TOKYO -- The incoming leadership team at Tokyo Electric Power Co. Holdings. faces an uphill battle. Turning around the struggling utility will require pushing ahead with badly needed reforms and overcoming deep internal divisions.
Takashi Kawamura, a 77-year-old former Hitachi chairman who currently serves as the industrial conglomerate's chairman emeritus, will become chairman of Japan's biggest utility, succeeding 76-year-old Fumio Sudo.
Tomoaki Kobayakawa, a 53-year-old Tepco director, will become president, taking over from 64-year-old Naomi Hirose, who will become a vice chairman with no representation rights.
The new team is set to be approved on June 23 at a shareholders meeting.
Tepco, still reeling from the 2011 meltdowns at one of its nuclear power plants in Fukushima Prefecture, on May 11 raised eyebrows by announcing the latest "comprehensive special business plan." The plan contains what seems to be an overly optimistic target: securing 500 billion yen ($4.46 billion) in funds annually until 2026.
On May 12, the Ministry of Economy, Trade and Industry, which supervises the electric power industry, convened a meeting of experts to discuss Tepco's reforms. In their hearts, many of the panelists are skeptical about the plan's feasibility.
Kawamura himself has acknowledged that putting Tepco back on its feet will be quite difficult. "Just making ordinary efforts will not be enough," he said.
Kawamura is not acquainted with Kobayakawa. The two have yet to sit down and talk about Tepco's future business strategy.
The costs of dealing with the aftermath of the Fukushima disaster are estimated to reach about 22 trillion yen. Tepco will have to cough up 500 billion yen annually over the next 30 years.
Tepco's reality is daunting, and Kawamura will have no time or energy to waste. No matter how difficult the turnaround plan's 500 billion yen target is, he will have no choice but to roll up his sleeves and get down to business.
Kawamura agreed to assume the top post at Hitachi after the conglomerate posted a massive loss in the wake of the 2008 global financial crisis.
At the time, Kawamura attracted trustworthy executives, such as Hiroaki Nakanishi, the 71-year-old current Hitachi chairman, to restore the Japanese industrial icon back to financial health.
But Kawamura "will probably not take Hitachi personnel to Tepco," a Hitachi source said. Doing so could raise questions about conflicts of interest; the two companies often do business together.
Speaking about roles he is determined to play as Tepco's new chairman, Kawamura said he will "supervise" and "advise" employees while "communicating" with them.
There is another role he did not speak of -- overcoming deep divisions within the electric utility.
Tepco has been rocked by what can be called "infighting" -- a deep rift between outside board members calling for changes, backed by the national government, and the old guard seeking to maintain the status quo as much as possible.
It is an open secret within Tepco that Sudo, the current chairman and outside board member, and Hirose, the incumbent president who started his career at the utility, have fallen out.
There was also a tug-of-war between reformist and old-guard forces over the lineup of Tepco's new leadership team before it was set at the company's Nominating Committee and announced on March 31.
The national government, Tepco's top shareholder, eventually intervened after growing frustrated by the discord.
In partnership with the prime minister's office, Hiroshige Seko, the minister of economy, trade and industry, asked Kawamura to take Tepco's top post.
Becoming increasingly distrustful of the Ministry of Economy, Trade and Industry, President Hirose voiced his objection to the proposed leadership changes at the March 31 meeting of Tepco's Nominating Committee, saying he cannot accept "this way of doing things."
As the behind-the-scenes maneuvering continued up to the last minute, Kawamura has yet to envision a clear business strategy that might turn around Tepco.
Relations between the next Tepco chairman and president are likely to be much better than those between the current chairman and president, as Kobayakawa has shown a willingness to play second fiddle to and take instructions from Kawamura.
It was only about a year ago that Kobayakawa was promoted to president of Tepco Energy Partner, the utility's retail subsidiary. He doubles as a Tepco director but has not established his own management style yet.
Meanwhile, Seiichi Fubasami, Tepco's managing executive officer in charge of management planning, held talks with labor union representatives at the utility's head office when the leadership tug-of-war was still playing out behind the scenes.
In response to a question from labor union officials, 56-year-old Fubasami declared that Tepco will continue to breathe new life into itself through a generational change.
Fubasami played a central role in compiling the new turnaround plan. He will become executive vice president when the new leadership team is inaugurated next month.
The plan calls for reforming corporate culture by handing over power to younger generations in a bold manner.
Sadayuki Sakakibara, chairman of the Japan Business Federation, the country's most powerful business lobby better known as Keidanren, said that the business world will support Kawamura's reform efforts.
Japanese industry cannot remain indifferent to Tepco's future. In fact, it is becoming increasingly concerned that if electricity bills remain stuck at high levels in Japan, domestic companies' international competitiveness will suffer.
Most of Japan's nuclear power plants remain shut because of safety concerns in the wake of the Fukushima meltdowns. Tepco and other electric power companies have raised their rates due to sharply higher fuel costs for thermal power generation.
Meanwhile, Seko, the minister of economy, trade and industry, is fired up. "As for [Tepco] reforms," he said, "all you have to do now is implement them."