The Japanese private finance initiative and its application in the municipal solid waste management sector

In Japan, the development and financing of infrastructure are traditionally dominated by the public sector. Learning from the failures of so called ‘‘third sector’’ projects in the 1970s and 1980s as well as based on experience from the Private Finance Initiative (PFI) in other countries, Japan introduced a PFI Promotion Law in 1999 to enhance private participation in the provision of infrastructure. This paper presents the legislative and administrative framework of the Japanese PFI model and its application in the municipal solid waste management sector by analysing two case studies of Ohdate BOO incineration plant and Narumi BTO incineration plant. Findings from the dual case study indicate that total costs can be reduced due to life-cycle integration, output specifications and capitalisation of economies of scale. However, inconsistencies between the existing fiscal system and the legislative PFI framework must be addressed to increase the benefits from the PFI procurement strategy. 2006 Elsevier Ltd and IPMA. All rights reserved.