Tokyo Electric Power Co. will sell 30,000 tons of natural gas to Nippon Steel Corp. on an annual basis beginning in 2003, marking Tepco's first move into the natural gas retail market, sources close to the deal said Tuesday.
The gas will be used to supply a thermal power plant to be built by Nippon Steel, the nation's largest steelmaker, in Sodegaura, Chiba Prefecture.
Nippon Steel, which launched an electricity-retailing business in April, expects to begin construction on the 50,000-kw plant Feb. 1.
The plant is scheduled to go online in April 2003, supplying electricity to office buildings and commercial facilities in the greater Tokyo area.
The deal between Nippon Steel and Tepco may heat up competition between the nation's top power supplier and Tokyo Gas Co.
The steelmaker decided to buy the gas from Tepco after engaging in negotiations with it and Tokyo Gas, the sources said. Nippon Steel and Tepco are expected to sign a contract before the end of the month.
Tepco already offers natural gas on a wholesale basis but has never retailed it.
It will follow Kansai Electric Power Co., which will begin supplying natural gas to Mitsubishi Heavy Industries Ltd. in April.