures such funds by way of a loan, upon request from the lenders, shareholders of the business operator often execute a 'sponsor support letter' in which they agree to cooperate with the lenders in performing the project, including but not limited to making additional capital contributions to the business operator upon the occurrence of certain trigger events. In addition, security interests are usually created on the assets of the business operator, including the 'concession right' as well as the shares in the business operator held by the sponsors. The lenders also have the 'step-in right' to intervene in the PFI project and engage a successor entity acceptable to the public authority to continue the same project in the event of default of the existing business operator.63 In practice, lenders will exercise their option to transfer contractual status of the business operator with respect to each agreement related to the PFI project to the successor entity in the event of default.

Since identity of the operator is critical to the success of the PFI project, the project agreement usually states that the business operator requires the consent from the public authority to transfer such contractual status under the project agreement. The public authority and the lenders will therefore enter into direct agreement in which the public authority agrees to refrain from early termination for a certain period of time so that the lenders can exercise their step-in right without the project agreement being terminated. The public authority will also provide consent to creation of security interest in the contractual status of the business operator, as long as it is not harmful to the stable operation of the PFI project and service quality.64

With regard to alternative financing resources, in relation to concession type PFI projects in which the business operator bears the demand risk (see Section V. iii), there has been a need for external investors who can provide risk money to the business operator in order to further promote the stand-alone type PFI projects. In response, amendment of the PFI Act in 2013 established PFIPCJ.

With respect to cross-border financing, while there is no restriction under the PFI Act that would prevent it, we rarely see such financing arrangements in PFI projects in Japan. Apart from the regulatory requirements, such as registration under the Money Lending Business Law of Japan, there are a few setbacks for cross-border financings or equity investments in PFI projects. First, the project size of PFI projects in Japan is still relatively small, and second, distribution of profits from equity investment in the business operator may not be lucrative enough to attract foreign investors. Limited liquidity in terms of equity interest in the business operator may also need to be improved with respect to PFI projects in Japan.

VII RECENT DECISIONS

In general, there has been no particular court precedent concerning PPP and PFI since the enactment of the PFI Act in 1999.

With respect to dispute resolutions in the area of construction works, in Japan, if parties are unable to resolve disputes through mediation or conciliation, such disputes will be settled through arbitration by the Construction Work Dispute Committee which is a semi-judicial institution organised in each prefecture pursuant to the Construction Business Act of Japan (Act No. 100 of 1949). The procedure of the arbitration held by the Construction Work Dispute Committee is not open to the public.

VIII OUTLOOK

The national government is striving to promote PPP/PFI to reduce the public financial burden of maintaining and operating infrastructure, and increase private investment and business opportunities in such areas, evident in the 2018 Action Plan. However, although the number of PPP/PFI projects in Japan has grown in certain areas, a surge is yet to be seen. One of the factors may be a lack of strong incentive on behalf of local governments, who are substantially subsidised by the central government in relation to public works, to commence the burdensome procedure to implement the PPP/PFI scheme. The harsh reality is, however, financial conditions of the local governments in Japan will become more severe while the number of public infrastructures requiring renovation will rapidly increase.

In response, in 2018, the PFI Act was revised to enhance further support from central government. For example, public authorities in charge of the public facilities and private business operators can submit enquires to the Prime Minister as to the availability of supportive measures from central government and applicability of regulations with respect to specific PFI projects. Consequently, the Prime Minister is now expected to serve as a one-stop contact point to receive and respond to such enquires. In addition, a 2018 revision of the PFI Act has enabled local governments to redeem their debt obligation (municipal bonds) owed to the central government in relation to the water works business prior to the original maturity date without any prepayment penalty being imposed, if such a fund was allocated to construction, renovation, operation or management of water supply and sewage systems, and subject to other certain eligibility requirements. Further, as a measure to promote concession type projects in respect of water supply, the Water Supply Act (Act No. 177 of 1957) was revised in 2018. Under the Water Supply Act, it is common for local governments to serve as a water supplier with the permission from the Ministry of Health, Labour and Welfare, and, if local governments intend to cease serving as a water supplier, they must obtain a separate permission from the same ministry. The 2018 revision of the Water Supply Act has made it possible for a local government to grant concession rights to private business operators with permission from the same ministry without losing its title as a licensed water supplier.


