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Tepco compensation to cost taxpayers more than previously estimated

JIJI, Kyodo

Maximum interest payments to financial institutions by the government related to helping Tokyo Electric Power Co. pay compensation over the nuclear disaster are projected to total ¥126.4 billion, up some ¥50 billion from an estimate in October 2013, according to the Board of Audit.

If the financial aid for compensation payments related to the crisis at the Fukushima No. 1 nuclear plant reaches a limit of ¥9 trillion, the government will take up to 30 years to collect the funds, the board said Monday in its latest estimate.

Because the interest payments may rise further, depending on Tepco’s financial conditions, the board said that the company needs to boost its efforts to improve its finances and corporate value.

It was the board’s second audit of Tepco.

After the upper limit for government financial aid was raised from ¥5 trillion to ¥9 trillion in December 2013, the board recalculated other figures based on the status as of the end of 2014.

According to the board, aid to Tepco for compensation payments totaled ¥4.534 trillion as of the end of last year.

Meanwhile, a total of ¥189.2 billion in taxpayer money has been spent since fiscal 2011 on decommissioning the nuclear facility and dealing with the buildup of radioactive water, the Board of Audit said.

The board also said Tepco has allocated a massive amount of money for radioactive water treatment facilities and tanks that functioned only for a short period of time, with the amount totaling around ¥68.6 billion.

Tepco has spent some ¥32.1 billion on equipment to remove radioactive cesium from tainted water at the crippled plant, but the facilities stopped operating three months after the start of operations in June 2011, due mainly to equipment failure.

The utility also spent ¥16 billion to build more than 100 tanks for storing radioactive water at the plant. But these are now being replaced with more reliable containers after around 300 tons of highly tainted water was found to have leaked from one of the tanks in 2013.

“The government should give sufficient consideration to ensuring the recovery of the state funds and boosting Tepco’s corporate value” to reduce the burden on taxpayers, the board said, urging Tepco to make further cost-cutting efforts.

The government plans to collect funds for the financial aid from the sale of Tepco shares, contributions by nuclear power plant operators, special payments by Tepco and government subsidies to the Nuclear Damage Compensation and Decommissioning Facilitation Corp.

The board’s estimate is based on the assumption that Tepco pays ¥50 billion, or half of its pretax profit, in its annual special contribution.

To calculate interest payments and how long it will take to collect the funds, the board also assumed that Tepco shares will move between ¥750 and ¥1,350 apiece.

The latest estimate shows that the government will finish collecting the funds as early as 2032, with interest to be paid to financial institutions totaling ¥89.2 billion, or as late as 2044, with interest reaching ¥126.4 billion.

The previous estimate found that the interest would total between ¥37.4 billion and ¥79.4 billion if Tepco receives maximum aid of ¥5 trillion.

The board also said that it will take much longer to collect the funds because Tepco has failed to resume operations at its Kashiwazaki-Kariwa nuclear plant, as assumed in the estimate, and the Tepco share price currently stands below ¥500, far lower than the prices projected in the estimate.