Fukushima costs $43b and 7400 jobs

8:35 AM Tuesday Oct 4, 2011
NZ HERALD

Tokyo Electric Power Co will have to cut 7400 jobs and slash costs by US$33 billion (NZ$43 billion) over the next 10 years to pay damages for the Fukushima nuclear accident, a government-commissioned panel says.

The panel, made up of five experts and assisted by a team of government officials, is investigating TEPCO's finances and advising on restructuring of the utility following the disaster at its nuclear power plant, which was crippled by the March 11 earthquake and tsunami.

Without restarting nuclear plants and an increase in electricity rates - measures likely to be deeply unpopular with the Japanese public - TEPCO will fall into a capital deficit of Y1.6 trillion (NZ$27 billion).

It will also require 8.6 trillion yen in fresh funding over the next 10 years, the panel said in its final report.

TEPCO, long one of the world's biggest power companies and supplying electricity to tens of millions of customers, has only about one trillion yen of its own capital.

The panel estimated the utility could reduce its workforce by 14 per cent and cut costs by 2.5 trillion yen, among other measures.

The findings suggest Tokyo still faces considerable challenges in trying to keep TEPCO afloat, even after setting up a body to help it pay an estimated 4.5 trillion yen in compensation claims by 2013.

The panel believes that a severe restructuring of the company is the only way to guarantee funds to compensate the tens of thousands of people and businesses affected by the Fukushima nuclear disaster, which forced the evacuation of a 20-kilometre zone around the plant.

"If these restructuring measures are carried out, it will be a major step in paving the road for (TEPCO) to receive aid from the government," panel chairman Kazuhiko Shimokobe, a bankruptcy lawyer, told a news conference.

Failure to obtain government assistance could prompt questions over the viability of TEPCO as a going concern and make its already difficult funding situation more challenging.

The company posted a net loss of US$15 billion for the fiscal year ended in March.

Rising public distrust of nuclear technology has meant many atomic reactors have been out of action since the March 11 quake as communities refuse to allow them to come back online over safety fears.

The panel also warned that TEPCO may have to seek new assistance from its creditors, which include Japan's three main banks and major life insurers, saying that fresh concessions could come in the form of eased repayment terms, debt waivers, or debt-for-equity swaps.

The nuclear disaster started when a magnitude-9.0 quake and massive tsunami knocked out cooling systems at the Fukushima plant, sparking meltdowns and a series of explosions in the worst atomic disaster since Chernobyl 25 years ago.

- AFP

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