Japan opposition LDP cannot accept Tepco scheme: MP Kono

Liberal Democratic Party lawmaker Taro Kono is seen through a window as the window reflects Tokyo's skyscrapers and parliament building at the Reuters Rebuilding Japan Summit in Tokyo June 20, 2011.

TOKYO (Reuters) - Japan's main opposition Liberal Democratic Party (LDP) won't accept a government scheme to help Tokyo Electric Power (9501.T) pay billions of dollars in compensation to victims of its nuclear plant disaster, a LDP lawmaker said on Monday.

But the party has yet to agree on a counterproposal to the government bill to establish a fund helping Tepco compensate those affected by radiation leaks from its tsunami-hit Fukushima nuclear plant, Taro Kono told the Reuters Rebuilding Japan Summit in Tokyo.

Kono also saw in the next general election, which must be held by 2013, the possible emergence of a "green alliance" of some lawmakers in the ruling Democratic Party and the LDP calling for a shift in energy policy.

Kono, known as a maverick in the LDP who has long condemned Japan's nuclear energy policy, criticized the government scheme for sparing shareholders and creditor banks while risking a bigger burden for taxpayers.

But those in the LDP against the bill are split over how the compensation issue should be handled, he said.

"It is probably unavoidable that Tepco's debts will exceed its assets. If that is the case, then the government should...have it go through court-led bankruptcy," he said, adding that this is not the majority view in his party.

The government should start compensation payments and ask Tepco to pay back later, and financially aid the firm as it goes through court-led bankruptcy, Kono said.

Moody's Investors Service on Monday its credit rating on Tepco, Japan's largest corporate bond issuer, to junk status, saying it is unclear if the government bill can be enacted. The ratings agency lowered Tepco's senior secured credit rating to Ba2 from Baa2 and long-term credit rating to B1 from Baa3.

ALLIANCE ON ENERGY POLICY

The 48-year-old son of a former foreign minister, Kono, who in 2009 bid unsuccessfully for LDP leadership, said some in the ruling and opposition parties could form an alliance to push for a change in Japan's energy policy, among other issues.

"There are moves now to form such a bipartisan group," he said. "There may not be a realignment of parties just with this, but I wouldn't be surprised if there was a movement close to that."

Prime Minister Naoto Kan wants to review goals that saw 50 percent of power supply coming from nuclear power by 2030, and has pledged to boost renewable energy to more than 20 percent of electricity supply in the 2020s.

Unpopular Kan, Japan's fifth premier in as many years, has said he will step down without saying when, sparking a tug-of-war with the opposition and some in his own party over when he will keep that promise, clouding the outlook for key policies.

Concerns over power shortages into 2012 are growing as only 19 of 54 nuclear reactors in Japan are now operating.

Some were damaged by the huge quake and tsunami in March, while others are undergoing regular safety checks or have not been restarted due to community concerns over safety.

Kono said the halted reactors, except for those run by Tepco and the high-risk Hamaoka plant that was shut down in May, should only be restarted once strict safety checks have been conducted, a process that should be completed by next summer.

Tepco also operates Kashiwazaki Kariwa, the world's biggest nuclear power plant, which was shut by a major quake in 2007.

Trade minister Banri Kaieda said on Saturday that government inspections showed all nuclear power plants had adequate safety measures against severe accidents and called on local governments to give the green light to resume operations, adding power shortages could hurt the world's third-largest economy.

"They are doing this (inspecting) as if they already have a schedule that they must follow," Kono said.

The quake and tsunami on March 11 left up to 23,000 dead or missing and damaged the Fukushima Daiichi nuclear power plant, causing the world's worst atomic disaster in 25 years. The government has estimated that the material damage from the natural disaster could top $300 billion.

Kono said Japan could re-emerge from the crisis if it makes use of this occasion to deregulate.

"There are many regulations that just exist for the sake of vested interests, especially in the power industry. Let's seize this opportunity and scale them back," he said.

(Additional reporting by Taro Fuse, Chisa Fujioka and Taiga Uranaka; Editing by Linda Sieg and Jonathan Thatcher)