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JAPANESE NUCLEAR NEWS BLACKOUT CONTINUES TO HURT JAPAN’S IMAGE »« TOKYO PEOPLE CELEBRATE THE DEACTIVATION OF THEIR LAST OPERATING NUKE

TOKYO ELECTRIC POWER CO. (TEPCO) TO BE NATIONALIZED BY BAILOUT

09 MAY 2012

Tokyo Electric Power Co, Japan’s biggest utility, and owner of the devastated Fukushima Dai No. 1 Nuclear Power Plant, will be taken over by the government, after Japan’s trade minister approved a $12.5 billion bailout plan on 09 May 2012, in what is effectively a “nationalization plan”. We suppose TEPCO is believed to be “too big to fail” since they supply electrical power to almost 45 million people, in and around Tokyo, with a large fleet of non-nuclear utilities. TEPCO lodged a formal request for government “support” last Apr 2012, after months of dragging its feet as it sought to retain management control.

YUKIO EDANO, JAPAN’S “TRADE AND INDUSTRY” MINISTER told a news conference: “Without the state funds, (TEPCO) cannot provide a stable supply of electricity and pay for compensation and decommissioning costs…Even though the firm will be under so-called state control, I want the company to do its best to step out of this situation soon…Under the new management, I urge that the firm builds a fresh culture, listening to voices of those who have been harmed [by the nuclear crisis], to customers, to society, and starts actively releasing information.”  Finally, Mr. Edano gets the “fundamental people’s right to information” correctly. Edano added that granting approval to the utility’s “10-year turnaround plan”, paves the way for the Central government to inject 1 trillion yen ($12.5 billion) thus bringing total government support for the company to at least 3.5 trillion yen since the triple meltdowns at Fukushima last Mar 2011. The eventual cost of the nuclear disaster, including compensation and clean-up costs, has been estimated at more than $100 billion.  Fukushima Dai No.1,  is a true “Money-pit”.

TEPCO PRES. TOSHIO NISHIZAWA SEES THE BAILOUT AS TEMPORARY.  Referring to the government’s intention to own TEPCO only until it recovers. (HOPE SPRINGS ETERNAL AMONG CEO’s).  TEPCO Chairman Tsunehisa Katsumata will be replaced by a member of the bailout body, and a new president was chosen this week from within TEPCO to replace Nishizawa in June 2012.  TEPCO IS SADDLED WITH DEBT OF TRILLIONS OF YEN in compensation and clean-up costs from the Fukushima triple meltdown radiation crisis, as well as surging fossil fuel costs to compensate for lost nuclear power capacity.  TEPCO has been facing insolvency risks since the disaster.

THE  BAILOUT PLAN STIPULATES that the government will get more than half of TEPCO’s voting rights, allowing it to choose board members. It will also take convertible stock that, when converted, will increase its control to more than two-thirds, enabling it to make unilateral decisions on major management issues including mergers. Even so, the bailout and takeover must first be approved by a general shareholders’ meeting in June, as a formality; Additionally…

1. The government will inject $12.5  billion dollars, and  provide TEPCO with an additional 850 billion yen for compensation,  Major creditors will provide the firm with an additional 1 trillion yen in compensation funds.

2. TEPCO WILL SELL OR LEASE some of its thermal power plants, a move Edano suggested could be an initial step towards loosening the grip of Japan’s 10 regional monopoly utilities including TEPCO, by opening markets to competition.

3. TEPCO PLANS TO CUT COSTS by 3.3 trillion yen over 10 years, and said it aims to turn profitable in the 2013/14 business year, forecasting a net profit of 106.7 billion yen. But this goal depends on many uncertain factors.  Yeah!, we reckon as how!

4. TEPCO AIMS TO RESTART SEVEN(7) REACTORS at its Kashiwazaki Kariwa plant from 2013/14;  However, this is viewed as improbable due to mounting public opposition –  Kashiwazaki Kariwa is not an exception;  Furthermore, the government has yet to decide what role nuclear power will play in Japan’s future energy policy. They just don’t want to smell the coffee!

5. TEPCO PLANS TO RAISE ITS RATES for three(3) years for households by 10 %, and for corporate customers by about 17 %.  The household electricity rate hike, unpopular among the public, must first be approved by the government.

TEPCO President Nishizawa said:  “The only thing we can do is to try to seek the public’s understanding. If we can’t realize this, then the impact would be big on our revenues and expenditures … But we do not have a plan B or a C now,”  Many Japanese believe TEPCO downplayed the risks of earthquakes and tsunamis at its nuclear stations and covered up safety lapses. “Public understanding” (forgiveness?) after their cover-ups and news blackouts are not likely.

COMMENT:  Very large utility companies are usually managed by people who safeguard their position first, and who seem perennially optimistic – even when faced with financial disaster.  TEPCO stock is down to 10% of its value before Fukushima.  Go figure! Many people have lost most of their financial investment; still, the magnates wish us to think TEPCO’s predicament is temporary.  I do not thiink so! As soon as the re-organization is over, such TEPCO magnates will be relegated to posterity – return or no; Good riddance!  Their misdeeds and recalcitrance has hurt direly the people of Japan, and the world’s Uranium Nuclear Industry worldwide. President Nishizawa should have had a plan “B”, as in B-gone! Pronto hombre! – OH! No golden parachutes please!

Edward Oliver Gonzalez (gonzedo)

 

May 9, 2012 at 8:27 PM
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