Tokyo Electric Power Co. on Thursday requested an injection of ¥1 trillion from a government-backed entity to avoid insolvency but left unsettled such key questions as how big a stake the utility will let the state have in return for receiving taxpayers’ money.
Tepco needs massive funds not only to compensate people affected by the crisis at the Fukushima No. 1 nuclear power plant but also to scrap the facility’s crippled reactors and meet growing fuel costs for thermal power generation.
The move marks the beginning of a process to put Japan’s largest utility under temporary government control, but twists and turns are expected over deciding the amount of shares the government will acquire to intervene in Tepco’s management and who will take over from departing Chairman Tsunehisa Katsumata.
The capital injection could take place in July. It would be Japan’s largest-ever bailout outside the banking sector.
Tepco is also seeking an additional ¥845.9 billion to be used for ballooning compensation outlays related to the nuclear crisis. The aid would raise the total amount of such aid to be provided by the government-backed Nuclear Damage Liability Facilitation Fund to more than ¥2.4 trillion.
Both the capital injection and the aid for redress payments are expected to be stipulated in a comprehensive restructuring plan to be crafted by Tepco and the fund, possibly in mid-April.
The plan needs to be approved by Minister of Economy, Trade and Industry Yukio Edano before it can be implemented, but Tepco decided to make the request first so it can book the financial assistance as an extraordinary profit for the current fiscal year, which ends Saturday.
Booking compensation expenses without the aid could have threatened the utility with falling into negative net worth.
The government hopes the restructuring plan will be crafted in a way that shows Tepco has “turned over a new leaf” and has taken a hard look at itself.
Public sentiment against Tepco remains harsh, with the company often criticized for its handling of compensation payments and for having taken a defensive attitude, apparently believing the crisis could not have been avoided because the tsunami that ravaged the Fukushima plant was larger than expected.
The former blue chip is now facing a heavy financial burden amid increasing fuel costs for thermal power generation.