The Development Bank of Japan may extend ¥500 billion in loans in fiscal 2012 to eight regional utilities operating nuclear plants, excluding Tokyo Electric Power Co., sources said Wednesday.
The state-backed lender wants to help electricity companies cover the higher costs of operating thermal power plants while all of Japan’s commercial reactors remain offline, the sources said.
The loans would also enable utilities to finance redemptions of their bonds so they can ensure a stable power supply to their service areas, they said.
The amount being considered is the same as in fiscal 2011, when the DBJ also loaned the power companies ¥500 billion in total.
Japan’s three largest banking groups and certain regional lenders are also willing to financially assist the eight utilities, whose total borrowing in fiscal 2012 is predicted to be around the ¥3 trillion required in the previous year, including DBJ loans.
The lender is currently examining each utility’s business plan and, if necessary, will discuss syndicated loans with other financial institutions, the sources said.
Utilities must continue to rely on thermal power generation to offset the electricity shortfall while their nuclear reactors remain idle, after three units at Tepco’s Fukushima No. 1 plant suffered meltdowns last year.
Other than two reactors operated by Kansai Electric Power Co. at the Oi nuclear complex in Fukui Prefecture, the chances of commercial reactors resuming operations in the near future are considered slim.
In addition, power companies were forced to halt new bond issuance — traditionally their main method of raising additional funds — because of the nuclear crisis. Tohoku Electric Power Co. resumed bonds issuance in March, but the terms and conditions were more stringent and thus far less lucrative than previous offerings.
Tepco, meanwhile, is set to be temporarily nationalized this summer and will receive a total of ¥1 trillion through fresh loans and refinancing from various financial institutions, including the DBJ and the nation’s top three banking groups.
The move is seen as necessary to ensure the utility stays afloat as it faces massive redress over the nuclear crisis. Tepco is currently finalizing the terms and conditions of its state bailout.