nuclear-news

Grave financial risk for Japanese government if TEPCO insolvent

unlimited liability could push TEPCO into insolvency and force the government to take a majority stake in the company

Japan’s Nuclear Rescue Plan: The Unintended Consequence of Unlimited Liability, BNet, By Kirsten Korosec | May 3, 2011, The Japanese government — once bosom buddies with Tokyo Electric Power — wants the company to face unlimited liability for damages from itstroubled Fukushima nuclear power plant.

TEPCO certainly deserves this treatment. The company’s repeated bungling of the nuclear power plant disaster hasendangered its own workers, led to a ban on imports, damaged the credit ratings of other Japanese utilities, and sent radioactive water into the sea that threatens to undermine the fishing industry. Still, this hard line approach could have an unintended consequence for the Japanese government.

Japan’s rescue plan

The goal is for TEPCO to compensate victims of the nuclear disaster, including the thousands of displaced residents, without the government taking it over. The rescue plan would create a fund to provide loans for and buy preferred shares from TEPCO.

The debate is over whether there should be a limit on compensation. Not surprisingly, TEPCO and creditor banks have argued for a cap. The government has argued for unlimited liability.

Unintended consequence

The Japanese government is treading a fine line here. Yes, it needs to go after TEPCO. But unlimited liability could push TEPCO into insolvency and force the government to take a majority stake in the company……. http://www.bnet.com/blog/clean-energy/japan-8217s-nuclear-rescue-plan-the-unintended-consequence-of-unlimited-liability/5041

May 4, 2011 - Posted by Christina Macpherson | business and costs, Japan