Executive Summary
The Osaka-Kansai Expo ran from 13 April to 13 October 2025. During the same period, public-private partnerships in water and sewerage moved one after another in Osaka Prefecture. For water supply, Osaka City procured the renewal of its trunk water mains as a PFI, and the winning companies announced it as "the first introduction in Japan." For sewerage, Osakasayama and Kawachinagano tendered jointly, and the two cities describe it as "Japan's first wide-area Water PPP Level 3.5 tender." Water supply consolidation also grew to 19 municipalities as five cities joined.
The national government requires, from FY2027, that a municipality has already decided to adopt Water PPP before it receives national support for sewage pipe renewal, except for seismic reinforcement of sewage pipes under emergency transport roads and similar. For Level 3.5, the decision counts not when the implementation policy is published but when the tender starts, that is, when the tender documents are published. The guideline considers that about two to three years are needed before Level 3.5 tender documents can be published.
This article breaks down the three Osaka developments, explains how Level 3.5 differs from Level 4 and what the grant requirement means in practice, compares the cases with the early concessions in Hamamatsu and Miyagi, shows how to read the re-municipalization cases, and lays out seven decision axes for municipal staff.
Two First-in-Japan Cases and Wide-Area Consolidation
The two first-in-Japan cases, the water-main PFI and the wide-area Level 3.5 sewerage procurement, and the prefecture-wide consolidation that ran alongside them, taken from the procurers' own documents
Osaka City water-main earthquake-resistance PFI, project cost (incl. tax)
52.5 billion JPY
Contract amount ¥52,553,216,100
Trunk mains renewed under the same project
38 km
About 100 routes
VFM of the same project
7.19%
Osaka City's initial estimate was 3.82%
Municipalities whose water supply is consolidated into the Osaka Water Supply Authority
19 municipalities
Including the five cities that joined in April 2025
First-in-Japan #1: Osaka City Water-Main Earthquake-Resistance PFI (started April 2024)
To avoid wide-area supply outages in large earthquakes such as a Nankai Trough earthquake, Osaka City procured the renewal of about 38 km (about 100 routes) of trunk mains as a single PFI covering planning, design, construction, construction supervision and operation.
| Item | Details |
|---|---|
| Term | FY2024 to FY2031 (8 years) |
| Project cost (contract amount) | ¥52,553,216,100 (incl. tax) |
| Scope | Trunk distribution mains and transmission mains, about 38 km (about 100 routes) |
| VFM | 7.19% (¥3.943 billion). Osaka City's initial estimate was 3.82% |
| Operator | Water Partner Osaka Pipeline Co., Ltd., a special purpose company set up by a group with Obayashi Corporation as the representative company |
| Acceleration | Completion is planned for the end of FY2031. With conventional procurement it would be the end of FY2036, so large-earthquake countermeasures come about five years earlier |
The "first in Japan" claim comes from the winning companies. Kubota announced that "introducing the PFI method to a project renewing ageing trunk water mains is a first in Japan," and lists seven member companies with Obayashi Corporation as the representative company. Kurimoto's release also carries "first introduction of the PFI method to trunk water main renewal in Japan" in its headline. Osaka City Waterworks Bureau's overview page and overview document do not use the phrase.
First-in-Japan #2: The Osakasayama and Kawachinagano Wide-Area Level 3.5 Joint Procurement (started April 2026)
The two cities say they "carried out Japan's first wide-area Water PPP Level 3.5 tender in FY2025." Osakasayama has 57,000 residents and Kawachinagano 97,000 (as of March 2025); they are neighbouring cities with comparable sewerage facilities and budgets.
| Item | Details |
|---|---|
| Contract names | Osakasayama City Public Sewerage Facilities Comprehensive Maintenance (Phase 3) and Kawachinagano City Sewerage Facilities Comprehensive Management |
| Method | Wide-area Water PPP Level 3.5 (renewal-implementation type). The two cities select the operator jointly under an agreement, and each city signs its own contract |
| Scope | All sewerage facilities across both cities (pipes, pumping stations, manhole pumps; the treatment plant is Kawachinagano only) |
| Work | All maintenance, plus overall management, planning, renewal and design |
| Amount ordered | About ¥2,016 million excluding tax (operating budget only). About ¥654 million for Osakasayama and about ¥1,362 million for Kawachinagano |
| Tender | September 2025 |
| Term | 1 April 2026 to 31 March 2036 (10 years) |
The contractor is an eight-member joint venture, Minami Osaka Koiki Gesuido Service, with Fujino Kogyo Co., Ltd. as the representative company. It signed service contracts with both cities on 19 February 2026. The release's subtitle also describes it as "a Water PPP Level 3.5 project of a form that is a first in Japan's sewerage sector."
