October 29, 2013 00:00 By The Yomiuri Shimbun
A report on Tokyo Electric Power Co by the Board of Audit raises concern that the government's financial support for the utility will hit a wall. The board launched its first probe into Tepco, which has been put under de facto state control. Investigators
Under the current framework, the government uses public money temporarily for the utility to compensate people and companies suffering from the nuclear crisis caused by Tepco’s nuclear power plant. The framework calls for the government to be reimbursed with “special contributions” by Tepco from its annual profits and general contributions from utilities around the country that possess nuclear power plants.
The amount of government assistance may go as high as 5 trillion yen, and 3 trillion yen has already been provided. Nonetheless, Tepco has not paid any special contributions at all due to its worsening financial condition.
According to the board, if compensation expenses reach 5 trillion yen and Tepco cannot make any special contributions, the government will not be able to collect all of the monetary assistance given to the utility until 2044. This is an extremely grim outlook.
Another problem is that the government is raising funds for assistance to Tepco from financial institutions by issuing bonds. This means the longer the repayment takes, the higher the interest payments will be. The maximum interest payments are estimated to be 79.4 billion yen. This will be a burden for taxpayers.
The board urged Tepco to rebuild its finances as soon as possible. But this is not easy because the restart of the firm’s Kashiwazaki-Kariwa nuclear power plant in Niigata prefecture, a key factor to improve its earnings, is not yet in sight. At the same time, fuel costs for thermal power plants, being used to make up for the lack of nuclear power plants, keep squeezing the utility’s management.
It is considered certain that decontamination work in areas affected by the nuclear crisis will cost trillions of yen. If the utility shoulders these costs, Tepco’s financial reconstruction efforts will go nowhere.
Tepco, which is responsible for the nuclear crisis, should work harder to reduce costs further, but the current method of financial assistance to Tepco should be drastically reviewed. It is necessary to plan a new system in which the government, which has been promoting nuclear power, should carry a reasonable burden.
In the latest probe, the board points out that Tepco holds some assets that it is neither planning to use nor sell. The board also finds it a problem that Tepco took more than a year to make compensation payments in about 200 cases after disaster victims made claims for damages.
Tepco must not fail to improve its business to obtain public understanding because the firm is receiving government assistance.