Sanyo plans to spin off its fuel cell business to form a new company on April 1, 2008, and Nippon Oil will acquire an 81 pct equity stake in the new firm, informed sources said.

Sanyo aims to cut research and development expenditures by selling the fuel cell operations, while Nippon Oil hopes to reduce manufacturing costs through the acquisition of Sanyo's business.

After the deal, Sanyo will provide support for the new firm in development, maintenance and production. The new firm is expected to start mass production of fuel cell systems for household use by 2011.

Before the latest accord, Sanyo and Nippon Oil were already in partnership, codeveloping liquefied petroleum gas-based fuel cell systems for household use in 2005.

Nippon Oil is the biggest supplier of household-use fuel cell systems under a government-sponsored demonstration project launched in fiscal 2005, with the number of such systems installed by the company expected to come to around 830 as of the end of fiscal 2007. However, the high manufacturing cost has prevented diffusion of such systems.

By Jiji Press, (c) Jiji Press