Each city had outsourced sewerage under comprehensive contracts for more than ten years. The two cities named two issues in procuring jointly. The first was aligning the performance requirements and the contract clauses as far as possible. The second was what happens when one city terminates its contract: the contracts give both the other city and the operator the right to terminate the other city's contract. The performance requirements also anticipate other bodies joining partway through the term ("later-joining contracts").
Concurrent Development: Consolidation into the Osaka Water Supply Authority (April 2025)
Municipal water supply has been consolidated into the Osaka Water Supply Authority in four rounds.
| When | Municipalities |
|---|---|
| April 2017 | Shijonawate, Taishi, Chihayaakasaka |
| April 2019 | Sennan, Hannan, Toyono, Nose, Tadaoka, Tajiri, Misaki |
| April 2021 | Fujiidera, Osakasayama, Kumatori, Kanan |
| April 2025 | Kishiwada, Yao, Tondabayashi, Kashiwara, Takaishi |
With the five cities the total became 19 municipalities, and the Authority aims to consolidate with more than half of the prefecture's 43 municipalities by FY2029. According to the Authority, national subsidies for the five-city consolidation are expected to total ¥11.5 billion. Izumiotsu, Minoh and Kadoma are in study and consultation toward consolidation in April 2027. Osaka City and Sakai City are not among the consolidated municipalities; they have a partnership agreement with the Authority to strengthen the water supply base.
Correctly Locating the "Expo Trigger"
The three developments above, the pipeline PFI, the joint procurement and the consolidation, were not Expo projects. They were separate projects that advanced in Osaka Prefecture during the same period. The water works for the Expo are a different project. The Waterworks Bureau raised the water supply capacity to the Yumeshima area to about 18,000 m³ per day, at the developers' expense. The capacity was set from the water needed for the Expo and for the Osaka IR, expected to open around 2030, and the facilities were completed by the end of FY2024. The accurate framing is "they advanced in Osaka at the same time as the Expo," not "the Expo triggered them."
Water PPP Levels
How Level 3.5 differs from Level 4, from the comparison table in guideline ver. 3.0
"Water PPP" was newly defined in the PPP/PFI Action Plan (2023 revision), adopted at the 19th meeting of the PFI Promotion Council on 2 June 2023, and the 2026 revision renamed it "Mizu no Kanmin Renkei" (public-private partnership for water). It is the collective name for the concession method (Level 4) and the integrated management and renewal method (Level 3.5).
Level 3.5 vs. Level 4
The main rows below are taken from the comparison table in guideline ver. 3.0 (Figure 1-3).
| Item | Level 3.5 (integrated management and renewal) | Level 4 (concession) |
|---|---|---|
| Term | Ten years in principle. An exception requires the manager to explain the reason based on published information | Can be set freely (most early cases run 20 years or more) |
| Public facility operation right | Not set (outsourcing) | Set |
| Tariffs | The contractor does not collect them directly | The operator collects the set tariffs directly as its own revenue |
| Funding for maintenance and renewal | Service fees, within the operating (Article 3) and capital (Article 4) budgets | Tariffs collected directly; work outside the Article 3 and Article 4 budget frames is also possible |
| Profit sharing | If the mechanism is triggered by a private proposal during the term, cost savings can be shared | Savings from the operator's ingenuity belong to the operator |
| Staff secondment under the PFI Act | Not available (secondment under the Act on Secondment of Local Public Employees to Public-Interest Corporations is possible) | Available (retirement secondment under Article 79) |
Level 3.5 is outsourcing that meets all four requirements: (1) a long-term contract (ten years in principle), (2) performance-based ordering, (3) integrated management of maintenance and renewal, and (4) profit sharing. Because it does not require an operation right, it is considered easier to undertake than Level 4. As an example of an exceptional term, the guideline cites a combination of a renewal-support type of about five years and a renewal-implementation type of about ten years, about fifteen years in total.
