Japan is set to nationalize Tokyo Electric Power, the operator of the ravaged Fukushima Daiichi nuclear power plant, under a ¥1 trillion bailout plan approved Wednesday.
The Japanese government has been scrambling to keep the company from collapsing so it can meet the billions of dollars in compensation claims and decommission the meltdown-stricken reactors at Fukushima Daiichi, all while continuing to provide the Tokyo metropolis with stable electricity.
The government is also eager to push through reforms to restore public trust in a company that has played a vital role in Japan’s energy policy but has also admitted to safety lapses and cover-ups at its power plants. But the $12.6 billion bailout comes at a time that the government itself is reeling under a debt burden that has mushroomed to more than twice the size of its economy.
“I ask that you rebuild the trust that has been lost,” Yukio Edano, the Japanese trade minister, told executives of the utility on Wednesday after his ministry approved the 10-year plan.
“We consider the plan a new start and are prepared to thoroughly carry it out,” said Toshio Nishizawa, president of Tokyo Electric, also known as Tepco.
The Fukushima Daiichi plant was heavily damaged by a powerful earthquake and tsunami in March 2011, which eventually led to multiple fuel meltdowns at the site and a massive radiation leak that forced tens of thousands from their homes.
The government has separately committed ¥2.4 trillion in taxpayer money to meet compensation payments arising from the accident. But estimates of the payments that Tepco might have to pay out have reached many tens of billions of dollars, making further government support likely.
Finances at Tepco have also been battered by the costs of decommissioning at least four of the Fukushima plant’s six reactors, a process that could take decades. And the utility has been incurring large fuel costs as it makes up for capacity lost at Fukushima Daiichi, as well as two other nuclear power plants that have been shuttered since the quake. Tepco has pushed to reopen at least one of those plants but has so far been hampered by local opposition.
According to the latest plan, Tepco will issue special shares of up to ¥1 trillion to the government, which will acquire majority voting rights. The government will relinquish control of Tepco once its credibility is restored enough that it can raise funds through the corporate bond market.
To further shore up its finances, Tepco is set to raise electricity rates — as much as 10 percent for normal households — a move that is certain to add to the public anger already directed at company over the disaster.
The plan also calls for Tepco to make cost savings of ¥3.36 trillion over 10 years. It calls for all of Tepco’s 16 directors to resign at its next shareholders’ meeting, in June, and for the new board to have a majority of outside directors.
Tepco has already announced that a new president, the company veteran Naomi Hirose, will take over in June, pending shareholder approval. Kazuhiko Shimokobe, a corporate turnaround lawyer, is slated to become Tepco’s next chairman, succeeding Tsunehisa Katsumata, who became something of a national villain for his apparent lack of remorse following the nuclear calamity. Mr. Katsumata never visited Fukushima to meet with victims following the accident. Tepco said earlier this week that he had been busy directing the company response from its headquarters in Tokyo.
“This plan forms the basis for how a new Tokyo Electric will proceed with reforms,” said Mr. Edano, the trade minister. “I strongly hope that under new management, Tepco will become more sensitive to the victims of the disaster, as well as its customers and the wider public, change the way it shares information, and reform its corporate culture,” he said.
Source: The New York Times