UPDATE 3-TEPCO wins approval to restart Japan nuclear plant

(Adds details)

* TEPCO wins long-awaited OK to restart nuclear plant

* Test start-up could come as early as Friday

* Restart would cut TEPCO fuel consumption, CO2 emissions

By Osamu Tsukimori

NIIGATA, Japan, May 7 (Reuters) - Tokyo Electric Power Co won approval on Thursday to restart the world's biggest nuclear plant nearly two years after it was damaged in an earthquake, a step towards cutting its fuel imports and carbon emissions.

The restart, which may come as early as Friday, could cut TEPCO's (9501.T) annual fuel purchases by more than 70 billion yen ($713 million) and cut carbon dioxide emissions by 5 million tonnes, according to company and Reuters calculations.

The governor of Japan's Niigata prefecture approved trials to restart the 1,356-megawatt No. 7 reactor at TEPCO's Kashiwazaki-Kariwa nuclear plant, as expected, despite a string of small fires there since the July 2007 quake.

But he kept up the pressure on TEPCO, saying the prefecture would keep a close eye on the reactor.

"If there were problems..., I would withdraw consent for the resumption of operations," he told reporters after announcing his approval at the prefectural assembly.

A TEPCO spokesman said no start date had been set but prefectural officials said the generator could start within a day and an analyst said there was an incentive to move quickly.

"For TEPCO, this has great meaning. If the restart is not granted, it will prolong its reliance on alternative fuel such as oil and gas," said Tomoko Murakami, head of the nuclear energy group at the Institute of Energy Economics, Japan.

Murakami estimated that a 75 percent run-rate at the No. 7 reactor would generate 8.9 billion kilowatt-hours of power annually, which is equivalent to burning 2.1 million kilolitres (about 37,000 barrels per day) of fuel oil.

The annual output from the reactor was equivalent to burning 1.87 million kilolitres of LNG and would help cut 5.97 million tonnes of CO2 emissions, Murakami said.

Trade minister Toshihiro Nikai said in a statement that restarting the No. 7 reactor would help relieve concerns about summer power supplies in Tokyo region that TEPCO serves.

Approval for the restart comes despite 600,000 people signing a petition against the plant reopening.

Public anxiety remains high about the scandal-plagued nuclear sector in a country on the Pacific Ring of Fire where earthquakes occur frequently.

"I'm worried about accidents, and I would want the company to institute all-out-efforts on safety," said Niigata resident Tetsu Shibuya, 75.

It is still unclearwhen the remaining six reactors at the 8,212-MW plant will resume operations. The governor told reporters nothing had been decided regarding those reactors.

The No. 7 unit is the newest and least damaged of the seven generators, all of which shut down after the quake.

Market sources say it will probably take about 40 to 50 days for TEPCO to conduct tests and pass a final government inspection before starting commercial operations at the No.7 generator.

Japan generates about a quarter of its power from nuclear reactors. TEPCO's 8,212 megawatt Kashiwazaki-Kariwa plant alone accounts for 17 percent of Japan's total nuclear capacity.

Resuming full production there would push Japan's nuclear fleet utilisation rate to over 80 percent, the highest since 2002, when a scandal involving false TEPCO documents came to light.

Increasing its reliance on atomic energy is a core part of Tokyo's Kyoto protocol plan to cut carbon emissions by 6 percent from 1990 levels in the five years to March 2013.

Japan also wants to cut its near total dependence on imported coal, LNG and oil.

The government gave its go-ahead for the restart of No. 7 unit in February, but TEPCO needed approval from the three local government leaders.

Two local mayors gave their backing last month, leaving the Niigata governor the only hurdle for the reopening.

TEPCO has not said when it might restart the rest of the plant. But the 1,356-MW No.6 reactor is next in line, and analysts said this could be restarted later this year.

The Institute of Energy Economics' Murakami said there could be hitches before TEPCO restarts other units.

"It is true that the restart of No.7 unit has been delayed due to a series of fire mishaps that had no relation to the reactor's safety," she said.

"So I cannot rule out a further delay in the restart (of other generators there) for some reason." ($1=98.18 Yen) (Additional reporting by Risa Maeda; Writing by Chikako Mogi; Editing by Rodney Joyce)