* Govt, Tepco to seek additional loans from banks -sources
* Firm may face insolvency from decommission costs -media
* Shares tumble as much as 17 pct on dilution fears
* Govt spokesman says public funds not being debated now
* Tepco exec doesn't rule out public fund injection -Kyodo
(Recasts with sources on public fund injection)
By Linda Sieg and Kentaro Hamada
TOKYO, Dec 8 The Japanese government may
inject about $13 billion into Tokyo Electric Power Co
as early as next summer in a de facto nationalisation of the
operator of the crippled Fukushima nuclear power plant, sources
said on Thursday.
Tepco's future as an independent firm has been in doubt
since an earthquake and tsunami wrecked the plant in March,
triggering the world's worst nuclear crisis in 25 years and
leaving it with huge compensation payments and clean-up costs.
In addition to public capital, the government and Tepco will
also seek additional loans from banks, sources said, but the
full scale of any Tepco bailout remains unclear.
Some analysts expressed doubt that the government would take
the drastic step of taking control of the giant monopoly, which
still has political clout, but the idea has proponents in some
sections of Japan's ruling party.
"You have an essentially bankrupt operation, and if you are
going to save it, it's going to cost a lot," said Andrew Dewit,
a Rikkyo University professor who writes about energy policy.
"You've got a very bad picture getting worse, and dithering
just ups the cost."
Tepco President Toshio Nishizawa was mentioned as saying a
public fund injection could not be ruled out. "It is better to
keep all options, so I don't deny it," Kyodo news agency quoted
him as saying in an interview on Thursday.
Tepco has made progress in bringing the Fukushima plant
under control and is on track to declare a "cold shutdown" --
when water used to cool the reactors is stable below boiling
point -- before the end of the year.
But decommissioning four reactors at the plant is set to
cost at least 1.2 trillion yen ($15.4 billion), a sum that would
render Tepco insolvent if drastic measures to shore up its
financial base were not taken, media reports said.
ENERGY POLICY REFORM
The Mainichi newspaper reported earlier on Thursday that the
government planned to inject at least $13 billion and perhaps as
much as $27 billion, while Kyodo news agency said the total
bailout could reach 3 trillion yen ($38.5 billion) over four
years, with half coming from private borrowings.
A government-run bailout fund would buy new stocks such as
preferred shares to be issued by the utility, sources said.
Shares in Tepco slid as much as 17 percent before regaining
some ground to end down 11 percent at 244 yen.
"The report got investors worried that Tepco could possibly
become insolvent," said Hiroyuki Fukunaga, CEO of Investrust.
"If they need 1 trillion yen to avoid that, then the money is
not coming from anyone but the government."
Tepco would need to get shareholder approval to raise the
ceiling on the number of shares it can issue at its next annual
meeting in June.
To cover costs, Asia's biggest utility is pushing for hikes
in electricity charges. It also wants permission to restart
nuclear reactors, particularly those that have been idled at its
biggest plant, Kashiwazaki-Kariwa.
Five of the seven reactors at that plant are off-line for
checks or repairs, and two more are scheduled for planned
shutdowns before May 2012.
But the ruling party has concluded that the public would be
unwilling to accept higher electricity fees, particularly at a
time when it is being asked to accept a hike in the sales tax to
cover social security costs, Mainichi said, while restarting
idled reactors is difficult due to public fears about safety.
Pushing Tepco to accept capital would also allow the
government to pursue drastic reform of energy policy, including
separating power generation from distribution, the paper said.
But experts questioned whether the two would necessarily go
hand in hand. The government aims to finish a review of national
energy policy, including nuclear power, by next summer.
"Nationalisation could be a first step toward such reforms
as splitting generation and distribution," said Rikkyo
University's Dewit. "But whether this is a trial balloon and
gets shot down in the short run, who's to say?"
The Mainichi report said a government panel led by Chief
Cabinet Secretary Osamu Fujimura could, in the new year,
announce plans to inject public funds, though Fujimura told
reporters the issue of public funds was not now on the table.
Tepco is due to announce new steps in the coming days, which
include an increase in its planned cost cuts over 10 years by
100 billion yen to 2.64 trillion yen as well as the sale of a
thermal power plant, a source has said.
($1 = 77.7300 Japanese yen)
(Additional reporting by Edwina Gibbs, Taro Fuse, Mayumi
Negishi, Hideyuki Sano, Taiga Uranaka and Yoko Kubota; Editing
by Alex Richardson, Muralikumar Anantharaman and Will Waterman)