Japan to take control of Tokyo Electric Power: report

TOKYO Thu Mar 31, 2011 7:17pm EDT

The logo of Tokyo Electric Power Company (TEPCO) is seen at its Shinagawa thermal power station in Tokyo in this January 26, 2009 file photo. REUTERS/Stringer

The logo of Tokyo Electric Power Company (TEPCO) is seen at its Shinagawa thermal power station in Tokyo in this January 26, 2009 file photo.

Credit: Reuters/Stringer

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TOKYO (Reuters) - Japan's government plans to take control of Tokyo Electric Power Co (9501.T), the operator of a stricken nuclear power plant, by injecting public funds, the Mainichi newspaper said on Friday.

But the government is unlikely to take more than a 50 percent stake in the company, an unnamed government official was quoted by the daily as saying.

"If the stake goes over 50 percent, it will be nationalized. But that's not what we are considering," the official said.

The company, also known as TEPCO, has come under fire for its handling of the emergency at its Fukushima Daichi nuclear complex, triggered by a March 11 earthquake and tsunami that left more than 27,500 people dead or missing.

A series of missteps and mistakes, combined with scant signs of leadership, have undermined confidence in the company. TEPCO shares are down almost 80 percent since the disaster.

Mainichi quoted a government official as saying: "It will be a type of injection that will allow the government to have a certain level of (management) involvement."

TEPCO officials could not immediately be reached for comment.

The company could face compensation claims topping $130 billion if the nuclear crisis dragged on, Bank of America-Merrill Lynch estimated this week, further fuelling expectations the government would step in to save Asia's largest utility.

Under law, TEPCO co u ld be exempt from compensation for nuclear accidents caused by natural disasters. But Mainichi quoted the official as saying it would not be possible to apply the legislation given strong public sentiment.

Anger against the company has seen protests outside its Tokyo headquarters, with people demanding an end to nuclear power and calling the company "criminal".

Investor concern about TEPCO mounted after its president, Masataka Shimizu, was admitted to hospital this week and the company said 2 trillion yen ($24 billion) in emergency loans from Japan's major banks would not cover its rising costs.

Liabilities for compensation claims alone could be up to 11 trillion yen ($133 billion) -- nearly four times TEPCO's equity -- if the nuclear crisis drags on for two years, an analyst at Bank of America Merrill Lynch wrote in a report.

TEPCO has around $91 billion in debt including some $64 billion in bonds. That excludes about $24 billion recently secured in loans from domestic lenders.

At the end of December, TEPCO had equity of about $35 billion, its accounts show.

Bank of America-Merrill Lynch said shareholders were very likely to take a big hit and a rapid resolution of the crisis was the only way to keep costs down.

If the situation can be turned around within the next two months, compensation costs may be less than 1 trillion yen. Costs will rise to 3 trillion yen if it drags on for six months, analyst Yusuke Ueda wrote.

Experts, however, say a final resolution of the nuclear disaster is likely to take decades and there could be many further setbacks.

TEPCO could burn through 2 trillion yen in about a year, said CLSA equity analyst Penn Bowers, as it pays extra for fuel to run its thermal plants, among other costs.

(Additional reporting by Taiga Uranaka; Editing by Dean Yates)

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