Funding key to Tepco's future
Costs related to clean-up efforts of low-level waste from the Fukushima accident could double the previous liability estimate, Tokyo Electric Power Company (Tepco) suggested. The utility is seeking additional government funds to help meet these costs.
Tepco presented a new two-year business plan to the government yesterday in which it requested a fundamental review of its previously-agreed comprehensive special business plan.
The company said that clean-up costs could come to double the estimate of ¥5 trillion ($62.6 billion) made in April. This initial figure included the costs of compensation, decontamination of highly-contaminated areas and storage of wastes. However, Tepco has now told the government, "There is a possibility that we may need the same amount of additional funds for the decontamination of low-level radiation areas and costs of temporary facilities for storing waste."
Calling the response to the Fukushima accident "a national challenge," Tepco said that it will not be able to meet all these costs by itself and in effect would remain a public utility. It requested a new framework in which it and the government would share the financial burden.
In May, the Japanese government approved amendments to Tepco's ten-year special business plan which effectively puts it, at least temporarily, under state control. Under the amendments, the government provided Tepco with ¥1 trillion ($12.5 billion) in state funds in return for a 51% stake in the company.
Including the bailout, the government has injected ¥2.5 trillion ($31.3 billion) into Tepco and allocated at least ¥5 trillion ($62.6 billion) for compensation and decontamination.
In addition to the clean-up and compensation costs, Tepco has already set aside ¥1 trillion ($12.5 billion) of its own capital to decommission the damaged reactors at the Fukushima Daiichi plant. However, the company warned that these costs could also rise significantly.
Tepco warned that if the costs were met by doubling the amount of government bond issuance, "our company will become an entity solely for the purpose of dealing with post-accident issues." It said that it would become difficult for it to raise money from the private sector, "so we will have to rely on the government for the financing of all our business."
The utility is seeking to cut costs by an extra ¥100 billion ($1.3 billion) annually over the next two years, in addition to a ¥336.5 billion ($4.2 billion) annual reduction over the next ten years as part of its long-term plan.
In October, Tepco said it now expects to report losses of some ¥45 billion ($563.7 million) for the year ending 31 March 2013, down from an earlier estimate of ¥160 billion ($2.0 billion).
Researched and written
by World Nuclear News
