March 31 (Reuters) - Japan’s city gas industry embarks on a new era on April 1 when city gas suppliers lose their monopoly rights to sell piped natural gas to the 2.4 trillion yen ($21.5 billion) per year retail market comprised mainly of households.
Japan, the world’s top liquefied natural gas (LNG) importer, had earlier liberalised the market for large corporate users in four stages since 1995, a 2.6 trillion yen market that accounts for 64 percent of city gas sales volumes.
The shake-up comes a year after the similar liberalisation of the nation’s 8 trillion yen a year power market for households and small customers, and marks the government’s latest bid to intensify competition across the broad energy sectors involving oil, power, gas and traders.
Here is how the latest reform will work, according to interviews with government and industry officials.
* The majority of the nation’s city gas market is controlled by three big city gas suppliers, Tokyo Gas, Osaka Gas and Toho Gas. Combined they own about 137,000 kilometres of pipeline network, or 53 percent of Japan’s total, and sell 65 percent of the nation’s total gas sales volumes.
* From April 1, any company outside the existing energy industry can enter the market by renting city gas firms’ pipelines to send gas to homes.
* Currently, 12 firms have registered with the government to sell city gas to retail market. They include four power utilities - Tokyo Electric Power, Kansai Electric Power , Chubu Electric Power and Kyushu Electric Power - all of which plan to sell gas in their home power market regions from April 1, except for Tepco.
* New entrants have already been accepting retail city gas customers. As of March 24, a total 92,403 customers have applied to make the switch, according to the trade ministry’s data.
* A price-cutting race has already begun to lure customers away from the current dominant city gas suppliers. Kansai Electric, for instance, has announced price cuts of more than 10 percent compared with the existing fees charged by the current exclusive supplier in its region, Osaka Gas.
($1 = 111.7300 yen)
Reporting by Osamu Tsukimori; Editing by Kenneth Maxwell