Japan's TEPCO in Dire Financial Straits, Applies for Government Aid

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Researched by Industrial Info Resources (Sugar Land, Texas)--Tokyo Electric Power Company Incorporated (TYO:9501) (Tokyo) (TEPCO) has been at work on the clean-up of Fukushima Daiichi nuclear power plant for more than a year. The clean-up efforts have seen the construction of various temporary structures, such as tanks, pipes and mobile generators. There also have been numerous problems in these structures, such as leaking pipes and clogged pumps, since their start of service. In response, the Nuclear and Industrial Safety Agency (NISA), a part of the Japanese Ministry of Economy, Trade, and Infrastructure (METI), has called on TEPCO to make its clean-up facilities into long-term structures rather than temporary ones, citing repeated leaks of irradiated water.

TEPCO has called on the Japanese government for $12.15 billion in aid for meeting its costs. In addition to this new government motion, TEPCO is in the process of paying damage compensations to affected citizens and businesses throughout the region. On March 16, TEPCO applied for $10.27 billion in aid to pay for new claims on compensation. If approved, the total for TEPCO's compensation bill alone will reach $41.31 trillion.

Another cause behind TEPCO's financial trouble is its fuel consumption. TEPCO has seen a rapid increase in its fuel bill as it compensates for the loss of capacity from nuclear reactors downed for maintenance or due to the earthquake through increase use of fossil fuel power plants, specifically natural gas-fired plants. While natural gas prices in the U.S. have been sinking lower and lower, in Japan, the world's largest importer of liquefied natural gas (LNG), the price for 1,000 cubic meters of liquefied natural gas (LNG) is more than four times that of the price in the U.S. With its last in-service nuclear reactor, Kashiwazaki-Kariwa Unit 06, shut down for maintenance on March 26, TEPCO no longer has any nuclear capacity in service. Japan currently only has one nuclear reactor still in operation, Tomari Unit 03, which is owned and operated by Hokkaido Electric Power Company Incorporated (TYO:9509) (Sapporo, Japan).

On a positive note, the situation on the ground at Fukushima Daiichi is stable. Some troubles with pressure-monitoring systems on Unit 01 have been fixed. TEPCO is investigating the cause. In addition, the work on on-site Diesel Generator A has been completed, and the generator has been restored to function. The generator is currently supplying power to the plant, which will help reduce Fukushima Daiichi's dependence on external power sources.

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