The government's nuclear damage liability fund, which began operation Monday, may put Tokyo Electric Power Co. under its control because costs to decommission reactors at the crisis-hit Fukushima No. 1 nuclear power plant are expected to reach several trillion yen.
Former Hitotsubashi University President Takehiko Sugiyama, who became head of the organization on Monday, told a press conference the entity would inject capital into TEPCO and put the utility under public management when the decommissioning costs reach an extremely high level.
Although Sugiyama said the final cost of the decommissioning work is not yet known, he made clear a capital injection by his organization "will be necessary."
The corporation was established to support TEPCO's payment of compensation for damages resulting from the crisis, including those from the spread of radioactive material from the power plant.
Despite the expected costs of several trillion yen for decommissioning the Fukushima No. 1 plant's reactors, TEPCO has only about 1 trillion yen of its own capital.
Therefore, if the company bears the burden only by itself, it is almost certain that its liabilities will exceed its assets.
In this regard, Economy, Trade and Industry Minister Yukio Edano said, "TEPCO has no competition at present [because of its regional monopoly] and profits are surely secured. It is natural that [pay for executives and employees] must be decided in a way similar to that of public employees and staffers at independent administrative institutions."
He was essentially calling on TEPCO to step up efforts to reduce its personnel costs.
Meanwhile, TEPCO President Toshio Nishizawa suggested the firm would study an additional restructuring program, saying "We're not in a situation to consider raising electricity rates."
The company earlier sought an opinion from the government's TEPCO Management and Finance Investigation Committee on a charge hike.
TEPCO and the fund will compile a special program plan in October, which will feature restructuring programs. If Edano does not approve the plan, the government will not extend capital assistance to the firm.
Severe programs expected
Sugiyama, the head of the fund's board of directors, emphasized at his press conference, "It is important for us to carefully understand how victims feel now."
In October the fund will establish a local office in Koriyama, Fukushima Prefecture, to answer questions from the victims.
A major focus in terms of TEPCO's management issues will be restructuring programs to be included in the special business project plan that the fund will compile jointly with the utility.
Edano, who will decide whether the government will accept the plan, intends to ask TEPCO to make thorough cuts in expenses, including personnel costs, saying the company's executive and employee pay should be significantly lowered.
Sugiyama also took a stance of not allowing an easy increase in power charges. He said the current system, which allows power companies to decide electricity charges by adding profits onto their actual power generation costs, needs to be reviewed.
With the launch of the fund, worries over how TEPCO will raise money to pay compensation are somewhat eased.
Sugiyama put the amount of necessary money for immediate compensation payments at 3 trillion yen to 4 trillion yen. This amount of money is to be provided by the fund to TEPCO.
However, no money from the fund can be used for decommissioning reactors. Therefore, it is almost certain that the company's liabilities will exceed its assets.
For this reason, Sugiyama thinks it necessary to put TEPCO under public control.
(Sep. 28, 2011)