nuclear-news

Japanese govt’s costly, desperate measures to save TEPCO from bankruptcy

Stopgap measures for TEPCO / Utility’s liabilities may exceed assets without government’s help,  Kunihiko Yasue and Chiaki Toyoda / Yomiuri Shimbun Staff Writers, 29 oct 11, Tokyo Electric Power Co.’s application Friday for more than 1 trillion yen in government funds was meant to help the utility swiftly compensate people for damage caused by the crisis at its Fukushima No. 1 nuclear power plant.

TEPCO has already started making full-fledged compensation payments, and without the government’s assistance its liabilities could exceed its assets.

TEPCO is expected to broadly commit to cutting 2.5 trillion yen in costs over 10 years, a reduction that Economy, Trade and Industry Minister Yukio Edano essentially set as a precondition for receiving financial aid from the Nuclear Damage Liability Facilitation Fund.

But the utility has been unable to present cutback measures more concrete than those devised by the TEPCO Management and Finance Investigation Committee, a panel established by the government to investigate TEPCO’s management situation.

There still are many unsolved issues, including how to cover the costs of decommissioning reactors, which are expected to be massive.

The investigation committee estimates TEPCO will have to pay about 4.5 trillion yen in compensation over a two-year period.

However, the scale of the damage and the timing of compensation payments remains uncertain. ….

It will take time for the utility to actually receive the funds, as it must wait until the Nuclear Damage Liability Facilitation Fund cashes national government bonds and transfers the money to TEPCO.

Therefore, the special business plan includes the provision that the emergency loans provided by major banks to the utility after the March 11 disaster for repairs to its damaged plants and other reconstruction efforts can temporarily be used for compensation payments.

Short-term bridge financing by the Development Bank of Japan also was included in the special business plan, reflecting how various financial measures were employed to avoid the collapse of TEPCO.

Attention will be focused in the future on the comprehensive plan to be mapped out in spring to allow TEPCO to receive full-scale governmental support.

The key management risk TEPCO is expected to face from fiscal 2012 on will be the cost of decommissioning and decontamination. It has been estimated TEPCO will need an additional  470 billion yen for decommissioning, but a committee report said the figure may be even larger.

It is hard to estimate how much decontamination will cost as the government has raised decontamination standards significantly. As a result, these costs are not reflected in the special business plan.

TEPCO will be able to receive government support even after its compensation payments become massive, but these funds cannot be used for decommissioning.

It is highly likely, therefore, that TEPCO will face liabilities in excess of its assets in the business year ending in March 2012, if decommissioning costs are included in the business plan…  http://www.yomiuri.co.jp/dy/business/T111028005943.htm

October 29, 2011 - Posted by Christina Macpherson | Japan, politics