Japan to revamp power sector

Tokyo - Japan's cabinet has approved a proposal to revamp its troubled electricity industry and foster more competition by obliging utilities to split power generation and distribution into separate businesses.

The move is meant to encourage more innovation and modernisation of the power grid as the country grapples with energy shortages following the shut-downs of almost all its nuclear power plants after the March 2011 tsunami disaster at the Fukushima Dai-Ichi plant.

The plan approved on Tuesday requires parliamentary approval. Although it was first proposed years earlier, it was included in a slew of economic reforms being considered by Prime Minister Shinzo Abe's administration that are intended to help improve Japan's competitiveness.

The power companies face soaring costs for imported fuel and for maintaining nuclear plants closed for checks after the Fukushima disaster.