JAPAN: Government approves TEPCO nuclear compensation scheme but says its purpose is not to bailout company

Record ID: 464187

  • Title: JAPAN: Government approves TEPCO nuclear compensation scheme but says its purpose is not to bailout company
  • Date: 14th May 2011
  • Summary: MINAMI SOMA CITY, FUKUSHIMA PREFECTURE, JAPAN (FILE - APRIL 2011) (REUTERS) AREA DESTROYED BY TSUNAMI WITH VACANT HOUSE CAR COVERED IN DEBRIS FLAG IN FRONT OF DEBRIS
  • Embargoed: 29th May 2011 13:00
  • Keywords:
  • Location: Japan, Japan
  • Country: Japan
  • Topics: Disasters / Accidents / Natural catastrophes,Domestic Politics
  • Reuters ID: LVA9POVD83IYPYSXTKJU13PLPINF
  • Story Text: Japan's government approved on Friday(May 13) a plan to help Tokyo Electric Power Company(Tepco) compensate victims of the crisis at its tsunami-crippled Fukushima Daiichi nuclear plant and save Asia's largest utility from financial collapse.
    The government will issue special-purpose bonds to help fund the scheme, which will allow Tokyo Electric to handle compensation payouts that are expected to run into the tens of billions of dollars.
    There will be no ceiling set on Tokyo Electric's liabilities.
    Other utilities will also be asked to pay annual premiums into the fund.
    "The purpose of the scheme decided this time is not to bailout Tokyo Electric Power Company, but to respond those who have been affected by this nuclear disaster so that they are properly compensated," Japan's Economic, Trade and Industry minister Banri Kaieda.
    The scheme had been expected to be approved by Prime Minister Naoto Kan's cabinet on Thursday(May 12) but was delayed for one day due to disagreement among ruling party members over details of the plan.
    The plan is designed in principle to protect bondholders and will keep Tokyo Electric (Tepco) shares listed, although the utility is expected to forgo dividend payments for several years as it pays back the fund for compensation.
    Government officials, bankers and Tokyo Electric executives have been wrangling for weeks over who should foot the bill for the crisis at the Fukushima Daiichi plant, which was crippled by the March 11 earthquake and tsunami.
    "If in the unlikely event that Tepco is unable to provide a stable supply of electricity due to having to pay for damages incurred, then then the government will indeed step in to support them. This could happen in a multitude of ways," Kaieda said.
    The government plans to inject about 5 trillion yen ($62 billion USD) worth of special-purpose bonds into the compensation fund, lawmakers told reporters earlier this week.
    Two months after the disaster, Tokyo Electric is still struggling to get reactors at the plant under control.
    In one government simulation, if compensation totals 5 trillion yen($62 billlion USD), Tokyo Electric would be asked to pay back 200 billion yen (2.4 billion USD) to the fund annually over 13 years, with the rest to be shouldered by the other utilities.
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