(Adds losses since disaster, capital ratios, comment, shares)
By Taiga Uranaka and James Topham
TOKYO, April 2 Kyushu Electric Power Co
has become Japan's second nuclear generator to seek state
support this week as reactors across the country remain idled
and industry losses stack up three years after the Fukushima
Kyushu Electric, a regional monopoly that supplies power in
southern Japan, said on Wednesday it was in talks with
state-owned Development Bank of Japan (DBJ) for financial
backing. On Tuesday, Hokkaido Electric Power Co, which
supplies Japan's northernmost island, also asked the same bank
for financial assistance, a source said.
All of Japan's 48 nuclear reactors have been shut down,
pending stringent safety checks, since an earthquake and tsunami
knocked out the Fukushima nuclear complex in March 2011.
The country's nine publicly traded nuclear operators have
together lost 3.2 trillion yen ($31 billion) in the two business
years since then and five of them, including Kyushu Electric and
Hokkaido Electric, also expect to be loss-making in the year
Japanese banking practices make it difficult for private
lenders to extend credit, including refinancing existing loans,
to companies that post three straight years of losses. That
means the utilities are turning to a government-owned lender for
help as the losses mount up and the cost of importing expensive
fossil fuels for power generation while nuclear reactors are
idle is draining their capital.
"Capital funds have been continuously declining and
liabilities might soon exceed assets," said a senior industry
source familiar with Hokkaido Electric's finances. "Continued
deficits have made it harder to borrow from banks. The way to
solve this is to increase rates to boost revenue, but since this
is very hard to do, other avenues are being considered."
Hokkaido Electric's capital ratio - a key measure of
financial health - has dropped to 8.9 percent from 24.2 percent
before March 2011. Kyushu Electric's capital ratio has more than
halved to 11.5 percent. The average capital ratio of Japan's top
companies is 43 percent, finance ministry data shows.
"Absent official announcements, I don't know where this is
all heading but, if I was asked whether this could spread to
other utilities ... it's possible," said Reiji Ogino, a senior
analyst at Mitsubishi UFJ Morgan Stanley Securities.
The utilities are also likely to be saddled with huge
decommissioning costs as many idled reactors are unlikely to
pass strict new standards, a Reuters analysis shows. Re-starts
also face political opposition.
Prime Minister Shinzo Abe's Liberal Democratic Party is
moving to revive nuclear power, but hasn't been able to get its
coalition partner to sign off on a plan that defines nuclear
power as an important source of electricity generation.
Of Japan's 48 reactors, 17 are unlikely to be restarted, and
as many as 34 may have to be mothballed, the Reuters analysis
shows. The cost of decommissioning a reactor is estimated at
around $1 billion.
According to industry ministry data, the utilities have
spent 9 trillion yen ($86.9 billion) on additional fuel costs in
the three years since the Fukushima disaster.
To ease the strain, the companies have been raising
electricity charges, but were warned by the industry minister
this week that further increases must be avoided.
Six of nine regional monopolies that operate reactors in
Japan have raised prices since the Fukushima crisis, while one,
Chubu Electric Power Co, has a request pending to
increase rates. Price increases for residential customers must
be approved by the government.
Kyushu Electric is asking the DBJ to buy 100 billion yen of
preferred stock in the company, a source said. The lender is
considering the request. "We are in consultations with the
Development Bank of Japan about receiving capital support, but
since nothing has been decided I'm unable to comment further,"
said Kyushu spokesman Yuki Hirano.
Shares in Kyushu Electric fell 5 percent on Wednesday - to
their lowest close in almost two months - and Hokkaido Electric
dropped 5.4 percent after falling more than 10 percent on
Tuesday. The benchmark Nikkei 225 ended up 1 percent.
Kyushu Electric has estimated a net loss of 125 billion yen
for the year ended March 31.
If both Kyushu Electric and Hokkaido Electric get the aid
they've asked for, they would join the Fukushima plant's
operator, Tokyo Electric Power Co (Tepco), in receiving
government bail-outs. Other nuclear operators may be forced to
turn to the government, too, the Nikkei has reported.
In 2012, the government took a controlling stake in Tepco,
and the company still relies on taxpayer hand-outs to pay
compensation to those affected by the disaster, which forced
160,000 people from their homes. Tepco lost 2.7 trillion yen in
the three years to March 2013.
($1 = 103.5750 Japanese Yen)
(Additional reporting by Osamu Tsukimori; Writing by Aaron
Sheldrick; Editing by Mark Bendeich and Ian Geoghegan)