OSAKA – Kansai Electric Power Co. and four other regional utilities are planning to jointly purchase equipment as part of cost-cutting efforts, industry sources said Monday.
The tie-up between Kansai Electric, Chugoku Electric Power Co., Kyushu Electric Power Co., Shikoku Electric Power Co. and Hokuriku Electric Power Co. will take the form of joint procurement of utility poles, cables, transformers and so-called smart meters from the current fiscal year through March 31, according to the sources.
Through the collaboration, the utilities hope to save some ¥100 billion in costs annually, the sources added. Currently they spend a combined ¥300 billion on procurement annually to repair infrastructure.
The envisioned tie-up has the possibility of prompting integration within the power transmission and distribution sector now that power companies are obliged to spin off their power transmission and distribution sections into separate units in 2020.
The business condition of Kansai Electric, like many other utilities in Japan, has deteriorated amid higher import costs for fossil fuels since the 2011 Fukushima nuclear disaster led to the suspension of nuclear power generation around the nation.
Kansai Electric posted a group net loss in the business year that ended March 31, its fourth straight year of red ink, and set up procurement headquarters in June as part of its cost-cutting efforts.
Tokyo Electric Power Co. is also planning to tie up with other regional utilities on joint procurement.
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