Company history

Nippon Gas was set up in Tokyo in July 1955 with $6,944 (¥3m) of capital and five employees by Iwatani Tetsuro, eldest son of the founder of the Iwatani group. The parent was building itself into an energy trading house around industrial LP gas; the household trade was a different business in everything but the molecule — selling appliances door to door, designing and laying the pipework, and supplying whole apartment estates under one contract. Household penetration of LP gas in Japan was still only a few percent, so a business that had to invest years ahead of its customers was better handed to a dedicated company than run as a sideline.

The first president was Motoyama Shusaku, a former deputy governor of Shimane, who then stayed in the chair for thirty-two years. He built an in-house construction department from the start so that piping and appliance installation were the company’s own responsibility rather than a subcontractor’s. Sales for the first half-year, July to December 1955, came to $8,333 (¥3m). Motoyama later dated the birth of the Japanese LP gas industry to 1953 and called it one of the fuel revolutions of the postwar years, replacing the charcoal, firewood and briquettes that still cooked most Japanese meals.

The decisive move came in 1956, when a tie-up with the Japan Housing Corporation produced the NGK piped-supply system. The Corporation, founded only the year before, was throwing up estates of several hundred to several thousand units across the country; piping gas into a whole block was safer and far cheaper per household than swapping cylinders at every door, and it delivered customers a thousand at a time. Filling plants followed on the western edge of the capital — Tanashi in 1959, Machida in 1960 — and in 1964 the company supplied the gas for the Olympic cauldron in Tokyo. Within ten years a household start-up had become a piece of the metropolitan infrastructure.

In June 1966 Nichigas founded Shin Nihon Gas and entered the city-gas business. The two trades pull in opposite directions. Gas in cylinders travels anywhere but adds customers one household at a time; gas in pipes demands a licensed service area and heavy plant, and in return takes every home inside the line. Rather than build its own network from nothing, Nichigas bought its way into the small municipal utilities ringing Tokyo Gas territory — Abiko in 1967, Oyama the same year, Toride in 1968, Kuki in 1971, Kanuma in 1984 — operators sized to their towns and too small to carry their own capital spending, for whom shared procurement, safety inspection and sales made plain arithmetic.

Listing supplied the money. The company reached the Tokyo Stock Exchange second section in February 1973 and was promoted to the first section in January 1979, and the proceeds went back into the regional utilities. Later the group was tidied: in 1999 Abiko and Toride were merged into Higashi-Nihon Gas and Oyama and Kanuma into Kita-Nihon Gas, and the subsidiaries were themselves floated — Shin Nihon Gas in 2001, Higashi-Nihon Gas in 2004 — so that each piece of the map carried its own share price and its own board.

Motoyama handed over to Ishibashi Yukihiro in June 1987 after thirty-two years, an unusually long run for a listed company and a comfortable fit with the business: a founding family that held the shares, a career official who ran the operation, and a franchise that mostly needed maintaining. By about 1990 household LP gas penetration had passed seventy percent and new territory was scarce, which suited a company organised around servicing equipment and holding on to customers. Then the ground shifted. Electricity retail was opened in part in 1995 and large-lot gas supply the same year, and by the year to March 1996 Nichigas was a comfortable regional energy company whose income still rested on protected areas that were about to stop being protected.

In April 1997 LP gas retailing moved from a licensing regime to simple registration — in the words of a later president, anyone could now sell anywhere. Roughly twenty thousand operators, most of them family firms, had until then each sat on their own patch. Nichigas read the economics: because the purchase price of LP gas tracks Middle Eastern and American markers and the exchange rate for everyone alike, the margin is decided after procurement, in the cost of delivering, inspecting and selling. Squeeze those with scale and there is room to cut the price. So the company cut first, in the densest customer geography in Japan, bought small competitors outright, and began in the same year the logistics overhaul — delivery routes, plant siting — that would run for the next two decades. For a utility bred on protected areas, deciding to compete was itself the change of mind.

