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.

Tweet