To avoid TEPCO bankruptcy, Japanese government will pay up
The government’s objective is to keep the company afloat. Without public funds, Tepco would have to report a capital deficit for the July-September quarter, results of which are due by Nov. 14. Even the slightest hint of bankruptcy of a company with ¥13 trillion in liabilities could trigger major financial turmoil. Public assistance is expected to sustain Tepco in a state of positive net worth of about ¥700 billion at the end of the current business year in March, even after booking an expected annual net loss of about ¥570 billion.
But if the bleeding continues at the current pace, much of the capital would be lost in the next business year. This makes it crucial for Tepco to secure either an electricity-rate increase or an early restart of idled nuclear reactors to deal with the cost increases resulting from the prolonged stoppage of nuclear power plants and greater reliance on expensive thermal power, a government official familiar with the matter said….Public funds will be provided via the Nuclear Damage Liability Facilitation Fund, an organization set up jointly by the government and power companies last month to provide insurance for nuclear accidents.
Under the interim plan, a supervisory committee comprising the top executives of the fund and Tepco will monitor cost-cutting progress. Tepco is required to produce a more comprehensive business plan in March, when there should be more clarity on rate hikes and reactor restarts…
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