Tokyo: The operator of Japan’s wrecked Fukushima nuclear plant is working on a reorganisation plan to fend off more drastic proposals, including possibly dragging the company through bankruptcy in return for a publicly funded clean-up and shutdown of the reactors.
Two people close to Tokyo Electric Power Co, or Tepco, and the government department that oversees it told Reuters that the giant utility may reorganise itself as a holding company, and separate its electricity generation and transmission businesses from the handling of Fukushima, the worst nuclear disaster since Chernobyl in 1986.
Tepco’s internal deliberations, which have just begun, are meant to stake out the position of Asia’s biggest utility and the Ministry of Trade and Industry (METI) against other plans circulating in the government and ruling coalition of Prime Minister Shinzo Abe.
Abe has vowed the government will take a more prominent role in addressing the Fukushima clean-up. His government aims to compile new policy measures by the middle of this month.
Japan effectively nationalised Tepco last year with a taxpayer-funded rescue. But there has been heated debate over direct government involvement in the company and over whether to spin off the Fukushima clean-up and let the remainder of Tepco focus on generating electricity for millions of homes and businesses in the Tokyo area.
For now, Tepco’s own planning does not specify whether the Fukushima operations would remain within the proposed holding company, the sources said.
A Tepco spokesman said, “Nothing has been decided on the matter so we have no comment to make at this stage.” A March 2011 earthquake and tsunami knocked out power and cooling at the Fukushima Daiichi plant, leading to three reactor meltdowns and explosions that sent a huge plume of radiation into the air and sea, forcing some 150,000 people to evacuate.
Tepco, before returning to profit in the most recent quarter through cost cuts, has lost $27 billion (Dh99 billion) at the plant north of Tokyo and faces massive liabilities for the decades-long tasks of decommissioning the facility, compensating evacuees and paying for decontamination of an area nearly the size of Connecticut.
Outside ideas range from spinning off the Fukushima project as a new unit within Tepco to breaking up the company and — in a view held by only a small minority in the ruling party — putting the company through a US Chapter 11-style bankruptcy proceeding, as happened three years ago with Japan Airlines Co. The debate is heating up just as Tepco prepares to begin, as soon as Friday, removing spent fuel rods from one of the crippled Fukushima reactors.
A panel in Abe’s Liberal Democratic Party last week recommended stripping Tepco of the responsibility for shutting down the Fukushima station while using public funds to pay for storing contaminated topsoil and other waste.
Tepco wants to demonstrate to the public that it is making its best efforts before appealing for taxpayers’ money to help it tackle the mammoth Fukushima tasks, the sources said.
METI, as Tepco’s advocate, will be pushing for taxpayer money and the easiest terms for Tepco. The Finance Ministry, keen to avoid a prolonged drip of taxpayer money into the company, wants a clear line drawn between what Tepco itself must pay for and what costs will be borne by the government.
There are growing concerns within the government and LDP that — with Tepco suffering a brain drain as its problems fester — a publicly funded restructuring of Tepco must be decided soon to keep the Fukushima decontamination and decommissioning from derailing.
Tepco must be put through “some kind of pain” in order to get public support for further rescue funds, according to people in the government and close to Tepco.
The company’s own plan would position it as the pioneer in the government’s planned energy market liberalisation — which aims for a gradual opening of the power grid to newcomers by 2020. Tepco would consider starting the shift by splitting off its thermal power-generation and sales and transmission businesses as soon as the financial year from April 2016, the sources said.
The utility would seek to cover as much of the Fukushima costs as possible with profits from other parts of the company, such as hydropower or from a restart of the undamaged Kashiwazaki Kariwa nuclear power station.
To shift to a holding company model, Tepco would have to negotiate with its banks and other creditors as the reorganisation could create joint liabilities among the new operating groups. This could saddle the power subsidiary with huge burdens just as it faces mounting competition.
