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CORRECTED-UPDATE 2-Tepco faces $110 bln hole in finances -Nikkei
September 29, 2011 / 8:21 AM / 6 years ago

CORRECTED-UPDATE 2-Tepco faces $110 bln hole in finances -Nikkei

(Corrects sourcing of first bullet point to Nikkei, not Yomiuri)

* Govt panel wants 160 bln yen in annual cost cuts -Nikkei

* Panel to urge lenders to freeze some debt, lower rates -Yomiuri

TOKYO, Sept 29 (Reuters) - Tokyo Electric Power Co , the operator of the stricken Fukushima nuclear power plant, faces a funding shortfall of up to $110 billion over 10 years, the Nikkei business daily reported, citing a government panel tasked with assessing its finances.

But the question of how much taxpayer money Tepco will ultimately need will depend heavily on whether it is allowed to restart reactors that have been shut for maintenance and that have yet to get the go-ahead amid public concerns about nuclear safety.

It will also depend on whether the utility will get permission to hike electricity fees to generate extra cash flow.

The committee’s calculation of 8.3 trillion yen ($110 billion) is a worst-case scenario, the Nikkei said.

Even in a best-case scenario, which assumes its Kashiwazaki-Kariwa nuclear plant is back up and running before March 2014 and that is allowed to hike fees by 10 percent, it would still face a funding shortage of 460 billion yen, it said.

The panel, comprised of lawyers and other experts, plans to submit recommendations next week for cutting costs at Tepco but has declined to make any of those proposals public.

Tepco, which must submit a business plan by the end of October, said it would not comment on the report until it is released.

The government needs to approve the business plan before funds can be released to pay compensation to residents and businesses forced to evacuate from near its radiation-leaking nuclear plant.

Separately, the Yomiuri newspaper said the panel’s draft plan also states that Tepco’s creditors may be asked to help by lowering interest rates or offering moratoriums on debt payments.

Trade Minister Yukio Edano, who has the power to reject or approve Tepco’s final business plan, this month suggested banks forgive some of their loans but Japan’s top banks, including Mitsubishi UFJ Financial Group , Mizuho Financial Group and Sumitomo Mitsui Financial Group , have so far rejected such suggestions.

They are among lenders that provided about 2 trillion yen ($26 billion) in emergency loans to Tepco in the immediate aftermath of the nuclear meltdown.

The panel wants lenders to maintain their combined outstanding loan balance to Tepco at roughly 2 trillion yen for at least 10 years, and will ask Tepco to trim its annual expenses by an further 160 billion yen, the Nikkei said.

As of the end of June, Tepco had a little more than 4 trillion yen in outstanding loans and another 4.7 trillion yen in outstanding corporate bonds.

Other media reports have said the committee will propose the utility slash 14 percent of its workforce, trim pension payouts and begin selling 600 billion yen in assets to help pay for compensation.

The biggest prize in its asset portfolio is a 7.9 percent stake in KDDI , Japan’s No. 2 cellphone carrier. The holding is worth around $2.7 billion.

Tepco also faces a 1.15 trillion yen bill to decommission four reactors in Fukushima, the Nikkei said. ($1 = 76.425 Japanese Yen) (Reporting by Tim Kelly and Yoko Kubota in Tokyo, and Arpita Mukherjee in Bangalore)

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