Major Level 4 Cases
| Municipality | Sector | Start | Operator |
|---|---|---|---|
| Hamamatsu | Sewerage (Seien treatment district) | April 2018 | Hamamatsu Water Symphony (set up by a group of Veolia, JFE Engineering, ORIX, Tokyu Construction and Suyama Construction) |
| Miyagi Prefecture | Water supply, sewerage and industrial water (Miyagi-type management and operation) | April 2022 | Mizumusubi Management Miyagi (METAWATER holds 51% of the voting shares) |
In the Seien treatment district, Hamamatsu introduced the operation-entrustment method under the PFI Act from FY2018, the first in Japan, and runs it as a 20-year project. It covers three facilities in Seien, the largest treatment district in the city, and the operator's proposal expects cost reductions of about ¥8.6 billion over 20 years. Miyagi's operating company aims to cut costs by ¥33.7 billion over 20 years compared with before, and according to the prefecture, savings in the first two years exceeded the plan by ¥400 million.
The Grant Requirement from FY2027
The requirement for national support for sewage pipe renewal, when the decision counts, and how long it takes to reach the tender
This is the single most important fact for municipal staff in this article.
The requirement applies to national support for renewing sewage pipes, including combined sewers, and covers the Comprehensive Grant for Social Capital Development, the Disaster Prevention and Safety Grant, the Okinawa Promotion Public Investment Grant and individual subsidies (sewerage project and sewerage disaster-prevention project). Renewal of treatment plants, pumping stations, manhole pumps and sludge pipes, and new sewage pipes, are outside it; seismic reinforcement of pipes under emergency transport roads and key logistics roads is an exception.
How Long It Takes to Reach the Tender
The guideline expects about two to three years before Level 3.5 tender documents are published (3.2). This is what Osakasayama and Kawachinagano actually did.
FY2023: talks begin
The two neighbouring cities, which had started comprehensive outsourcing at the same time, had been exchanging information regularly. Both had already extended outsourcing to its maximum scope, so they judged that going further required cooperation between them and began talks (four meetings that year).
FY2024: feasibility study
They carried out a feasibility study under MLIT's model city support programme, and MLIT joined the talks (four meetings). They revised the performance requirements to meet the Level 3.5 conditions.
FY2025: agreement, tender and contract
The cities signed a joint procurement agreement and used the subsidy for Water PPP study costs to prepare the tender documents. The tender went out in September 2025 and the contracts were signed on 19 February 2026.
FY2026: project start
The ten-year project began on 1 April 2026. The cities' presentation says it took "about three years from starting the joint study in FY2023 to launching the tender."
The two cities already had more than ten years of comprehensive outsourcing experience, and still took about three years from the start of talks to the tender. Subtracting the guideline's two to three years from FY2027 puts the start of study in FY2024 or FY2025. A municipality that has not yet begun a feasibility study will need to compare, in its budget, funding sewage pipe renewal without national support until it meets the requirement against rescheduling the renewal. Level 4 meets the requirement when the implementation policy is published, but setting an operation right requires a council resolution beforehand (PFI Act, Article 19(4)).
National Promotion Framework
MLIT held the public-private partnership promotion council six times in FY2025, and at the sixth meeting (20 February 2026) Osakasayama and Kawachinagano presented their joint procurement.
The Action Plan targets 100 water supply, 100 sewerage and 25 industrial water cases "materialized" in the ten years to FY2031. For sewerage, it says it will work to reach the target early, within FY2026. "Materialized" includes cases where implementation was studied regardless of whether the project is finally carried out, and the industrial water target also counts multi-year, multi-task outsourcing.
Comparison with Hamamatsu and Miyagi
The two early Level 4 cases and how the two cities' joint procurement differs
| Item | Hamamatsu | Miyagi | Osakasayama and Kawachinagano |
|---|---|---|---|
| Method | Level 4 (sewerage concession) | Level 4 (water supply, sewerage and industrial water concession) | Level 3.5 (joint sewerage procurement) |
| Start | April 2018 | April 2022 | April 2026 |
| Term | 20 years | 20 years | 10 years |
| Scope | Three facilities in the Seien treatment district | The prefecture's water supply, sewerage and industrial water | All sewerage facilities in both cities |
| Contract form | The city set an operation right | The prefecture set an operation right | Joint selection by the two cities; each city signs a service contract |
Hamamatsu and Miyagi each chose Level 4 as a single body. In Osaka Prefecture, Osaka City procured water main renewal as a PFI, while Osakasayama and Kawachinagano procured Level 3.5 together. These were different procurers; "Osaka" did not choose them under one policy.
