Tokyo Electric Power Company Holdings, Inc. (TEPCO) said in late April that its Chairman Takashi Kawamura would resign after the shareholders' meeting set for June. It creates an extraordinary situation, in which the post of chairman will be left unoccupied because of difficulties selecting a successor, underscoring the fact that managing TEPCO is not as easy a task as handling a purely private company.
Without appointing a chairman, TEPCO has installed director Shouei Utsuda, a former president of Mitsui & Co., as head of the board of directors. This is the first time that the post of chairman will be vacant since the utility company was in effect nationalized in the aftermath of the disaster at its Fukushima No.1 nuclear power station in 2011.
Kawamura around autumn last year expressed his intent to step down. TEPCO and its largest shareholder, the government, explored business leaders ― including Yoshimitsu Kobayashi, former chairman of the Japan Association of Corporate Executives (Keizai Doyukai) and chairman of Mitsubishi Chemicals Holdings Corp. and former Komatsu Ltd. Chairman Masahiro Sakane, who served as chairman of a government advisory council on basic energy policy ― about whether he would accept an offer for the post.
The reasons why the two business leaders were tapped as candidates for the post: Kobayashi was a member of an expert panel that examined the direction of TEPCO reform in 2016, while Sakane is knowledgeable on energy issues.
Sakane was rather positive about accepting the offer, but eventually decided to decline, according to TEPCO sources familiar with the case.
Said a TEPCO executive who analyzed the background: "During three years under the leadership of Chairman Kawamura, the difficulty in steering TEPCO management was given new light because there were too many stakeholders involved and the latitude of management was found to be limited."
In the initial stage of his term as chairman in 2017, Kawamura expressed his determination to make use of his experience ― specifically his ability to successfully rebuild struggling Hitachi, Ltd. ― to revamp TEPCO into a company that is capable of paying dividends to shareholders.
The situation shifted when he made remarks concerning the disposal of treated water that was generated by purifying contaminated water discharged from the Fukushima No. 1 nuclear power plant.
According to media reports, Kawamura said TEPCO had cemented a policy that would see it discharge the treated water into the sea, and that drew fire from fishery-related entities and government officials.
The issue of treated water has yet to be resolved. The uproar began with his controversial statement, but Kawamura "has exerted almost no influence on key management decisions," a TEPCO source said.
TEPCO subsequently looked into former Chairman Shoji Muneoka of Nippon Steel & Sumitomo Metal Corp., which changed it name to Nippon Steel Corp. in April 2019. A deal was expected to go through, but because of a sharp deterioration of Nippon Steel's business performance, things fell through.
TEPCO is expected to go outside the company to recruit its chairmen it wants to serve as "the face" of its rebuild. However, it has yet to resolve issues regarding the disposal of treated water and the resumption of operations at its Kashiwazaki-Kariwa nuclear power plant.
In the meantime, TEPCO's operating profit and after-tax profit dropped about 30% and about 80%, respectively, in its consolidated financial statement for the business year that ended in March.
The key to the rebuilding of TEPCO, which is carrying the burden of expenses for compensation payments and the decommissioning of nuclear reactors, is enhancing its earning capacity. However, its new business projects have yet be fostered, and its retail business results have been deteriorating as the competition with Tokyo Gas Co. and other entities has intensified because of the liberalization of electricity retail sales.
President Tomoaki Kobayakawa faces a new test of his ability to rebuild TEPCO amid the absence of a chairman.
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