Footnotes

1 Kiyomi Kikuchi is a partner and Kazuyuki Wakasa is a counsel at TMI Associates.

2 The term PPP is used in Japan to describe a variety of different forms of public-private sector cooperation. This chapter, however, focuses principally on PFI, since it is, to date, the model that has been used for most PPP projects.

5 'Future Investment Strategy 2018', the growth strategy of Japan announced by the Japanese government on 15 June 2018 http://www.kantei.go.jp/jp/singi/keizaisaisei/pdf/miraitousi2018_zentai.pdf. See the Prime Minister's official website: https://www.kantei.go.jp/jp/headline/seicho_senryaku2013.html.

7 Meetings, incentive tours or travels, conferences or conventions, and exhibitions.

11 See the New Kansai International Airport Company website: http://www.nkiac.co.jp/concession/index.html.

15 See the Tottori Prefecture website: http://www.mlit.go.jp/koku/koku_tk5_000022.html.

17 Conference to Review Promotion of PPP/PFI Business in the Sewage Sector on 4 July 2017.

18 See the Hamamatsu City (Shizuoka Prefecture) website: https://www.city.hamamatsu.shizuoka.jp/g-sisetu/gesui/seien/pfi.html.

19 See the Ministry of Justice website: http://www.moj.go.jp/kyousei1/kyousei07_nara.html.

21 Article 2, Paragraph 3 of the PFI Act.

22 See the Ministry of Justice website: http://www.moj.go.jp/kyousei1/kyousei07_nara.html.

23 Article 3.1 of the PFI Act.

24 id., at Article 8.1.

25 id., at Article 68.

26 Article 29-8 of the Accounting Act, Article 100 of the Preliminary Financial Results and Accounting Ordinance.

27 Article 12 of the PFI Act and Article 3 of the Enforcement Order of the PFI Act (Tokyo Metropolis and prefectures: ¥500 million, ordinance designated cities: ¥300 million, other cities: ¥150 million, towns and villages: ¥50 million).

29 Article 5 of the PFI Act.

30 Section 2-3 of the Procurement Guideline.

31 ibid.

32 Section 4-1 of the Procurement Guideline.

33 Article 6.2 of the PFI Act.

34 Section 2-1-(8) of the Basic Policy for the Implementation of PFI Projects (Cabinet decision, dated 18 December 2015).

35 Article 8.1 of the PFI Act.

36 id., at Article 11.

37 id., at Article 10.

38 Section 4-1 of the Procurement Guideline.

39 id., at Section 4-1(11).

40 id., at Section 4-1 (12).

41 Article 11.1 of the PFI Act, Section 4-2 of the Procedure Guideline.

42 Article 4-2(3) of the Contract Guideline issued by the Cabinet Office.

43 id., at Article 4-3.

44 id., at Article 4-2(4).

45 Article 23 of the PFI Act.

46 There are several recent cases of concession scheme for which the entirety of the concession agreement is made publicly available (concession agreement for the operation of Sendai Airport, Kobe Airport, Takamatsu Airport, Tottori Airport, Fukuoka Airport, Mt. Fuji Shizuoka Airport and sewage treatment plant in Hamamatsu City).

47 Article 1, Section 2 of the Risk Allocation Guideline.

48 id., at Article 2, Section 6.

49 Article 4 of the Concession Guideline.

50 Article 6-9 of the Contract Guideline.

51 Articles 30 and 41 of the Model Agreement.

52 Article 4-4(3) of the Contract Guideline.

53 id., at Article 4-4(4).

54 id., at Article 5-3.

55 Article 4 of the Concession Guideline.

56 Article 4-4(5) of the Contract Guideline.

57 Articles 24 through 27 of the PFI Act.

58 Article 4-3 of the Contract Guideline.

59 Article 58 of the Model Agreement.

60 id., at Article 57.

61 id., at Article 59.

62 id., at Article 56.

63 Article 5-1 of the Contract Guideline.

64 id., at Article 5-1 and Article 6-1.