A government panel said Tuesday night that a bid by a British investment fund to boost its stake in Electric Power Development Co., better known as J-Power, could "disturb the maintenance of public order."

The conclusion by the Council on Customs, Tariff, Foreign Exchange and Other Transactions is expected to prompt the government to ask the Children's Investment Fund, or TCI, to drop or change its plan to raise its stake in the electricity wholesaler to up to 20 percent from the current 9.9 percent.

"We cannot deny the possibility that it could affect the planning, operation and maintenance of key facilities such as power transmission lines and implementation of Japan's nuclear power generation and nuclear fuel cycle policies," the panel said.

The panel asked the government to take "appropriate measures" on TCI's bid. The panel submitted its opinion to Finance Minister Fukushiro Nukaga and trade minister Akira Amari.

A panel member said it is doubtful that TCI's policy of seeking investment returns on a three- to five-year cycle would be consistent with J-Power's operations of nuclear power plants and power transmission facilities, which must be considered for a longer span covering 20 to 25 years.

The panel reached the conclusion despite a new proposal by the TCI unveiled earlier in the day.

The British fund said it told the government it was willing to freeze voting rights on matters such as power plants and transmission facilities if it takes a larger stake in J-Power. In the proposal, TCI also suggested that the government set up a state-run firm to buy out J-Power's planned nuclear plant in Aomori Prefecture so the government can ensure TCI will not have any influence on national nuclear power policy.

The utility is building its first nuclear plant in Oma, Aomori Prefecture, with commercial operations slated to start by March 2012. The utility also operates transmission cables connecting Hokkaido, Honshu, Shikoku and Kyushu.

The case has been closely watched as a test of how open Japan is toward foreign investments. Japan is especially sensitive about foreign entities holding investments in energy supply because of its dependence on imported oil, gas and uranium.

The fear is that foreign investors might put profits before long-term planning and investment. By law, foreign investors need government approval before taking more than a 10 percent stake in a company in such sectors as electric power that are critical to national security.