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8 trillion yen in public funds sought for post-Fukushima disaster costs

The Federation of Electric Power Companies of Japan (FEPC) has informally asked the government to inject some 8 trillion yen in public funds into efforts for nuclear damage compensation and decontamination work in areas around the Fukushima No. 1 nuclear power plant, it has been learned.

    The FEPC has drawn up a report stating that an extra 8 trillion yen is estimated to be necessary even after Tokyo Electric Power Co. (TEPCO) and other major utilities shoulder the planned amount of costs for dealing with the aftermath of the Fukushima disaster, and has informally requested that the government foot the surplus amount. The government has heretofore taken the position that nuclear plant operators should bear the costs for nuclear damage compensation and decontamination work in principle. It is therefore expected to approach the request with caution.

    The costs for Fukushima disaster damage compensation and decontamination work are funded under the following steps: the state issues cashable government compensation bonds to the Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NDF), a government-authorized corporation; TEPCO then receives necessary funds from the NDF and spends them on nuclear damage compensation and decontamination work; the NDF then receives due contributions from TEPCO and other major utilities and pays back the funds to the state.

    Among the contributions made by power companies to the NDF, funds for nuclear damage compensation are shouldered by TEPCO and other major utilities, and the funds for decontamination work are covered by profits on the sale of TEPCO shares held by the NDF, while the funds for building interim storage facilities for radioactive waste are covered by revenues from the tax on the promotion of power resources development.

    In 2013, the government estimated that nuclear damage compensation would cost 5.4 trillion yen, while decontamination work would require 2.5 trillion yen and construction costs for temporary storage facilities for radioactive waste and other expenses would need 1.1 trillion yen. The total amounts to be granted to the NDF were estimated at a maximum 9 trillion yen.

    However, the FEPC now forecasts that damage compensation would cost 2.6 trillion yen more at 8 trillion yen and the decontamination expenses 4.5 trillion yen more at 7 trillion yen, according to sources familiar with the matter. Furthermore, the FEPC forecasts that profits on the sale of TEPCO shares would be 1 trillion yen less than the initial estimate due to a fall in the stock prices, bringing the total fund shortages to 8.1 trillion yen.

    Major utilities fear that they would ultimately be forced to shoulder the additional burden as the enormous costs for decontamination work cannot be covered by profits on the sale of TEPCO shares.

    The FEPC has unofficially asked that the government foot the extra amount of costs necessary for nuclear damage compensation and decontamination work on the grounds that the business environment for major utilities has deteriorated amid the stalled reactivation of nuclear reactors that have been left idle since the Fukushima disaster and the intensifying competition among power companies following the liberalization of the electricity retail market this past spring.

    While TEPCO has forked out 2 trillion yen for the decommissioning of disaster-stricken reactors at the Fukushima No. 1 nuclear plant, several trillion yen extra is projected to be necessary to cover the expenses. In July, Tokyo Electric Power Company Holdings Inc. asked for government assistance in covering the expenses for reactor decommissioning at the plant and other efforts. The FEPC's recent request to the government, meanwhile, does not include financial assistance for reactor decommissioning.

    The government is poised to discuss the costs for Fukushima disaster damage compensation and reactor decommissioning at a panel on TEPCO reform and Fukushima No. 1 plant issues to be convened on Oct. 5, where the FEPC's request is likely to be deliberated on.

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