Tokyo Electric Pleads for Government Help on Compensation

The head of Tokyo Electric Power on Tuesday asked Japan’s government to help shoulder the burden of compensating those displaced by the crisis at its Fukushima Daiichi nuclear plant, a bill that is expected to run to tens of billions of dollars.

The president of the troubled utility also said the firm would carry out additional cost cutting measures in response to demands from some cabinet ministers for it to take such steps before receiving public help.

Officials from the government, Tokyo Electric and creditor banks have been scrambling to craft a scheme that would allow the utility to cope with the massive payouts. But talks have been taking longer than expected, with some ministers saying Tokyo Electric is not making enough effort to save money.

National Strategy Minister Koichiro Gemba also hinted holders of Tokyo Electric shares and bonds might share some of the burden, when asked about issue.

“In relation to any burden on taxpayers, it’s important to consider the issue of those who hold Tokyo Electric shares and bonds,” he told reporters.

Tokyo Electric and its creditor banks have been pushing for a scheme with substantial government help, arguing this is essential to preventing a drop in its credit rating to junk status, which would likely affect Japan’s entire bond market.

The draft plan already calls for a fund to be set up that would include contributions from other utilities, which Tokyo Electric would pay back over a few years from its annual profits, sources familiar with the matter have said.

STEP UP
Tokyo Electric chief Masataka Shimizu told reporters after meeting with Chief Cabinet Secretary Yukio Edano and Trade Minister Banri Kaieda that the company would step up planned restructuring steps including asset sales.

He said he and other representative directors of the company would forgo salaries “for the foreseeable future” as part of the additional measures.

He warned that the utility could face 1 trillion yen ($12.5 billion) in extra fuel costs after shutting down reactors in Fukushima following the massive March 11 earthquake and tsunami, and that it was having difficulty raising funds.

He also noted the firm faced 750 billion yen [$9.28898 billion] in outlays to redeem bonds and loans in the current financial year to March 2012, potentially overwhelming its finances.

“Our fundraising situation is extremely difficult,” Shimizu said in a written request for government support to the trade minister.

“If this situation continues … sooner or later we will not be able to secure enough funds, potentially affecting not only fair and timely compensation payments for victims but also the stable supply of electricity.”

After the meeting with Shimizu, Kaieda said the government would ask Tokyo Electric to keep its requests for government financial support to a minimum and not to raise electricity prices immediately.

He also said the government was aiming to finalize the scheme this week. It had been expected that it would be announced early this week to give Tokyo Electric time to prepare for reporting its 2010/12 earnings, scheduled for sometime later this month.

($1 = 80.275 Japanese Yen)
(Reporting by Kiyoshi Takenaka and Taiga Uranaka, Writing by Nathan Layne; Editing by Edwina Gibbs and Joseph Radford)