* Hokkaido Electric asks lender to buy shares for $490 mln
* Prolonged shutdown of reactors hurting finances
* Hokkaido Electric shares tumble more than 10 percent
(Adds minister comment, price rises, new company comment)
By Taiga Uranaka
TOKYO, April 1 Japan's Hokkaido Electric Power
Co, facing a third year of financial losses, is seeking
a capital infusion from a state-owned lender, a source with
knowledge of the matter said on Tuesday.
If successful, Hokkaido Electric would be the second
Japanese nuclear operator after Tokyo Electric Power Co (Tepco)
to receive a government bailout since the Fukushima
crisis in 2011. Japanese media earlier reported that the utility
will get the bailout.
Hokkaido Electric is asking the government-owned Development
Bank of Japan to buy 50 billion yen ($485.5 million) worth of
preferred shares in the company, said the source, who was not
authorised to discuss the matter publicly. The utility said in a
filing that it has consulted with the Development Bank of Japan
on how to procure funds, but has not formally requested a
Japanese nuclear operators are in dire financial straits
after being forced to import more costly thermal fuels amid a
prolonged shutdown of their reactors for safety checks after an
earthquake and tsunami hit the Fukushima Daiichi nuclear plant
north of Tokyo in March 2011, causing the worst atomic crisis
since Chernobyl in 1986. Tepco was bailed out by the government
Most have raised already electricity prices, and further
increases would be politically hard for the government to
"I think it is extremely important for Hokkaido Electric to
exhaust all possible avenues to avoid another rate hike,"
Industry Minister Toshimitsu Motegi told reporters during a
regular press conference earlier on Tuesday.
Seeking an increase in capital would be one way to secure
its finances, Motegi said, without further comment.
The utility said in February it was considering another
increase in charges after raising prices last September, since
higher revenue from the earlier hike and cost cuts are unlikely
to prevent the utility from avoiding a more-than-110 billion yen
recurring loss expected in the year ended March 31.
The company on March 27 said it applied for government
permission to dip into special reserves that would reduce its
net loss by 19 billion yen.
Liabilities may exceed assets in the financial year that
started on Tuesday, the Nikkei business daily reported.
The company's shares tumbled more than 10 percent on
Tuesday, compared with a 0.2 percent fall in the Nikkei 225
Hokkaido Electric is the regional monopoly that supplies
power to the country's northernmost island of the same name.
Six of nine regional monopolies that operate reactors in
Japan have raised prices in the wake of Fukushima nuclear
crisis, while one, Chubu Electric Power Co, has a
request to lift rates under review, a spokesman at the
industry's trade group said. Price increases for residential
customers must be approved by the government.
All of Japan's 48 nuclear reactors are in shutdown and
undergoing stringent safety checks with no schedule for
restarts, forcing operators to import more costly fossil fuels.
The prolonged shutdown of Hokkaido Electric's sole Tomari
nuclear plant and the cost of burning more fossil fuels has put
it on course for a third straight financial year of net losses.
According to Japanese banking practices, it is very
difficult for lenders to extend credit, including refinancing
existing loans, to organizations that post three consecutive
years of financial losses.
Hokkaido Electric is expected to negotiate the proposal with
other shareholders and announce the plan by the end of April,
with an official decision to be made at its annual shareholders
meeting in June, the Nikkei reported.
($1 = 102.9850 Japanese Yen)
(Additional reporting by James Topham, Osamu Tsukimori, Kentaro
Hamada; Editing by Aaron Sheldrick, Michael Perry and Kenneth