Tokyo Electric Power Co. on Oct. 21 decided to sell off 400 billion yen ($5.2 billion) in assets this fiscal year. While the utility plans to sell off some 700 billion yen in assets within three years, it plans to sell more than half that amount before this fiscal year ends in March.
Tokyo Electric Power Co. on Oct. 21 decided to sell off 400 billion yen ($5.2 billion) in assets this fiscal year. While the utility plans to sell off some 700 billion yen in assets within three years, it plans to sell more than half that amount before this fiscal year ends in March.
The measure is intended to demonstrate TEPCO's earnestness in restructuring efforts at a time when it is seeking government funding to help compensate sufferers of the Fukushima No. 1 nuclear plant accident.
The planned asset sales will be included in TEPCO's "emergency special business plan" that will be drawn up jointly with the government's Nuclear Damage Compensation Facilitation Corp. toward the end of October. The Compensation Facilitation Corp. on Oct. 21 held a meeting of its steering committee and approved TEPCO's policy on the sale of assets.
The plan assumes that about 700 billion yen will be needed for compensation payments in the current fiscal year. Also put forth will be restructuring measures in an effort to win industry minister Yukio Edano's approval for government funding. TEPCO will tap into the government funds, which will be provided by way of the Compensation Facilitation Corp., to compensate sufferers and will pay back the money out of its annual profits.
Stocks will account for most of the asset sales. TEPCO possessed a total of 350 billion yen's worth of stocks as of the end of March. TEPCO plans to sell off 300 billion yen of these holdings by the end of the current fiscal year, except for those indispensable to electric power business operations. The utility will also sell 10 billion yen in real estate, including an office building close to its head office in Tokyo. Further, it will also sell parts of its affiliated companies.
The government's third-party investigation committee on TEPCO's management and finances had called on TEPCO, in a report released Oct. 3, to sell 700 billion yen in assets within three years.
The emergency special business plan will also include cooperation from financial institutions. Key cooperation measures include maintaining 2 trillion yen in outstanding loans, which the utility borrowed before the March 11 disaster, until the end of this fiscal year and allowing the loans to be used not only for business operations but also for compensation payments. These measures are intended to prevent the company from falling short of cash before it receives government funding, as it has already started compensation payments.
Toshio Nishizawa, TEPCO's president, on Oct. 21 told a news conference that the utility had paid a total of 151.6 billion yen in compensation, including both temporary and final payments.
An insurance system based on the Act on Compensation for Nuclear Damage allows 120 billion yen of that amount to be covered by the government. TEPCO soon plans to ask the government for the payment.
Although TEPCO can receive government funding for compensation payments, it has to procure its own financial resources to cover the cost of fuel for thermal power generation, which is expected to increase because of suspended nuclear reactors.
This may also hurt the utility's financial state. It has, therefore, been proposed that the Compensation Facilitation Corp. could fund TEPCO to help increase its capital.
Nishizawa, however, is cool to that idea.
"We will revamp our management through streamlining as a private enterprise," he said. "We will make every effort to get along without receiving (the injection of public funds)."