President, JERA Co., Inc. Yuji Kakimi

Creating a New Energy Company That Does More Than Just Integrate TEPCO and Chubu Electric Businesses

―― Nearly a year and a half has passed since April 2015 when JERA was established as a joint venture between TEPCO (Tokyo Electric Fuel and Power) and Chubu Electric. Looking through the business plans and projects that have been announced so far, I get the impression that the birth of this new company is drawing the attention of the energy industry worldwide.

Globally, the energy industry is moving in the direction of greater scale, even among the international resource majors that develop and produce resources. The same holds true for Japanese electric companies. In order to build more effective value chains stretching from resource procurement to power generation, we needed to get bigger.

Integrating our businesses may sound simple enough, but we’re bringing together two massive companies involved in a wide array of businesses. That’s why we’ve taken the integration step by step. We began with about forty employees, centralizing the two companies’ contact points for new business development. Then we added their fuel trading and fuel transport businesses in autumn 2015 before taking over their existing overseas power generation and fuel businesses in summer 2016. The expectation is that TEPCO and Chubu Electric will decide in spring 2017 whether or not to turn over their existing domestic thermal power generating business. Today we have about 500 employees. The pace is dizzying, but things have gone smoothly so far.

Expansion Roadmap

―― I see. You’re moving forward by stages, but also integrating quickly. At the same time, electric companies with long histories are often thought of as having distinctive corporate cultures that reflect the circumstances of their development. Have you encountered any gaps as you integrate the two companies?

Rather than carry on the two companies’ corporate cultures, with JERA we aim to create a completely new energy company. We need to move forward quickly in order to be a global player. And doing so requires all sorts of maneuvers. Take, for example, this office you’re visiting today. We’ve given it an advanced, modern layout that would be unthinkable at a traditional electric company. (Laughs) We’re moving toward paperless meetings and incorporating all sorts of new things to cultivate a new corporate culture. Rather than following precedent, we’re creating something new. Two major players have joined together, but in terms of our corporate culture I want us to have the spirit of a start-up so that we can expand on the best of both.

―― Not so much gaps, then, as synergies?

That’s right. Even in the same business areas, TEPCO and Chubu Electric excelled at different aspects. In the overseas power generation business, for example, within Southeast Asia Chubu Electric was stronger in Thailand while TEPCO was stronger in the Philippines and Indonesia. Business integration enables us to take advantage of the strengths of each, to generate synergies by sharing regional information and systems.

Such synergies are being created even between departments. Our fuel business and power generation business departments work together on the same floor, with no walls between them, because we want to create an open atmosphere that enables sharing information back and forth. Fuel procurement and power generation have traditionally been kept separate, even within the same company, so this is a real watershed. It may seem like a trivial initiative from the outside, but for us eliminating the barriers between departments makes it easier to create a mixed team that can combine fuel procurement and power generation. When talking about synergies it’s easy to look at things from the standpoint of TEPCO and Chubu Electric, but synergies are being created between departments, too. Our ability to package a competitive fuel supply with the construction and operation of overseas thermal power stations—to offer unbroken value chains reaching from fuel procurement through power generation in line with our business scheme—should make it easier for us to propose projects that better meet the needs of our customers.

―― And how have customers reacted? As a result of business integration between the two companies, JERA now procures a greater volume of LNG than anyone else in the world.

LNG Procurement: Volume Procured by Asian Buyers (FY 2013)

Our customers have high expectations. Today we are a big company even by global standards. There are not many companies anywhere in the world that can offer both fuel procurement and power generation.

As attention had grown, we have been fielding a number of project proposals and partnership opportunities. To be watched, of course, also means to be tested. I’m sure our competitors are watching closely and taking stock, too! (Laughs) Our task now, of course, is to respond with results.


Fuel Business

Achieve a robust fuel value chain underpinned by world top-class offtake volume to emerge as a global leader in the fuel market.

We will achieve an integrated value chain of the conventionally divided energy business in order to further enhance the competitiveness of LNG and other fuel procurement and create a system that can withstand changes to the business. In addition, we will make efforts to optimize the value chain from various aspects surrounding the fuel business and lead the transformation of the fuel market.

Fuel Business

Darwin LNG Project