The Japanese government headed by Prime Minister Shinzo Abe is planning to overhaul the country's ailing power industry with major reforms.

The country's cabinet has already approved a plan proposed by a panel of experts to separate nine regional utilities into generation, grid and retail companies. The government is also likely to remove restrictions on pricing by the year 2018 in the country. The move will require power sector firms to form separate entities for power generation and distribution will encourage stable power supply and foster competition.

The plan is expected to boost innovation and modernization of the power grid as the country faces shortages after almost all of its nuclear reactors were closed down following the tsunami disaster at the Fukushima Dai-Ichi plant in March, 2011. The plan is subject to an approval from the country's parliament. The power companies are facing higher costs for imported fuel and also for maintaining closed nuclear plants in the country.

The government has said that the plan to overhaul the power structure is a part of the economic reforms to improve the country's competitiveness. Abe's government is aiming to revive the economy with the help of monetary easing and stronger government spending for improving economy.