Tepco to remain a ward of the state for at least 3 more years
Costly Fukushima cleanup continues to dog the Japanese utility
TOKYO -- Tokyo Electric Power Co. Holdings will likely remain under government control for at least three more years as cleanup costs for a 2011 nuclear meltdown continue to weigh on the Fukushima plant operator's finances.
Under the current business plan, Tepco's finances were to be evaluated at the end of fiscal 2016 to decide whether the government's stake can be lowered, with full privatization taking place in the early 2030s. But those familiar with the situation say Tepco's financial independence remains elusive.
"It is irresponsible to give up voting rights under current conditions," said an official at the public-private vehicle through which the government holds the stake. A source from the Ministry of Economy, Trade and Industry also indicated that the government cannot lower its stake yet. The final decision is slated for around the end of March.
The state injected 1 trillion yen ($8.78 billion) into the utility back in July 2012 via the Nuclear Damage Compensation and Decommissioning Facilitation Corp., taking a 50.1% stake.
Cleanup costs for the Fukushima Daiichi meltdown of March 2011 stand in the way of Tepco's road to recovery. The figure has doubled from three years ago to 21.5 trillion yen. And the 8 trillion yen in decommissioning costs included in this estimate could rise even more.
Tepco plans to consolidate and merge nuclear and power distribution operations with other companies. But how much of a boost these steps could offer is unclear.
In addition, prospects for resuming operations at the Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture have faded amid pushback from new Gov. Ryuichi Yoneyama.
Should the government pull away amid such uncertainties, Tepco's creditworthiness could suffer and the utility could struggle to raise funds.
The government will now likely hang on to voting rights and push for additional restructuring steps.
Around fiscal 2019, the government will again consider whether to lower its stake. But decommissioning costs will still be a risk factor, since removal of fuel debris will not have begun by then.
The government has planned to apply the proceeds from unloading Tepco shares toward funding cleanup work. The longer the current arrangement continues, the longer this profit will take to generate.
Japan's retail market for electricity is now fully deregulated. Healthy competition could be hampered by the presence of a government-owned juggernaut. The utility must work quickly to boost its earnings potential.