Tepco halts dividends, so metro buses to run red ink


Staff Writer

The Tokyo Metropolitan Government’s bus operations, running in the black since 2003, probably lost money for the first time for fiscal 2011, and the major reason is the dividends from Tokyo Electric Power Co. shares have dried up.

While many bus operators, public and private, have been losing money for more than a decade amid the declining population and rise in other transportation options, the metropolitan government’s bus operation has logged profits since 2003.

That doesn’t mean, however, that metro bus operations had been a money generator until 2010. The truth is that it had been receiving all of the dividend payments from Tepco shares held by the metro government.

The payments far exceeded the bus operation’s losses until the second half of fiscal 2010, when Tepco stopped paying dividends following its massive losses in connection with the nuclear disaster in Fukushima.

“We have not closed the books for fiscal 2011, but we will undoubtedly have posted losses,” Atsuko Inagaki of the capital’s Transportation Bureau said. “The largest reason is that we got no dividend” from Tepco shares.

The metropolitan government is Tepco’s largest shareholder, owning 2.66 percent of the utility, or 42.7 million shares.

The metro government had budgeted for a net profit of ¥300 million from the bus business in fiscal 2011, under the assumption that it would receive ¥2.56 billion in dividends from Tepco shares. It created the budget in summer 2010, Inagaki said.

Tepco had paid a dividend of about ¥30 per share every six months from at least 2001 to the first half of fiscal 2010, translating into about ¥2.56 billion a year.

The profit from the bus operation has been smaller than the Tepco dividends since around 2001, which means the business would likely have posted losses had it not been for the utility.

The metropolitan government has counted Tepco dividend revenue in the bus operation budget since World War II.

The capital was invested in Tepco during the war by supplying power generation equipment through its Electricity Bureau, the predecessor of the Transportation Bureau, Inagaki said.

The bureau first folded the dividend income into the Toden tramway business, but because that operation shrank dramatically, it has been putting the money into the bus business since 1972, she said.

However, the utility, which announced its second consecutive annual loss in fiscal 2011, stopped paying dividends from the second half of 2010, which means Tokyo’s bus business stopped receiving dividends in fiscal 2011, Inagaki said.

“The financial conditions are tough. We will continue to make efforts to increase passengers and cut costs,” Inagaki said.

Only one out of 26 public bus operators as well as 67 out of 228 private bus entities were running in the black in fiscal 2010, according to statistics compiled by the transportation ministry. Combined, public and private bus operators have posted an accumulative loss every year since at least 2001.

With Tokyo’s bus business likely to lose money, its drivers’ high salary level may become a target of public criticism, as it has in the city of Osaka.

The metropolitan government pays its bus drivers an average annual salary of ¥7.36 million, compared with ¥5.73 million for drivers working for competing bus companies in Tokyo, according to the Transportation Bureau. The metropolitan government is trying to cut drivers’ salaries, according to officials.

Osaka Mayor Toru Hashimoto has publicly criticized the salaries of his city’s bus drivers, and the municipal government is negotiating with labor unions to cut their pay. Osaka’s bus drivers earn an average of ¥7.39 million a year, compared with ¥4.6 million for drivers at private bus firms in the city, an Osaka official said.