Thursday, November 8, 2012

TEPCO Says It May Take 10 Trillion Yen (US$125 Billion) to Decon and Compensate, Needs Government Support


In the land of make-believe (aka Japan), TEPCO says it will take 10 trillion yen, or US$125 billion, to decontaminate and compensate people and businesses that suffered the consequence of the Fukushima I Nuclear Power Plant accident.

Decommissioning the reactors is totally separate. TEPCO says the company is allocating 1 trillion yen ($12.5 billion) to decommission Fukushima I Nuclear Power Plant (or at least Reactors 1, 2, 3 and 4). $3 billion each, a generous enough amount if it were a normal reactor.

As AFP article below notes, Japan's national government budget is about 90 trillion yen, of which only 50% of expenditure is paid by revenues from income tax and stamp tax, according to the charts by the Ministry of Finance. The rest is all borrowing, and 24% of the budget has to be set aside to pay the interests to the bond holders (11%) and to retire the debt (13%).

Japanese always wanted their government and the central bank to just print away to cause inflation. Here's their chance.

From AFP (11/7/2012):

Fukushima operator warns clean-up 'may cost $125 bn'

TOKYO — The cost of the clean-up and compensation after Japan's Fukushima nuclear power plant disaster may double to $125 billion, the plant's operator warned Wednesday.

Tokyo Electric Power Company (TEPCO) said decontamination of irradiated areas and compensating those whose jobs or home lives have been affected would cost much more than the five trillion yen it estimated in April.

"There is a view that we may need the same amount (again) of additional money for the decontamination of low-level radiation areas and costs of temporary facilities for storing waste," the company said in a statement.

The utility -- one of the world's biggest -- received one trillion yen of public cash in April in exchange for granting the government a controlling stake.

The money was on top of previous grants and loans. It was intended to prevent the company, which generates and supplies electricity to millions of people, including in and around Tokyo, from going under.

But on Wednesday, as it presented a new management plan, TEPCO said it was looking at a bill of up to 10 trillion yen ($125 billion) -- equal to around two percent of Japan's gross domestic product or 11 percent of the country's annual budget.

The company said it would need more government help to meet the colossal figure.

TEPCO also said it had already set aside one trillion yen of its own capital to decommission the plant's broken reactors, which is in addition to the clean-up and compensation bill, but it was possible this may also rise.

"We are awaiting the government's instructions and are aware the total cost, including of removing fuel debris and final disposal, could be considerably larger than we have previously allowed for," it said in a statement.

Company chairman Kazuhiko Shimokobe told reporters TEPCO could become a shell, existing only to sort out the mess left by the tsunami-sparked disaster and dependent on the government for money.

"If we address the swelling costs by doubling the amount of government bond issuance (to 10 trillion), our firm will become an entity only for the purpose of dealing with post-accident issues," a company statement said.

"It will become difficult for us to raise money from the private sector so we will have to rely on the goverment for the financing of all of our business."

Shimokobe stressed that he believed TEPCO should be revived as a fully-fledged private-sector entity, to achieve its mission of compensating those affected by the disaster and providing a stable supply of energy.

TEPCO said Wednesday it would build a new office in Fukushima to try to speed up processing of compensation claims, whose slow pace has been much criticised, and to provide more than 4,000 jobs in Fukushima prefecture.

It also said it is looking at shaving extra 100 billion yen in costs annually.

Last month the Tokyo-listed TEPCO -- the one-time standard bearer of widows' and orphans' stocks -- said it expects to lose 45 billion yen this year, a figure well down on the 160 billion yen initially forecast.

The devastating tsunami of March 2011 swamped cooling systems at the Fukushima plant, sending reactors into meltdown and spewing radiation over a large area.

The clean-up is expected to take decades, with scientists warning that some settlements may have to be abandoned.

In October TEPCO admitted it had played down known tsunami risks for fear of the political, financial and reputational cost.

The confession was one of the starkest yet by a company that has fallen very far out of favour in Japan and has been criticised for trying to shirk responsibility for the worst nuclear disaster in a generation.

