The government of Japan is planning to acquire two thirds of Tokyo Electric Power Co. (TEPCO) in a de-facto nationalization.
Sources were quoted as saying the Japanese government will put in about $13 billion into the utility firm in a de facto nationalization, Reuters reported. In addition, banks will be asked to give 1 trillion yen in loans.
TEPCO, the operator of the crippled Fukushima Daiichi nuclear power plant, faces huge compensation payouts and costly cleanup efforts resulting from the nuclear crisis known as the worst in the world after the 1986 Chernobyl accident.
Full-scale negotiations between the government and the utility are set to begin next year. The negotiation will tackle the government’s acquisition of TEPCO’s classified stock including preferred shares.
TEPCO stock is previously considered a safe investment. Since the March 11 disaster though, the Japanese utility has lost about 90% of its value.
Meanwhile, it has expressed the necessary raise in electricity bills for corporate users to cover switching costs in view of the shutting down of the Fukushima Daiichi plant. “We are extremely sorry for our customers but we ask for understanding,” TEPCO President Toshio Nishizawa was quoted saying.
The hike, which will require approval by the government, will be less likely considering that this would be passing on to consumers the costs of resolving the nuclear crisis.
A nationalization under a government bailout may be the only option for TEPCO to stay on the brink.