Fukushima operator Tepco seeks $12 billion government rescue

Thu Mar 29, 2012 6:25am EDT
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By Taiga Uranaka and Kentaro Hamada

TOKYO (Reuters) - Tokyo Electric Power Co (9501.T: Quote) has asked the government for an injection of 1 trillion yen ($12 billion) in what would be Japan's biggest public bailout outside the banking sector, as it struggles with the aftermath of the Fukushima nuclear crisis.

The utility, widely known as Tepco, said on Thursday it had also sought 845.9 billion yen from a government-backed bailout body to help compensate victims of the tsunami-triggered accident - the world's worst nuclear disaster in 25 years.

Without the bailout, which must be approved by Trade Minister Yukio Edano, Tepco - which supplies electricity to 45 million people in and around Tokyo - could face insolvency, which in turn would mean massive losses for its lenders and bondholders.

Tepco President Toshio Nishizawa said the company's capital has fallen to 620 billion yen, from around 2 trillion yen before the March 11 disasters last year, underscoring the urgency of the fund injection.

"If this situation continues, there is a real possibility that we will become insolvent," he told a news conference. "I am painfully aware that our financial situation is extremely dire."

The magnitude-9.0 earthquake and ensuing tsunami caused reactor meltdowns at Fukushima, triggering a radiation crisis and widespread contamination. Tens of thousands of residents within 20 km (12 miles) of the plant have been forced to evacuate, leaving behind their homes and livelihoods.

The disaster has left Tepco with huge compensation and clean-up costs, a mounting bill for fossil fuels to replace lost nuclear capacity, and the massive burden of decommissioning the devastated reactors, a process expected to take decades.

The bailout request paves the way for Tepco and the government to finalise a turnaround plan, which the company said on Thursday it wants to submit by mid-April. Tepco had been hoping to file the plan by the end of March, but has been delayed by the difficulty in finding a new chairman.   Continued...