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Japan greenlights Tepco, Chubu Electric thermal power merger

Combination seen accounting for half the country's fossil-fuel energy capacity

TOKYO -- Tokyo Electric Power Co. Holdings and Chubu Electric Power have won approval to consolidate their fossil-fuel power businesses into one massive operation under an existing joint venture.

The Japan Fair Trade Commission allowed the deal after looking into whether it would harm the competitive environment, as the operation is expected to contribute about half the electricity generated from fossil fuels in Japan.

Tepco and Nagoya-based Chubu Electric plan to transfer the operations in the first half of fiscal 2019 to their 50-50 joint venture known as JERA. They expect the merger to generate an annual 100 billion yen ($891 million) or more in cost savings and other benefits during the first five years.

On receiving approval, both companies began undergoing appraisals of the power generation equipment and other assets targeted in the merger. If Tepco's contributions are found to be worth significantly more than Chubu Electric's, the latter will need to pony up the difference in cash to maintain its ownership ratio in JERA.

The two are due to finish their appraisals and decide on the required sums as soon as the current fiscal year ending in March. Chubu's burden may total hundreds of billions of yen.


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