This week, Japan’s government floated the idea of putting Tokyo Electric Power Co (TEPCO)—the operator of the crippled Fukushima nuclear power plant—under temporary state control, following a request by the utility for an additional $8.9 billion from the state-run Nuclear Damage Liability Facilitation Fund to help it compensate families affected by the crisis.
The company’s request, if granted, would bring the amount of aid the utility has sought from the Nuclear Damage Compensation Facilitation Corporation to $22.1 billion from a previous $13.1 billion.
TEPCO said its appeal for an increase results from government moves to widen eligibility criteria for claimants and to alter the evacuation zone restrictions around the stricken plant. The decisions have increased both the amount of compensation for which the utility is liable and the number of people entitled to claim it, TEPCO claimed in a posted statement, adding, “We submitted a change to the amount of financial assistance” required.
A government panel has estimated that claims from victims affected by the nuclear disaster could reach $58.5 billion by 2013. A massive earthquake and tsunami on March 11, 2011, left 100,000 displaced or missing, and 20,000 dead; rendered towns uninhabitable for decades; and severely damaged nuclear reactors at the plant in Japan’s northeast.
Yukio Edano, Japan’s minister of Economy, Trade and Industry, told TEPCO President Toshio Nishizawa during a personal meeting to consider “every possibility, including temporary state control” to strengthen its financial base and come up with a comprehensive turnaround plan promised for next spring, the Jiji and Kyodo news agencies reported.
The details of a possible government takeover remain murky, but sources say that TEPCO's top management would resign and the government would effectively place TEPCO under state control through the purchase of the utility’s preferred stock.
The utility’s shares tumbled earlier this month on a press report that it would be effectively nationalized following a massive government share purchase. TEPCO is projected to post a non-consolidated net loss of $7.5 billion for the business term ending in March 2012. But without financing from the fund and banks, the utility's liabilities are expected to exceed its assets for the business term ending in March 2013.
Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.
Edited by Rich Steeves