The massive natural disaster claimed nearly 19,000 lives when a huge undersea quake generated a massive tsunami that wreaked havoc along a stretch of coast in northeast Japan.

But the emergency at Fukushima is not officially recorded as having directly caused any deaths, although it has made tens of thousands of people homeless and rendered swathes of Japan's agricultural belt unfarmable.


6 comments:

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Anonymous said...

This is what happens when you based your estimates on false hopes and delusions. Let's remember originally they estimated all the contaminated water would be cleaned up in about a year. Now they finally realize they'll be cleaning water for years if not decades. The JGOV went as far as firing the company that setup their radiation monitoring because their system read too high. Too high means too expensive so they looked for a company that could deliver a lower less expensive number. Why do you think they only test a small fraction of the food they allow to be offer for sale? If they did more in-depth broad spectrum testing people would realize contamination isn't always distributed equally in some crops.

It isn't an accident that they grossly underestimated the cost of clean up the Russians did exactly the same with Chernobyl. If the government gave the actual figures early on everyone would really be up in arms so they lied and ignored the actual cost. This is not unlike the constant underestimating of radiation numbers, they don't want to spread "baseless rumors" just "faceless tumors". I doubt this will be the last time that they realize their math is a bit fuzzy or they ignored some important "unforeseen" expenses.



Anonymous said...

Has anyone compared how many billions the plants earned over their lifetime as opposed to how much the accident will cost? I've heard Chernobyl is slated to cost more than the value of electricity generated by all Soviet reactors at the time. This could be green propaganda but who knows for sure. In any event it is pretty obvious the victims are still getting screwed around 26 years later.


"Coping with the impact of the disaster has placed a huge burden on national budgets. In Ukraine, 5–7 percent of government spending each year is still devoted to Chernobyl-related benefits and programmes. In Belarus, government spending on Chernobyl amounted to 22.3 percent of the national budget in 1991, declining gradually to 6.1 percent in 2002. Total spending by Belarus on Chernobyl between 1991 and 2003 was more than US $ 13 billion.

This massive expenditure has created an unsustainable fiscal burden, particularly for Belarus and Ukraine. Although capital-intensive spending on resettlement programmes has been curtailed or concluded, large sums continue to be paid out in the form of social benefits for as many as 7 million recipients in the three countries. With limited resources, governments thus face the task of streamlining Chernobyl programmes to provide more focused and targeted assistance, with an eye to helping those groups that are most at risk from health hazards or socio-economic deprivation."

http://www.greenfacts.org/en/chernobyl/l-3/5-social-economic-impacts.htm

"Streamlining Chernobyl programmes to provide more focused and targeted assistance" is a fancy way of saying, "screw you poor people".

Anonymous said...

Some time ago, after Fukushima, some government appointed commission recomputed the economical feasibility of nuclear power generation taking into account the costs stemming from Fukushima. Their conclusion was the nuclear was still a little cheaper than fossil.
Never mind that such calculations did not take into account the cost of storing the nuclear waste, is the government going to redo the math now that TEPCO is revising the costs upward?
Why should TEPCO survive as a private entity? After this cost revision they are bankrupt twice, not once. Why is TEPCO management still there rather being in prison?
Beppe

arevamirpal::laprimavera said...

Beppe, the reason is because the national government has taken over TEPCO. TEPCO's former chairman Katsumata wanted the company to be liquidated, he was denied by the DPJ honcho (not Noda, but the real one).

Anonymous said...

Primavera-san, I do not see how the government has taken over TEPCO, I see no Ghosn at the helm of TEPCO, which instead keeps milking the Japanese taxpayers and the end is nowhere in sight. Keeping Tepco alive is giving free money to its bondholders (banks) and indirectly subsidizing the other nuclear utilities by reducing their credit risk.

If the losses caused by nuclear disasters were footed by the same people who have enjoyed the profits then we would see who would have the guts of investing into such a madman's technology.

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