Business / Corporate

Tepco and other nuclear firms to loan Japan Atomic Power cash for safety work at idled Tokai No. 2 plant

JIJI

Japan Atomic Power Co. is expected to receive around ¥300 billion in loans to fund safety work at its idled Tokai No. 2 nuclear plant in Ibaraki Prefecture, according to informed sources.

Of the total, Tokyo Electric Power Company Holdings Inc., which plans to buy electricity from the nuclear plant, is likely to provide about ¥190 billion in loans and debt guarantees.

Tohoku Electric Power Co., Kansai Electric Power Co., Chubu Electric Power Co. and Hokuriku Electric Power Co. will also offer financial support to Japan Atomic Power, the sources said Monday.

The five electricity companies and major banks aim to finalize their plans by May.

But they may face difficulty in coordinating the assistance, due partly to differences in opinion over their respective shares of financial contributions and methods, a senior bank official said.

In draft aid plans, Japan Atomic Power is seen restarting the nuclear plant in the village of Tokai in 2023. The company needs to gain approval from nearby municipalities to reactivate the plant.

If Japan Atomic Power fails to get their backing for the restart and ends up scrapping the plant, Tepco and others offering financial aid are highly likely to suffer losses, the sources said.

Tepco may face criticism for playing a leading role in the financial aid, as it was placed under effective government control after the March 2011 disaster at its Fukushima No. 1 nuclear plant, industry sources said.

By the end of 2022, Japan Atomic Power is expected to receive some ¥120 billion in financial assistance, of which ¥96 billion is likely to be shouldered by Tepco and ¥24 billion by Tohoku Electric, according to the draft aid plans.

Tepco plans to borrow funds from a major bank for its financial support to Japan Atomic Power, while Tohoku Electric is considering utilizing its cash reserves for loans to Japan Atomic Power or providing a debt guarantee to the company, sources familiar with the situation said.

After the 2023 restart of the Tokai plant, Japan Atomic Power is expected to receive ¥180 billion in loans from major banks, including Mizuho Bank and the government-backed Development Bank of Japan.

For these loans, Tepco and Tohoku Electric are considering providing debt guarantees of some ¥96 billion and ¥24 billion, respectively.

Although Kansai Electric, Chubu Electric and Hokuriku Electric have no plans to buy electricity generated at the Tokai plant, they see a need to support Japan Atomic Power’s finances, looking to provide debt guarantees of ¥24 billion in total.

But the three electricity companies may face opposition from their shareholders, as the support would not have direct effects on their electricity operations, the sources said.