TOKYO, Aug 7 (Reuters) - Chubu Electric Power Co Inc will take control of a Tokyo-based electricity supplier, sources said on Wednesday, giving the utility an entry into the territory of Tokyo Electric Power Co, which is struggling with losses from the Fukushima disaster.
The move by the Chubu Electric to buy an 80 percent stake in independent power supplier, Diamond Corp, is the first significant incursion by one of Japan’s regional electricity monopolies into another’s turf.
Each of Japan’s 10 regional monopolies controls everything from power generation to transmission in its own service area, an arrangement that allows them to easily shut out competitors.
A government attempt in the 1990s to deregulate the market for large users left only a small portion of electricity supply in the hands of independent suppliers like Diamond Power, which is owned by Mitsubishi Corp.
Chubu Electric, based in Nagoya, southwest of Tokyo, is looking to acquire the Diamond stake by the end of the year, two sources familiar with the matter said, speaking on the condition of anonymity.
Mitsubishi, Chubu Electric and Nippon Paper Industries Co have also agreed to build a coal-fired power plant in Shizuoka prefecture southwest of Tokyo to provide electricity for Diamond Power, the sources said.
The partners will spend 25 billion yen ($256 million) on the plant, which will provide electricity to the Tokyo metropolitan area.
Chubu Electric is paying 1 billion yen for the stake in Diamond Power, the Nikkei newspaper reported on Wednesday.
Chubu Electric said it is in talks on the stake but details haven’t been finalised. A spokesman at Mitsubishi declined to comment.
Tokyo Electric, known as Tepco, was placed under government control last year to avoid going bankrupt following the meltdowns at its Fukushima Daiichi plant north of Tokyo, caused by an earthquake and tsunami that left almost 20,000 people dead or missing in March 2011.
All but two of Japan’s 50 nuclear reactors have been shut down in the wake of the disaster, leaving the utilities with large losses as they import more fossil fuels to run power stations.
$1 = 97.6050 Japanese yen Additional reporting by James Topham; Writing by Dominic Lau; Editing by Aaron Sheldrick and Richard Pullin