The government is weighing additional loans of 3 trillion yen ($30.2 billion) to the operator of the crippled Fukushima No. 1 nuclear power plant, sources said.
The government is weighing additional loans of 3 trillion yen ($30.2 billion) to the operator of the crippled Fukushima No. 1 nuclear power plant, sources said.
The excess funds would be intended to enable Tokyo Electric Power Co. to pay compensation to victims of the 2011 nuclear disaster and complete decontamination work around the facility quickly.
At present, the framework for government loans to TEPCO, as previously set by the Democratic Party of Japan-led government, limits loans to 5 trillion yen. TEPCO, along with other utilities, is obliged to repay the loans over time.
Under the existing system, the government first issues government bonds of 5 trillion yen. Then, the government-affiliated Nuclear Damage Liability Facilitation Fund gradually cashes the bonds to provide funds to TEPCO. Electric power companies, including TEPCO, have up to 30 years to pay off the debt.
As part of efforts to support the plant operator financially, the ruling coalition has recommended to Prime Minister Shinzo Abe that TEPCO cover the estimated 2 trillion yen in costs for already planned decontamination work. At the same time, it called on the government to bear expenses of an estimated 1 trillion yen to build intermediate storage facilities for radioactive debris, as well as part of the costs for future decontamination work.
If the proposal is accepted, the financial burden TEPCO has to shoulder will be eased drastically.
However, the utility has already spent 3.8 trillion of the 5 trillion yen on compensation for nuclear disaster victims.
Because the government is currently considering raising the amount of indemnity for those who will likely be unable to return home over their lifetime, the entire loan of 5 trillion yen almost certainly will be swallowed up in compensation payments.
In addition, as costs for decontamination work in the surrounding communities are estimated at between 3 trillion yen and 5 trillion yen, the government has decided that it is impossible for TEPCO to cover all the expenses related to the nuclear disaster under the current framework.
At issue now is how TEPCO and other electric power companies will repay the additional 3 trillion yen.
If the utilities try to pay off the loans over a short period, they will have to raise electricity rates significantly. Meanwhile, if they extend the payback period, the amount of interest payment, paid for with taxpayers' money, will rise.
Thus, the government will inevitably face a backlash from the electric power industry, which will probably make it difficult to provide additional loans quickly.