The guideline asks municipalities to consider Level 4 as the successor to Level 3.5, while also stating that Level 4 can be implemented without going through Level 3.5. Starting with a ten-year Level 3.5 and considering Level 4 for the next contract, and choosing Level 4 from the outset, are both consistent with the guideline.
Opposition and Re-municipalization Abroad
The union's demands, the citizens' group, and the Paris and Berlin re-municipalizations source by source
In Japan there is opposition to the requirement itself, and re-municipalization abroad is often cited as a reason. Assessments of the overseas cases differ from source to source.
Major Domestic Criticism
The union's Public Enterprise Council made demands to MLIT on 20 November 2024 (water supply section) and 3 December 2024 (sewerage section). The demands concerning Water PPP were these two.
- The water supply section said Water PPP weakens municipal involvement and raises concerns about declining staff capacity, technical skills and service quality, and asked MLIT not to push municipalities forcefully in its guidelines and not to make Water PPP adoption a condition for subsidies or grants
- The sewerage section said making Water PPP adoption a condition for grants for renewing sewage pipes risks promoting privatization and outsourcing that do not fit local conditions, and asked for the requirement to be withdrawn
In Hamamatsu, the Citizens' Network on Water Privatization is collecting signatures, together with groups nationwide, against the rule that cuts sewer pipe subsidies unless Water PPP is adopted, and submitted its first batch on 26 February 2026. The mayor of Hamamatsu announced in January 2019 that the introduction of a concession for water supply would be postponed. In Miyagi, the Miyagi-type management and operation system was one of the issues in the 2025 gubernatorial election, as in the previous election in 2021.
Re-municipalization Cases Abroad
Paris (France)
A contribution by Shinichiro Adachi of the Development Bank of Japan says the following. From 1985, Paris's bulk transmission and distribution was run by a mixed company with capital from the city, Veolia and Suez, and retail supply by subsidiaries of Veolia and Suez. From 2010 the operations were merged and have been run by Eau de Paris, a public body wholly owned by the city. The reasons for re-municipalization were that tariffs more than doubled during outsourcing, which angered residents, and that the city was losing its expertise and monitoring know-how; tariffs were cut by 8% at re-municipalization. The increases, however, followed the formula agreed in the original contracts, and cannot be attributed simply to private operation. The transition cost €30 million (about ¥3.74 billion), and parts of the work are still contracted to Veolia and Suez.
A paper by Satoko Kishimoto, on the other hand, notes that a post-re-municipalization review found operating profits reported at 7% had actually been 15–20%, and that savings including no longer paying shareholder dividends and executive pay came to €40 million compared with the privatized era, allowing an 8% tariff cut in 2011.
Berlin (Germany)
The State of Berlin bought back RWE's stake in the water company in 2012 for €618 million, and in 2013 agreed to buy Veolia's 24.95% stake for €590 million. The paper reports that the Veolia price was well below what experts and politicians had expected, and that a successful referendum in 2011 put pressure on politicians to reverse the partial sale.
Worldwide counts
Kishimoto's paper counts at least 267 water re-municipalizations worldwide from 2000 to the end of 2016. The Nikkei BP contribution says that in France in 2010–15, 68 services moved from private outsourcing back to direct public operation (about 600,000 people), while 68 moved the other way (about 1 million people), so re-municipalization cannot be said to be increasing.
How Japan's System Differs
Under Japan's concession method, the public body keeps ownership of the facilities and sets an operation right for a private operator (guideline ver. 3.0, 1.1). Berlin had sold stakes in its water company, so reversing it meant buying those stakes back. On Paris, the Nikkei BP contribution says the public sector bore final responsibility for the water service both before and after re-municipalization, and that France has no concept of "full privatization" handing an entire water service to private companies.
