Japan's drive to reform power sector hits snag amid political feud

The Japanese government's drive to overhaul the country's power sector hit a snag Wednesday as a bill to achieve the first part of a three-stage reform was scrapped amid an intensifying political feud ahead of the upper house election.

"It's extremely regrettable that the bill was scrapped due to wrangling in the upper house at the final stage" of the just-ended Diet session, industry minister Toshimitsu Motegi told reporters, adding he will seek passage of the bill "without fail" in the next session to be convened in the autumn.

"We will try not to see a delay in the (planned) reforms," the economy, trade and industry minister added.

The bill to revise the Electricity Business Law was passed by the House of Representatives earlier in the month and was awaiting approval by the House of Councillors on Wednesday, the final day of the 150-day ordinary Diet session.

But the upper house passed an opposition-sponsored censure motion against Prime Minister Shinzo Abe the same day, a move that resulted in the scrapping of the bill.

The censor motion was submitted after Abe and his Cabinet ministers skipped upper house Budget Committee sessions Monday and Tuesday in protest at the handling of the chamber by its president, Kenji Hirata of the main opposition Democratic Party of Japan.

Under the current plan, the government intends to reform the power sector in three stages, starting from the creation of an independent entity that will be in charge of coordinating power supply and demand nationwide by around 2015.

In the following stages, the government plans to fully liberalize the retail market and separate utilities' power generation and transmission businesses around 2018 and 2020.

While the bill that was being deliberated in the Diet only covered the first stage, it also stipulated the timelines for achieving the subsequent reforms, which are expected to bring about the most significant changes to Japan's power sector in the postwar period.

The massive earthquake and tsunami in March 2011 and the ensuing Fukushima Daiichi nuclear disaster led to power supply shortages and exposed the vulnerability of Japan's system of regional power monopolies.

The government has since been pushing for the separation of power generation and transmission to create a more competitive environment and attract new power suppliers.