Capital came from an unexpected direction. In September 2011 Nichigas agreed a capital and business alliance with OEP, a private-equity vehicle in the JP Morgan Chase orbit; a third-party share allotment on 18 October left the fund with about 18.7 percent as largest shareholder and raised roughly $129.1M (¥10bn), of which some ¥5.3bn was earmarked for investment abroad and ¥5.0bn for buying domestic rivals. Taking a fund as the top holder was an odd choice for a Japanese energy supplier, and it brought in more than money: return on equity, capital allocation and KPI management arrived with it. Cloud-based operations began in 2012, a mutual LP gas wheeling agreement with the TEPCO group followed in 2015. Wada Shinji, president from June 2005 to May 2022, had worked sales, delivery, safety and IT in turn, and drove both programmes; his definition of digital transformation was the removal of friction from the paths that money and data travel.

The last piece was structural. In March 2014 a share exchange took four listed city-gas subsidiaries — Tosai, Higashi-Nihon, Shin Nihon and Kita-Nihon — wholly in-house, so that group and parent could be steered as one and their procurement, safety and sales systems merged. Consolidated sales for the year to March 2016 were about $947.8M (¥115bn) with $97.5M (¥12bn) of operating profit, an operating margin above ten percent held while paying for both the reorganisation and the response to liberalisation. In parallel, depot stations — combined filling and dispatch points that shorten the round trip to the customer — were planted around the metropolitan fringe from 2010: Hadano, Yokosuka, Togane, Mito, Toda, Sayama, Mizuho, Inashiki, Toride.

City gas retailing was fully opened in April 2017, and in August Nichigas set up Tokyo Energy Alliance as a fifty-fifty venture with TEPCO Energy Partner. The company sells a cloud platform — procurement, sales, wheeling paperwork, safety, appliance sales and repair, settlement — that lets an operator with no pipes of its own retail city gas. The fit was exact: TEPCO EP was the largest power retailer in the region and needed gas to attack Tokyo Gas, while Nichigas had the procurement and safety expertise and no way to reach much of the territory alone. Tokyo Electric Power Holdings bought about three percent of Nichigas in March 2018 and sent a director. By January 2019 the two partners had passed a million city-gas contracts between them; of roughly 250,000 households that had left Tokyo Gas by April 2018, TEPCO EP had taken about 135,000 and Nichigas about 110,000. City-gas sales for the year to March 2019 reached some $499.1M (¥55bn), 27 percent above two years earlier.

On the LP side the company went the other way — from spreading out to concentrating. Land in Kawasaki was bought in December 2018 and the hub filling terminal Yume-no-Kizuna Kawasaki started up in March 2021, designed to process the region’s LP gas demand at one site with throughput among the highest in the world, laying a central hub over the existing depot network. LP gas capital spending jumped to $192M (¥21bn) in the year to March 2019 from ¥4.1bn the year before, and the segment’s assets swelled with it. Around the same terminal came a digital layer: the MyNichigas app from 2018, the company’s own smart meter Space Hotaru in 2019 and sold to outsiders from 2020, and LP gas wheeling offered to other suppliers from 2022. Wada put the case for it bluntly — electrons do not tire, do not ask for rest and do not ask for a pay rise. A gas retailer was turning itself into infrastructure that its competitors rent.

Kashiwaya Kunihiko succeeded Wada in May 2022; Wada moved up to chairman and died in December 2024 at seventy-two. The new plan, NICIGAS 3.0, runs the company on two axes — energy retail to households, and a business-to-business “energy space” of platform services with the TEPCO group, the IoT firm SORACOM and hybrid water heaters — against targets of ¥500bn of market capitalisation and half the per-household carbon emissions by the year to March 2031. Then, in January 2024, the retail operations of Tosai, Higashi-Nihon and Kita-Nihon Gas were absorbed into the parent as a single “new Nichigas”, ending the design begun with Shin Nihon Gas in 1966. Sales for the year to March 2024 were $1.4B (¥194bn) with $123.8M (¥17bn) of operating profit and ROE around fifteen percent; two million customer accounts and roughly ¥240bn of market value at the end of 2024 measured the distance from a five-person household gas company.