December 25, 2002
Osaka Gas in agreement for acquisition of IPP plants

Osaka Gas and its subsidiary, Gas & Power Investment, today entered into an agreement with Nakayama Steel Works for acquisition of Nakayama's IPP business.

In the proposed transaction, the two IPP (independent power production) plants owned by the subsidiaries of Nakayama will be subject to acquisition by Osaka Gas for about 60% shareholding of their power plants. The close of transaction is expected around March 2003.

Each of the two plants has a generation capacity of 150MW. One, located in Osaka, is fueled by natural gas, and the other, located in Aichi Prefecture close to Nagoya, is fueled by coal. The one in Osaka whose operation was commenced in April 1999 has a power wholesale agreement of 15 years with the local power utility, Kansai Electric Power. The plant in Aichi, operated under the similar power sales agreement with Chubu Electric, started operations in April 2000.

The planned acquisition will be the first substantial transaction of IPP plants in Japan. It marks a significant milestone and a major addition of generation capacity for Osaka Gas whose first IPP plant of 150MW came on stream in April this year. With these added power capacity, Osaka Gas will have a broader business portfolio for power wholesaling both inside and outside the company's service area.