The same contribution's lesson for Japan is that, whether a service is run directly or outsourced, the most important thing is a framework that secures transparency, and that outsourcing works only when the public sector has proper governance and monitoring capacity. It adds that small municipalities find it hard to monitor an outsourced operator on their own. Osakasayama and Kawachinagano built joint monitoring through annual reporting sessions and termination rights, for when one city terminates, into their joint procurement.
Seven Decision Axes for Municipalities
Covered renewal, procurement unit, outsourcing experience, monitoring, termination, council, and the publication deadline
Drawing on guideline ver. 3.0 and the cases above, the decision splits into seven axes.
Apply each axis to your jurisdiction's finances, facilities and staffing. The question is not "yes or no" but which facilities to cover, whether to procure alone or jointly, and which level to start from.
Conclusion — FY2026 Is the Turning Point
In Osaka Prefecture, two "first-in-Japan" cases moved with different procurers and different methods: Osaka City's water-main PFI and the wide-area Level 3.5 procurement by Osakasayama and Kawachinagano. Meanwhile, from FY2027, national support for sewage pipe renewal requires a decision to adopt Water PPP, and for Level 3.5 it takes about two to three years to publish the tender documents that count as that decision.
The two cities reached the tender about three years after starting talks, on top of more than ten years of comprehensive outsourcing. For a municipality starting now, the first thing to check is whether its renewal plans from FY2027 include covered sewage pipe renewal.
For the institutional details (the four Level 3.5 requirements, which renewals are covered, and the options if you cannot meet the deadline), see The Complete Guide to Water PPP — The FY2027 Grant Requirement and the Level 3.5 Transition. This article complements it with the "geographic and temporal" perspective of the Osaka Prefecture cases.
What to do next
In the order you can act on them, within the week you read this.
| # | What to do | Where | Rough effort |
|---|---|---|---|
| 1 | Check whether your renewal plans from FY2027 include covered sewage pipe renewal (renewal of treatment plants and pumping stations and new sewage pipes are outside it; seismic reinforcement of pipes under emergency transport roads and key logistics roads is an exception) | Your sewerage planning team; if unsure, your prefecture's sewerage department or MLIT | Half a day |
| 2 | Confirm whether pipe facility records sit in a GIS database (a grant requirement separate from Water PPP) | Your sewerage records team | Half a day |
| 3 | Produce the FY2027 sewage pipe renewal budget and count the shortfall without the grant | Budget team | A week |
| 4 | With 1–3 in hand, decide: run to tender at Level 3.5, switch to Level 4, procure jointly with neighbours, or defer to FY2028 | Departmental decision | — |
| 5 | If you are considering joint procurement, read the Osakasayama and Kawachinagano presentation (agreement, aligned requirements, termination rights) before approaching neighbouring municipalities | Neighbouring municipalities | — |
| 6 | If you proceed, open market sounding first | Operators | 2–3 months |
Steps 1 and 2 can be done the day you read this. If step 1 shows no covered renewal, nothing further is needed.
References
- Osaka City Waterworks Bureau, Overview of the Osaka City Trunk Water Main Earthquake-Resistance PFI Project: https://www.city.osaka.lg.jp/suido/page/0000647079.html（外部サイト、新しいタブで開きます）
- Kubota Corporation, news release on winning the Osaka City Trunk Water Main Earthquake-Resistance PFI Project (17 April 2024): https://www.kubota.co.jp/news/2024/management-20240417.html（外部サイト、新しいタブで開きます）
