¥1 trillion puts Tepco under state control

Kyodo

Tokyo Electric Power Co. said Tuesday it has received ¥1 trillion in public funds and is under effective government control amid its financial plight stemming from the Fukushima nuclear disaster.

The capital injection by a government-backed bailout fund is expected to help the top utility put its business back on track without going bankrupt, while giving the government more than 50 percent of Tepco’s voting rights and the ability to intervene in management.

“We feel sorry and take very seriously that the public was asked to bear a further burden,” Tepco President Hirose Naomi said in a statement, adding the utility will continue to fulfill its three key responsibilities — compensating the people and businesses affected by the meltdowns at the Fukushima No. 1 plant, scrapping the crippled reactors and supplying electricity in a stable manner.

On Tuesday, the government’s Nuclear Damage Liability Facilitation Fund bought preferred shares issued by Tepco, acquiring a majority of voting rights. The government ownership stake can be boosted to up to more than two-thirds to impose even stronger control in pushing for reforms.

The capital injection alone will not solve Tepco’s problems, as the utility still hopes to be able to restart idled reactors in Niigata Prefecture starting in April to cut its massive outlays for thermal power fuel — a tall order amid the nationwide nuclear safety fears brought on by the Fukushima crisis.

To raise revenues, Tepco has been allowed by the government to raise household electricity rates Sept. 1, but only by an average 8.46 percent compared with the initially planned 10.28 percent.

Hirose said earlier that Tepco will make further cost-cutting efforts so the lower rate hike won’t affect its goal of turning a net profit in fiscal 2013.

In the event Tepco can’t keep its schedule for moving back into the black, discussions to further raise electricity rates or to pour more public funds into the company could emerge, analysts say. Banks may also cut off their financial support.