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▼ Spin-off Eyed For TEPCO N-business
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An expert panel of the Economy, Trade and Industry Ministry, tasked with discussing the reform of Tokyo Electric Power Company Holdings Inc., held its second meeting Tuesday and approved the direction for the utility’s drastic reorganization, which could involve a spin-off of its nuclear business.
During the meeting, the panel was told the annual cost of decommissioning nuclear reactors at the crippled Fukushima No.1 nuclear power plant is estimated at hundreds of billions of yen. To secure funds for the decommissioning, the panel — chaired by Kunio Ito, an adjunct professor at Hitotsubashi University — confirmed the need for TEPCO to carry out drastic reform requiring cooperation with other companies and a business restructure that could include the spin-off.
Currently, TEPCO has spent about ¥80 billion on average each year for decommissioning work at the Fukushima plant. In the future, the work is expected to include operations that require advanced techniques such as retrieving melted nuclear fuel debris from the reactors. In light of this, a senior ministry official said, “The decommissioning cost would swell significantly to several hundreds of billions of yen a year.”
TEPCO expects to take about 40 years to complete the decommissioning of the Fukushima nuclear plant. If hundreds of billions of yen are required annually, the overall decommissioning cost could amount to roughly ¥10 trillion.
However, TEPCO only intends to secure about ¥2 trillion for the decommissioning. During the three-year period through the fiscal year that ended in March, the company managed to post annual after-tax profits of ¥140 billion to ¥450 billion as a result of streamlining its business operations and other efforts. However, the profits were largely because of falling crude oil prices. If crude oil prices rise, it is unclear whether the company could maintain the current level of profit.
Given this situation, the ministry presented the panel with four reform proposals:
■ The central government would shoulder Fukushima-related costs, including decommissioning work;
■ Public funds would be used, with an obligation to repay, and TEPCO be placed under state control for an extended period;
■ TEPCO would be liquidated and creditors be asked to forgive debts; or
■ TEPCO’s profitability would be improved through reform measures, and a system be created to enable the company to secure decommissioning funds without increasing the public burden.
At Tuesday’s meeting, the panel approved the fourth proposal and agreed on the view that calls on TEPCO to do as much as possible to handle the matter on its own.
During the meeting, the panel was told the annual cost of decommissioning nuclear reactors at the crippled Fukushima No.1 nuclear power plant is estimated at hundreds of billions of yen. To secure funds for the decommissioning, the panel — chaired by Kunio Ito, an adjunct professor at Hitotsubashi University — confirmed the need for TEPCO to carry out drastic reform requiring cooperation with other companies and a business restructure that could include the spin-off.
Currently, TEPCO has spent about ¥80 billion on average each year for decommissioning work at the Fukushima plant. In the future, the work is expected to include operations that require advanced techniques such as retrieving melted nuclear fuel debris from the reactors. In light of this, a senior ministry official said, “The decommissioning cost would swell significantly to several hundreds of billions of yen a year.”
TEPCO expects to take about 40 years to complete the decommissioning of the Fukushima nuclear plant. If hundreds of billions of yen are required annually, the overall decommissioning cost could amount to roughly ¥10 trillion.
However, TEPCO only intends to secure about ¥2 trillion for the decommissioning. During the three-year period through the fiscal year that ended in March, the company managed to post annual after-tax profits of ¥140 billion to ¥450 billion as a result of streamlining its business operations and other efforts. However, the profits were largely because of falling crude oil prices. If crude oil prices rise, it is unclear whether the company could maintain the current level of profit.
Given this situation, the ministry presented the panel with four reform proposals:
■ The central government would shoulder Fukushima-related costs, including decommissioning work;
■ Public funds would be used, with an obligation to repay, and TEPCO be placed under state control for an extended period;
■ TEPCO would be liquidated and creditors be asked to forgive debts; or
■ TEPCO’s profitability would be improved through reform measures, and a system be created to enable the company to secure decommissioning funds without increasing the public burden.
At Tuesday’s meeting, the panel approved the fourth proposal and agreed on the view that calls on TEPCO to do as much as possible to handle the matter on its own.
- October 26, 2016
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