http://www.reuters.com/article/2012/01/26/tepco-idUSL4E8CQ0SO20120126
UPDATE 3-Japan's stricken nuclear operator set for $13 bln bailout - sources
Wed Jan 25, 2012 11:47pm EST
By Kentaro Hamada and Linda Sieg
Jan 26 (Reuters) - Japan is set to launch a $13 billion bail-out of the owner of its stricken Fukushima nuclear power plant after the utility dropped resistance to a public fund injection, sources said on Thursday, as the country debates the future of nuclear power.
The injection of 1 trillion yen ($12.8 billion) in public funds into Tokyo Electric Power Co would effectively nationalise the firm, supplier of power to almost 45 million people, in one of the world's biggest bailouts outside the banking sector.
Tepco's Fukushima plant was wrecked by a quake and tsunami last March, sparking the world's worst nuclear crisis in 25 years and swamping the firm with future cleanup, decommissioning and compensation costs estimated at $100 billion or more. But it had been resisting a bail-out, fearing a loss of management control.
It is now resigned to the state rescue, but sources familiar with the matter said it was still dragging its feet over the form of bail-out, with the government proposing that the state-backed Nuclear Damage Liability Facilitation Fund take a two-thirds share, which would let Tokyo make the key decisions.
"If the government has a two-thirds stake, they have a right to control management, so naturally, Tepco doesn't like that," said one source familiar with the matter.
Tepco's plight is emblematic of problems facing Japan's entire nuclear power industry, once touted as safe, clean and cheap. Fifty of the nation's 54 reactors have been idled since the disaster and all may be off-line by spring for safety checks, despite government efforts to regain public trust in an industry that had provided a third of Japan's power.
The government has abandoned a plan to boost nuclear power to more than half of electricity supply by 2030, but has signalled atomic energy could play a role for decades to come.
Prime Minister Yoshihiko Noda aims to come up with a new plan for Japan's mid-to-long-term energy mix by summer, but must first persuade a wary public to allow off-line reactors to resume operations -- not an easy task.
BANKS TO LEND MORE
Tepco's fate is also being watched for clues as to whether Japan will deregulate its system of monopolistic regional utilities that both generate and distribute electricity.
Tepco's share price soared on the bail-out news, jumping as much as 8 percent in heavy trade.
Tepco, which together with the fund is drafting a business reconstruction plan to be unveiled in March, is also seeking at least around 1 trillion yen in fresh loans from banks and insurers, sources said.
One source said the financial institutions were likely to agree to the additional lending in an effort to keep Tepco afloat and protect their already big exposures.
Japan's three mega-banks -- Mitsubishi UFJ Financial Group, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc -- have combined exposures to Tepco of around 3.3 trillion yen, and their outstanding bonds total 5 trillion yen, according to IFR Japan Capital Markets.
A source familiar with the plan said it envisaged Tepco remaining under state control for 10 years, while resuming bond issuance in four or five years after which it would issue new equity to raise money to pay back the government.
The Nikkei business daily said the plan called for the utility to swing into profit in fiscal 2014 after posting a parent-only net loss of about 580 billion yen in the year ending March 31 and next fiscal year.
That would be followed by a net profit of 37.7 billion yen in fiscal 2013, largely on the sale of real estate, the Nikkei said. Tepco is also expected to generate a pretax profit of 159.1 billion yen in fiscal 2014, it added.
The projection for improved earnings, however, is based on the assumption Tepco will increase household electricity rates by 10 percent in October and reduce fuel costs by restarting reactors at its Kashiwazaki-Kariwa nuclear plant in fiscal 2013 -- moves the utility will find difficult to execute.
Tepco shareholders will need to approve an increase in its authorized share capital at an annual meeting in June before the nationalisation plan could go ahead.
II
Possible Tokyo Evacuation Was Kept Secret in Nuclear Crisis
By THE ASSOCIATED PRESS, Published: January 25, 2012
TOKYO (AP) — The Japanese government's worst-case scenario at the height of the nuclear crisis last year warned that tens of millions of people, including residents of Tokyo, might be forced to leave their homes, according to a report. Fearing widespread panic, officials kept the report secret.
The emergence of the 15-page internal document might add to complaints that the government withheld too much information about the meltdown at the Fukushima Daiichi nuclear plant, the world's worst nuclear accident since the Chernobyl disaster in 1986.
It also casts doubt about whether the government was sufficiently prepared to handle what could have been an evacuation on an extraordinary scale.
The report was submitted to Naoto Kan, the prime minister at the time, and his top advisers on March 25, two weeks after an earthquake and tsunami devastated the Fukushima Daiichi nuclear power plant, causing three reactors to melt down and generating hydrogen explosions that blew away protective structures.
Workers ultimately were able to bring the reactors under control, but at the time it was unclear whether those emergency measures would succeed. Mr. Kan commissioned the report, compiled by the Japan Atomic Energy Commission, to examine what options the government had if those efforts failed.
The authorities evacuated 59,000 residents within 12 miles of the Fukushima plant, and thousands more were evacuated from other towns later. The report said, however, there was a chance that far larger evacuations might be necessary.
The report looked at several ways the crisis could escalate — explosions inside the reactors, complete meltdowns, and the structural failure of cooling pools used for spent nuclear fuel.
Using matter-of-fact language, diagrams and charts, the report said that if meltdowns spiraled out of control, radiation levels could soar.
In that case, it said, evacuation orders should be issued for residents within and possibly beyond a 105-mile radius of the plant and "voluntary" evacuations should be available to everyone living within 155 miles and beyond.
That would have included the Tokyo area, with a population of 35 million people, and other major cities like Sendai, with 1 million people.
The report further warned that contaminated areas might not be safe for "several decades."
"We cannot rule out further developments that may lead to an unpredictable situation at Fukushima Daiichi nuclear plant, where there has been an accident, and this report outlines a summary of that unpredictable situation," said the document, which was written by Shunsuke Kondo, the leader of the atomic energy commission.
After Mr. Kan received the report he and other Japanese officials publicly insisted that there was no need to prepare for more widespread evacuations.
Rumors of the report emerged this month after a panel was created to investigate possible cover-ups. The Kyodo News agency first reported on the contents of the document on Saturday.
Nevertheless, the government continues to refuse to make the document public. Goshi Hosono, the cabinet minister in charge of the nuclear crisis, implicitly acknowledged the document's existence this month, but said the government had felt no need to make it public.
"Even in the event of such a development, we were told that residents would have enough time to evacuate," Mr. Hosono said.
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