Local governments are increasingly interested in public-private partnerships in the fields of water supply, sewerage, and industrial water supply. According to the Ministry of Land, Infrastructure, Transport, and Tourism, many organizations consider the renovation and earthquake resistance of facilities as an issue and believe that countermeasures should be considered through public-private partnerships. There is also strong interest in regional expansion, DX, AM (asset management), etc. Partly due to consideration of the requirements for state subsidies, more and more local governments are taking the initiative to implement Water PPP, entrusting the maintenance, repair, and renovation of water supply and wastewater treatment facilities to the private sector.
Water related businesses are struggling with various issues, including deterioration and fee income. There is also a need to address issues such as improving management efficiency and shortage of engineers. In the case of wastewater treatment plants, more than 90% of management tasks such as inspection and operation are assigned to the private sector, and comprehensive outsourcing to the private sector, where many tasks have been outsourced for many years, is increasing. Concession projects (rights to operate public facilities) based on the PFI Act, including water PPPs, are expanding.
Local governments are interested in innovation and earthquake resistance, maintenance and management of pipes and equipment, DX, large-scale cooperation and expansion, and AM. Many local governments are considering water PPP as a public-private partnership initiative, and some organizations have begun to study the feasibility of its implementation. Chino City, Nagano Prefecture, plans to conduct a similar survey in fiscal 2025. There are some areas, such as Gifu Prefecture, where the system is being considered in conjunction with public drainage systems related to river basins, and where municipalities in the prefecture are beginning to consider adopting the system independently and with neighboring areas.
Regional cooperation is also expected to become more active. In Gifu Prefecture, several cities in the Tono region are exploring the possibility of public-private partnerships. In Tottori Prefecture, a basin drainage project managed by the prefecture and five local governments is planning to conduct a feasibility study by fiscal 2025. Musashimurayama City, Tokyo, is considering a contracting method.
In the water sector, the Ministry of Land, Infrastructure, Transport and Tourism will approve the Project to Promote Infrastructure Enhancement by Public-Private Partnerships, etc., to support research, introduction and planning of public-private partnerships, due in fiscal 2027. For sewerage systems, government funding for sewerage pipe renovation will become a requirement starting in fiscal 2027, except for earthquake protection for buried pipes on emergency transportation routes. Regarding industrial water supply, the Ministry of Economy, Trade and Industry will introduce a water PPP requirement for subsidies starting in fiscal 2028 for projects of a certain scale.
Given this situation, it is expected that the number of water PPP projects by local governments and infrastructure managers will “increase further in the next two or three years” (a senior official from the Ministry of Land, Infrastructure, Transport and Tourism).
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