TEPCO seeking more financial bailouts from Japanese government

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The survival of Tepco, which has received 1.4 trillion yen in state funds to compensate those affected by the disaster, hinges on whether it receives more aid, said Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co.

The utility in charge at the Fukushima Daiichi nuclear power station says the current framework to provide the company with compensation costs through the Nuclear Damage Liability Facilitation Fund is not enough to allow it to continue making compensation payments and decommission the devastated nuclear reactors

The total clean-up costs and claims were initially estimated to be around 5 trillion yen, but some reports show the figure closer to 10 trillion yen.  “We are awaiting the government’s instructions and are aware the total cost, including of removing fuel debris and final disposal, could be considerably larger than we have previously allowed for,” TEPCO said in a statement.

TEPCO said that the costs of compensation and decontamination alone could reach over 120 billion dollars, easily exceeding previous estimates, and requires future government support to bear the financial burden.  “Such costs cannot be tackled with the efforts of one company alone,” TEPCO said in the program.

In its new management plant for 2013 and 2014 released on Wednesday, TEPCO outlined steps to set up a new decontamination and compensation office in Fukushima Prefecture, as well as a research center to develop methods for decommissioning the Fukushima Daiichi reactors.  TEPCO threatened that it would have to resort to major rate hikes if it were unable to acquire additional support from the Japanese government, and is still basing its plan on restarting the Kashiwazaki-Kariwa nuclear power plant, which has been opposed by local authorities.

The utility has already received over one trillion yen of public cash in April, on top of previous grants and loans, but the utility is pushing for at least another trillion to keep from going under.  “There is a view that we may need the same amount (again) of additional money for the decontamination of low-level radiation areas and costs of temporary facilities for storing waste,” the company said in a statement.

Masashi Goto, a retired power plant designer and university lecturer, said “It also appears that TEPCO underestimated the cost involved at first, probably because it would be criticized by the public by admitting to the immense scale of the catastrophe.”

TEPCO chairman Kazuhiko Shimokobe told reporters revising the current financial framework was unavoidable as TEPCO could become a shell, existing only to sort out the mess left by the tsunami-sparked disaster and dependent on the government for money.  “It will become difficult for us to raise money from the private sector so we will have to rely on the government for the financing of all of our business.”

The survival of Tepco, which has received 1.4 trillion yen in state funds to compensate those affected by the disaster, hinges on whether it receives more aid, said Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co.  “The government is likely to refuse to cover all the additional expenses” as extra aid would draw public criticism, Kawachi told Businessweek.

Last month, the utility admitted it had played down known tsunami risks for fear of the political, financial and reputational effects the new findings may have had.  “There were concerns that if new countermeasures against severe accidents were installed, concern would spread in host communities that the current plants had safety problems,” the October report said.

Just last week, TEPCO slashed its fiscal-year loss projection, now expecting to lose some $550 million this year, instead of the billions it initially forecast.  In July, the government allowed TEPCO to raise household electricity rates by an average 8.46 percent.

Source: NHK

Source: JiJi Press

Source: BBC

Source: Reuters

Source: Live Mint

Source: AFP

Source: Businessweek

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