Mumbai: The Japanese government is expected to reject a bid by The Children's Investment Fund (TCI) of the UK to raise its stake in Japan's largest electricity wholesaler, J-Power, on national security grounds, official sources said.

Electric Power Development, known as J-Power, meanwhile, is planning to spend 1 trillion yen ($10 billion) in the next five years beginning April to expand and set up fresh capacity in power and mining projects overseas.

Foreign investors need regulator's approval to buy over 10 per cent stake in Japanese companies which are deemed vital to the country's security and public order.

J-Power's status is  under review as it is the country's largest electric utility and plans to build nuclear power plants.

TCI, which currently holds 9.9 per cent of J-Power, has sought government permission to raise its stake to as much as 20 per cent, at about $630 million at the current market price. 

TCI has warned the Japanese government that it would take the matter to court if rejected.

Japan's ministries of economy, trade and finance have decided to come out against TCI's bid because of the concerns it raises for national security and the public order.

"There is no way to eliminate worries of an adverse impact to the reliable supply of electricity, to electric supply facilities or to nuclear energy," said the government official.

The Japanese government, meanwhile, is awaiting the report of a sub committee to recommend TCI to halt its bid.

TCI wants J-Power to increase returns on equity and allow it to appoint directors to the board

J-Power said it plans to raise pretax profit by 28 per cent to more than 60 billion yen by the end-March 2011, from 47 billion yen estimated for the fiscal year, the company said in a statement.

J-Power expects its first nuclear reactor to be completed by March 2012.

J-Power will also invest 340 billion yen in a new 1,383 MW nuclear reactor in Oma in northern Japan. The company plans to finish building the 600 MW Phase II coal- fired power plant at Isogo near Tokyo by July 2009.

The company will allocate 270 billion yen for expanding businesses overseas and about 100 billion yen for renewable energy projects and acquiring coal mines.

J-Power owns and operates plants in Thailand, Taiwan, the Philippines and the US.