TEPCO gets Y1 tril in public funds, putting it under gov't control
The operator of Japan’s crippled Fukushima nuclear power plant was effectively nationalised Tuesday as it received one trillion yen of taxpayer money to stay afloat.
The public bailout of Tokyo Electric Power Co (TEPCO) in the wake of last year’s tsunami-triggered accident gives the government 50.11% of the utility’s voting rights.
And the deal has an option which allows the Nuclear Damage Liability Facilitation Fund to raise the stake up to 75.84% to impose stronger control if TEPCO fails to push reforms.
The country’s biggest utility will remain under state control for a “considerably long period of time”, Yukio Edano, the minister of economy, trade and industry, told a news conference.
But he added it would be “appropriate” for TEPCO to repay the debt and restore itself “as a purely private company in course of time.”
A 9.0-magnitude earthquake and monster tsunami ravaged Japan’s northeast coast in March 2011, leaving some 19,000 people dead or missing and sparking reactor meltdowns at the Fukushima Daiichi plant.
TEPCO posted a massive 781 billion yen net loss in the fiscal year to March 2012 following the disaster, after which it had to increase imports of fossil fuels to make up for a nuclear power shortfall when Japan switched off its nuclear reactors. Only two reactors have since been restarted.
In addition to the strong operating headwinds, it is also facing massive clean-up and compensation bills from the tens of thousands of people whose homes were ruined or who lost livelihoods as a result of radioactive leaks.
“We are now placed under ‘temporary state control,’” TEPCO president Naomi Hirose said in a statement.
He said his company had been granted a “last chance” to transform itself into a “New TEPCO” and it would make “utmost efforts” to compensate those affected by the meltdown disaster, scrap the crippled reactors and supply electricity in a stable manner.
In mid-July, the government allowed TEPCO to raise household electricity rates in its service area, including Tokyo, by an average 8.46%, although the utility had initially wanted a 10.28% increase.
Hirose said earlier that TEPCO would make further cost-cutting efforts to realise its target of logging a net profit in the year to March 2014.
Apart from the injection of public money, TEPCO has already agreed to borrow about one trillion yen from its major lenders with 370 billion yen expected to be loaned on Wednesday, media reports said.
© 2012 AFP