Tokyo: Japan’s government has approved a plan to help Tokyo Electric Power (Tepco) compensate victims of the crisis at its tsunami-crippled nuclear plant. Payouts are expected to run into the tens of billions of dollars over the Fukushima nuclear plant breakdown.
Government assistance could help Tepco, Asia’s largest power utility, avoid bankruptcy.
But Trade Minister Banri Kaieda said the government’s plan to help Tepco was not meant as a rescue of the utility.
The Fukushima plant was left severely damaged by the March 11 earthquake and subsequent tsunami.
More than 80,000 local residents living within a 20km (12 mile) radius of the plant have been evacuated from their homes.
Agriculture and businesses have been hit and there is no timescale yet for allowing residents to return.
The crisis has brought Tepco to the brink of ruin, and there has been concern about how the company would pay a massive compensation bill.
Now Japan’s government has agreed to use taxpayer’s money to help – reports say more than $60bn.
Under the plan a state-backed institution will be created from which Tepco can draw money to pay out claims.
In return the company will fall under close government supervision. It will remain listed on the stock exchange but will use profits to pay back the money over a period of years.
Tepco – which serves an area that accounts for 33 percent of Japan’s economy – had earlier agreed to drastic restructuring in return for government help
The conditions agreed by the company include massive cost-cutting, no upper limit for compensation payouts and accepting an investigation of its management.
Other electricity companies with nuclear power stations will also be expected to contribute.
The government is expected to provide as much support as needed to prevent companies from going into the red, and is expected to fund the scheme by issuing special-purpose bonds.
The scheme eases fears that Tepco’s problems could destabilise Japan’s financial markets.
But it may face opposition in parliament if it is seen as too lenient on shareholders and management, our correspondent says.
Japanese media have reported that Tepco may have to raise electricity prices in order to help pay for payments.
Tepco’s shares dropped on Friday and were trading about 6 percent lower at 452 yen (£3).
Banking stocks also fell, on fears they may have to rework their loan agreements with Tepco.
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