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Gov't to order JR Hokkaido to improve management, offer financial aid

This file photo shows JR Hokkaido's Togeshita Station covered in snow in the winter in Rumoi, Hokkaido. (Kyodo)

TOKYO (Kyodo) -- The Japanese government will order struggling Hokkaido Railway Co. to improve management while offering 40 billion yen ($360 million) in financial aid to the firm over two years through March 2021, transport minister Keiichi Ishii said Friday.

The railway operator, known as JR Hokkaido, which serves the northernmost main island of Hokkaido, has been mired in a serious management crisis after a series of accidents and scandals.

It is the second time JR Hokkaido has received such an order since January 2014, when it was found that the operator had left rail defects unfixed and falsified track maintenance data.

"It's essential for JR Hokkaido to achieve tangible results during the two-year period" when the aid is provided, said Land, Infrastructure, Transport and Tourism Minister Ishii at a press conference.

The grant is to be used for new facilities, trains and services on seven routes which the operator wants to keep running but is unable to maintain without funding to repair aging tunnels and bridges. The government funding will also be used to improve services on the route to the international airport located in the southeast of Sapporo.

The ministry will review progress of the company's business improvement every three months. JR Hokkaido executives will be fined up to one million yen if they fail to deliver improvements.

The government will decide whether to keep providing financial support after April 2021 based on improvements achieved by then.

The company posted a record operating loss of 41.6 billion yen in the business year ending in March, saying about half of its routes are difficult to maintain without outside help.

The Hokkaido government and municipalities are also expected to provide some financial assistance.

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