- Kurimoto, Ltd., news release on winning the Osaka City Trunk Water Main Earthquake-Resistance PFI Project (22 April 2024): https://corp.kurimoto.co.jp/news/20240422-01/（外部サイト、新しいタブで開きます）
- Osakasayama City and Kawachinagano City, On the Joint Procurement of Water PPP Level 3.5 (Renewal-Implementation Type), Material 6 for the 6th FY2025 Public-Private Partnership Promotion Council for the Water Sector: https://www.mlit.go.jp/mizukokudo/watersupply/content/0606_material6.pdf（外部サイト、新しいタブで開きます）
- Sekisui Chemical Co., Ltd., news release on winning the Osakasayama and Kawachinagano joint procurement (20 February 2026): https://www.sekisui.co.jp/news/2026/1448836_42699.html（外部サイト、新しいタブで開きます）
- Osaka Water Supply Authority, Wide-area consolidation of water supply in Osaka Prefecture (initiatives): https://www.wsa-osaka.jp/soshiki/renkei/3/2118.html（外部サイト、新しいタブで開きます）
- Osaka Water Supply Authority, Study and consultation toward consolidation with Izumiotsu, Minoh and Kadoma: https://www.wsa-osaka.jp/soshiki/renkei/3/2-2/11729.html（外部サイト、新しいタブで開きます）
- Nikkei, report on five cities including Yao joining Osaka Prefecture's water consolidation (21 November 2024): https://www.nikkei.com/article/DGXZQOUF198WT0Z11C24A1000000/（外部サイト、新しいタブで開きます）
- Osaka City Waterworks Bureau, Water supply development in the Yumeshima area: https://www.city.osaka.lg.jp/suido/page/0000614385.html（外部サイト、新しいタブで開きます）
- Cabinet Office, Public-Private Partnership for Water (Water PPP): https://www8.cao.go.jp/pfi/wppp/wppp_index.html（外部サイト、新しいタブで開きます）
- Cabinet Office, PPP/PFI Action Plan (2026 revision): https://www8.cao.go.jp/pfi/actionplan/pdf/actionplan_r8_2.pdf（外部サイト、新しいタブで開きます）
- MLIT, Guideline for Public-Private Partnership for Water in the Sewerage Sector, ver. 3.0, Level 3.5 Basics: https://www.mlit.go.jp/mizukokudo/sewerage/content/001994494.pdf（外部サイト、新しいタブで開きます）
- MLIT, Guideline for Public-Private Partnership for Water in the Sewerage Sector, ver. 3.0 (full version): https://www.mlit.go.jp/mizukokudo/sewerage/content/001995093.pdf（外部サイト、新しいタブで開きます）
- MLIT, FY2025 Public-Private Partnership Promotion Council for the Water Sector: https://www.mlit.go.jp/mizukokudo/watersupply/mizukokudo_watersupply_tk_000001_00065.html（外部サイト、新しいタブで開きます）
- Hamamatsu City, Public-private partnership in Hamamatsu's water and sewerage services: https://www.city.hamamatsu.shizuoka.jp/suidow-s/suidou/tyousakennkyuunogaiyou.html（外部サイト、新しいタブで開きます）
- Hamamatsu City, Public Sewerage Treatment Plants (Seien Treatment District) Operation Project: https://www.city.hamamatsu.shizuoka.jp/g-sisetu/gesui/seien/pfi.html（外部サイト、新しいタブで開きます）
- Kahoku Shimpo, explainer on how Miyagi's water concession became an issue again in the gubernatorial election (18 October 2025): https://kahoku.news/articles/20251018khn000001.html（外部サイト、新しいタブで開きます）
- All-Japan Prefectural and Municipal Workers Union, second demand action to MLIT for FY2025 (Public Enterprise Council): https://www.jichiro.gr.jp/cncl/241218koki/（外部サイト、新しいタブで開きます）
- Hamamatsu Citizens' Network on Water Privatization, post on submitting signatures (3 March 2026): https://suidou2018.hamazo.tv/e10148355.html（外部サイト、新しいタブで開きます）
- Nikkei BP, New Public-Private Partnership Frontline, The truth about the re-municipalization of Paris's water service (6 March 2019): https://project.nikkeibp.co.jp/atclppp/PPP/report/022600172/（外部サイト、新しいタブで開きます）
- Institute of Local Government Issues (Jichitai Mondai Kenkyusho), Water and human rights: why so many cities worldwide are re-municipalizing water (Satoko Kishimoto, 19 January 2019): https://www.jichiken.jp/article/0104/（外部サイト、新しいタブで開きます）
- Berliner Zeitung, Berliner Wasserbetriebe BWB: Berlin kauft Wasser zurück (10 September 2013): https://www.berliner-zeitung.de/article/berliner-wasserbetriebe-bwb-berlin-kauft-wasser-zurueck-22944（外部サイト、新しいタブで開きます）
- Act on Promotion of Private Finance Initiative (Act No. 117 of 1999): https://elaws.e-gov.go.jp/document?lawid=411AC1000000117（外部サイト、新しいタブで開きます）
