Head on this page.

Kawai Water Purification Plant PFI Project

Print this page

Using Private Financing to Respond to the Growing Demand for Renovating Water Purification Facilities

Water systems are essential social infrastructure for maintaining comfortable, hygienic living environments. At present, approximately JPY 40 trillion has been invested in Japan's water purification facilities and water and sewage systems. Most of that amount was used for construction during Japan's period of high economic growth and deterioration has in recent years resulted in a growing demand for renovation. It is now estimated that the approximate JPY 550 billion required annually for renovation as of the end of March, 2006 will grow to 1.5 times that amount in the decade beginning with 2020 and surpass the amount spent on new construction in 2025.

On the other hand, with economic growth slowing, the population aging, and the birthrate falling, the national and local governments are dealing with increasingly severe fiscal management circumstances. As a result, spending on water projects has fallen at an average rate of 4.0% annually over the past 10 years. If this trend continues, it is feared that a great backlog of renovation work will develop as renovation demand exceeds the amount of funds available.

Japan, therefore, has loosened regulations on water system operations, and is attempting to make systems more efficient by outsourcing to private–sector providers, while also moving ahead with social infrastructure improvements financed with private–sector money under PFI (Private Finance Initiative)* schemes.

  • *The Private Finance Initiative approach was developed in the U.K. as a way to provide social capital. Its purpose is to use private–sector capital, management know–how, and technical expertise to perform public–sector services (Construction, maintenance and management, operation, etc. of public facilities) more efficiently and effectively than national or local governments could on their own.

Applying Our Wealth of Experience and Know–How to Actively Support Domestic and Overseas Water Businesses

Responding to societal demands, MHCB arranged a syndicated loan for the refitting and operation of Yokohama's Kawai Water Purification Plant. This was the first PFI Project for the renovation of an entire water purification facility in Japan.

Diagram of the Kawai Water Purification Plant

Source: Yokohama Waterworks Bureau's Website (Translations by Mizuho)

The subject of this project is a deteriorating water purification facility constructed in 1901. The project calls for a water system company established with joint investments by the private sector to refit this facility and, after its transfer to the city of Yokohama, manage and operate it over the ensuing 20 years. The application of the PFI approach to water projects offers local governments the benefit of not having to invest large amounts of public money to renovate aging facilities and gives private companies and investors an opportunity to participate in the stable business of operating a water system.

As the first water system PFI Project in Japan, this project has gained significant attention from cities, towns and villages across the country.

MHCB will continue to pursue opportunities to apply the PFI approach and work with as many local governments as possible to meet water facility renovation demand, which is expected to grow significantly going forward. In addition, in parts of Asia with strong demand for investment in new water systems, we aim to contribute to the realization of better living environments by actively supporting water businesses primarily through PFI–based projects for the installation of water system infrastructure.

Branches (Japan)

Branches (International)

Integrated Report

CSR Management

Fostering Industries with the Aim of Generating Business Opportunities

Corporate Information

Group Companies

Mizuho's Brand Strategy

It moves to the head on this page.
It moves to the head on this page.