TEPCO to be told to ax 7,400 jobs

The government panel tasked with overseeing Tokyo Electric Power Co.'s management and financial standing will request the operator of the crippled Fukushima No. 1 nuclear power plant to shed 7,400 jobs by the end of March 2014.

The figure accounts for about 14 percent of the 53,000 employees on the TEPCO group's payroll. The request will be incorporated in a report to be compiled and released by the panel on Oct. 3.

The investigative panel has been tasked with assessing TEPCO's assets, the sale of which will be used to fund compensation payments for damage caused by the March 11 earthquake.

The report will also mention that TEPCO may not be able to meet its repayment commitments to financial institutions depending on its financial standing.

Most panel members argue that drastic restructuring is necessary for TEPCO to create adequate compensation funds and minimize a proposed increase in electricity over three years starting in fiscal 2012.

The panel is also planning to propose a cut in corporate pension payments by the power company.

TEPCO is expected to face up to 4 trillion yen ($52 billion) in compensation costs. In addition, it faces a huge bill for decommissioning nuclear reactors at the plant northeast of Tokyo.

For this reason, panel members said a 10-percent hike in electricity rates would likely not be enough to finance TEPCO's compensation costs and other commitments. This would leave the utility with a serious capital shortage.

Given this background, the report will call on banks to maintain the current levels of loans made to TEPCO over the next 10 years.

The report is also expected to note that TEPCO may not be able to repay the remaining balance of 2 trillion yen it was loaned before the Great East Japan Earthquake.

TEPCO's loans before and after the disaster currently total some 4 trillion yen.