Protectionism is adding to Japan's expensive electricity bill

Apr 10th 2008 | TOKYO

Akira Amari, Japan's trade minister, says that Japan is open to foreign investments. He says also that J-Power, a wholesaler of electricity, is different. They deserve a special treatment because of their strategic importance: they are building a nuclear reactor.

Japan is a country that has to import all their needs so they are sensitive about investments in energy. The country is devoid of oil, gas, uranium and other fuels.
The European Commission is struggling to persuade the governments of European Union countries that they should allow foreigners to buy their national energy champions. But Japan's energy sector seems particularly in need of the fresh capital and new ideas that outsiders might provide.

Energy prices in Japan have a fall thanks to deregulation, they are still among the highest in the world. Between 1995 and 2005 they fell by almost 40%, even as consumption rose by around 20%.

In 2003, the government privatised J-Power in the hope that the rigours of the market would instil greater efficiency. Ten private firms now handle generation, transmission and distribution in specific regions, supplemented by two big wholesalers, of which J-Power is one.

J-Power shares have sunk by one-third over the past year. It included recommendations to sell directly to large customers, eschew minority stakes in overseas ventures for majority control, and shed its cross-shareholdings, which total ¥68 billion. Many of the ideas seemed sensible. Yet they were immediately dismissed by J-Power's president, Yoshihiko Nakagaki.

Source: the economist