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Tokyo Electric Power Co. plans to grant Chubu Electric Power Co. negotiating rights as it hunts for a partner to build and operate a new thermal power plant, sources said Thursday.

Tokyo Gas Co., another influential candidate, is expected to withdraw from the bidding for the project, which is aimed at reducing fuel expenses amid the leading utility’s withering finances.

Tepco is facing huge compensation claims over the disaster at the Fukushima No. 1 nuclear plant. It is likely to give negotiating rights to Chubu Electric by the end of this month so that it can reach a deal by the end of the year after hammering out details on fuel procurement, the rebuilding of generation facilities and other issues.

Osaka Gas Co., which has a cooperative relationship with Chubu Electric in fuel procurement, could also join the partnership between Tepco and Chubu Electric.

If the partnership is forged, Tepco’s procurement of liquefied natural gas would increase to nearly 40 million tons a year, giving the company more power in price negotiations with vendors.

The two utilities will also replace old thermal power generation facilities around Tokyo Bay to increase efficiency and save more in costs.

In the envisioned tie-up, Tepco would set up a 50-50 joint venture by the end of this business year to handle their existing thermal power generation facilities as well as the two companies’ interests regarding LNG.

In addition to Tokyo Gas, Kansai Electric Power Co. and JX Holdings Inc. have also sought to tie up with Tepco.

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