Thursday, August 22, 2024 Japan’s ambitious plan to extend the Hokuriku Shinkansen bullet train line from Tokyo to Osaka is facing significant challenges as costs escalate, and construction timelines lengthen. The Ministry of Land, Infrastructure, Transport, and Tourism recently revealed that the estimated cost of the extension has surged to 5.3 trillion yen (approximately $36 billion), more than double the initial 2016 estimate of 2.
1 trillion yen. Escalating Costs and Extended Timelines The sharp increase in the project’s cost is attributed to rising labor and material expenses, as well as changes in construction timelines due to labor reforms. Initially, the extension was expected to take 15 years to complete, but the latest estimates suggest it could now take up to 28 years.
These developments have raised concerns about the project’s viability, particularly whether it can still pass the cost-benefit test, a crucial condition for greenlighting the construction. The Ministry did not provide an updated benefit-to-cost ratio, which was previously calculated at 1.1 in 2016.
With 1.0 being the minimum threshold for approval, the project’s future hangs in the balance. Cost-Benefit Ratio Under Scrutiny The Ministry of Land, Infrastructure, Transport, and Tourism has acknowledged the challenges in providing an accurate benefit-to-cost ratio at this time.
This uncertainty is partly due to changes in Japan’s economic landscape, particularly the rising borrowing costs as th.