The operator of the Fukushima nuclear plant on Thursday asked the Japanese government for a capital injection of $12 billion in a bid to avoid insolvency.
Tokyo Electric Power (TEPCO) officially requested one trillion yen, because it is in a “very serious financial condition,” President Toshio Nishizawa told a news conference.
The firm separately asked a state-backed entity for an additional 846 billion yen in financial aid to pay ballooning compensation bills to victims of the nuclear accident at the Fukushima Daiichi power plant after last year’s earthquake-tsunami disaster.
The company needs a capital injection to shore up its finances because of the increasing costs it faces running obsolete and inefficient thermal plants amid public distrust of nuclear power in the wake of the Fukushima disaster.
TEPCO also faces a growing bill for the work to dismantle the crippled plant and to clean areas polluted by radiation.
Creditor banks have reportedly demanded TEPCO receive taxpayers’ money before turning to them for fresh loans.
In return for the one trillion yen capital, the government wants to take at least a 51 percent stake in TEPCO, with an option to take up to a two-thirds stake to essentially nationalise and reform the company, local media have said.
Under the latter scenario, the government could move to separate TEPCO’s power generation and power distribution functions to encourage new entrants in the power generation market.
Industry Minister Yukio Edano has been at the forefront of the push to reform the utility, which may not be able to continue as a going concern without public money, but is seen as slow to change.
After a general shareholders’ meeting in June, the government will acquire newly issued stock through the state-backed Nuclear Damage Liability Facilitation Fund, local media have said.
Nishizawa said he wanted to keep TEPCO as a private entity, despite repeated demands by Edano for substantial management control in exchange for the bailout.
“If we don’t do anything now, and if all sorts of management cost increases, it is possible that we fall into a state where our liabilities will exceed our assets,” he told a press conference.
“Our financial foundation is in a very severe situation. Everyday, rather than getting better, it is only getting worse. To shore up our finances, we had no choice but to take the step we took today.
“I think it is important that we express the energy of a private enterprise and nurture green shoots for future growth,” Nishizawa said, promising restructuring and cost cutting.
Nishizawa said TEPCO was drafting a new management plan to be submitted to the government soon, which will need Edano’s approval.
If the fresh cash injections are approved, the total amount of taxpayers’ money handed to TEPCO would add up to 3.5 trillion yen.