The Japanese government might give financial aid to TEPCO, operator of the stricken nuclear plant, to make sure the company is able to manage the nuclear disaster. But not everyone is satisfied.
TEPCO might not be able to cope with the crisis without government aid
Japanese Trade and Industry Minister, Banri Kaieda, has told the press that the Japanese government will soon launch a special team to discuss the issue of giving financial aid to TEPCO, adding that Japan will also have to review its energy policy, including the extent of its dependency on nuclear power.
The government says, while no definitive decision has yet been made, it could end up spending tax money to bolster TEPCO to secure Japan’s power supply. A senior government official adds, despite the possibility of getting involved, the government does not plan to nationalize the company.
TEPCO will have to pay litigation fees and compensation
Without government help TEPCO might not be able to handle the massive litigation costs and compensation claims it expects to see after the nation's worst nuclear disaster, while at the same time ensure a steady supply of electricity, as pointed out by one of Japan’s leading newspapers, Mainichi Shimbun.
Meanwhile a TEPCO official says the firm is still busy containing the “nuclear accident” and has not held internal discussions about asking for government help. Since the March 11 earthquake and resulting tsunami that triggered the Fukushima crisis, the company has taken a big financial hit.
This week, TEPCO announced that it had secured around 24 billion euros in bank loans. However, it has warned that might not be enough to keep the company running. Fukushima has more than tripled TEPCO’s debt, which is one of the world's biggest power companies, to over 80 billion euros.
If the nuclear crisis drags on, the company could face compensation claims of up to around 90 billion euros, Bank of America-Merrill Lynch has estimated. Furthermore, the company will also have to cover the expanding costs to contain the nuclear crisis, repair damaged thermal plants and to run remaining power plants.
TEPCO’s reputation worsening
"Putting TEPCO under government control is not necessarily good for the company’s shareholders because TEPCO will probably be too overwhelmed to repay public money for a long time and won't be able to return anything to investors," Fujio Ando, an adviser at Chibagin Asset Management, tells Reuters.
Share holders are likely to lose interest in TEPCO
Ando adds that whatever happens, TEPCO has to make clear who will be taking responsibility. People do not want to see them keeping their current management, the advisor says.
Due to a series of missteps and mistakes in handling the crisis since the disaster, the company's shares have also fallen by 80 percent. Rating agency Moody has downgraded TEPCO by three notches due to "significant financial obligations" faced by the company.
Under the law, TEPCO should be exempted from compensation for nuclear accidents caused by natural disasters. But, as quoted by Japanese Media, a government official says that will not apply, given strong public sentiment.
No final resolution in sight
Protesters have been calling the company "criminal" and staging rallies outside TEPCO’s headquarters in Tokyo. More and more people are demanding a stop to nuclear power.
Radiation levels in water near the reactors are reported to be 10,000 times above normal. Plutonium, a by-product of atomic reactions and one of the most dangerous substances on the planet, has also been found in soil samples at the disaster site.
Elevated iodine levels have been found in water in the disaster area
Prime Minister Naoto Kan reiterated on Friday that the radiation leaking from the Fukushima nuclear plant presents no public health threat as long as people follow the government's advice. The government has stopped shipments of farm and dairy products from four prefectures near the plant. Authorities in and around Tokyo have urged parents not to use drinking water in baby formula after elevated iodine levels were found.
More than 70,000 people have now been evacuated from the 20-kilometer exclusion zone and another 13,000 who live in a 10-kilometer radius area beyond that have been advised to either leave or stay indoors.
Experts say the impact of the nuclear disaster is likely to last for decades and, as the situation continues to change, there might be further setbacks yet to come.
Author: Anggatira Gollmer (Reuters, AFP, AP)
Editor: Sarah Berning