Bloomberg News

Tepco Falls to Lowest Since 1974 on Possible Government Takeover

December 28, 2011

Dec. 28 (Bloomberg) -- Tokyo Electric Power Co. shares fell to the lowest in at least 37 years after Trade and Industry Minister Yukio Edano said the company should consider being nationalized.

The stock fell 12 percent to close at 186 yen, the lowest since at least September 1974, on the Tokyo Stock Exchange. It was the worst performer among the benchmark Topix 1,659 members.

Tepco’s shares have plunged 91 percent since the day before the March 11 quake and tsunami wrecked the utility’s Fukushima Dai-Ichi nuclear station, wiping out about 3.1 trillion yen ($39 billion) in market value, according to data compiled by Bloomberg.

“Edano’s comments increased uncertainty over the future of Tepco” and speculation of a possible delisting of the shares, Takashi Aoki, who helps manage 120 billion yen at Tokyo-based Mizuho Asset Management Co., said by telephone.

The company yesterday requested 689.4 billion yen ($8.8 billion) in additional aid to pay compensation linked to the Fukushima disaster. Edano countered with the option to nationalize the company, without saying if that would require an injection of public funds or some other means.

‘All Options’

“I want you to consider all options including temporary government control of Tepco” as the company needs to improve its finances for compensation payments and raise funds for decommissioning the reactors at Fukushima, Edano told the company’s president Toshio Nishizawa in a meeting last night.

The utility, which supplies power to Metropolitan Tokyo, the world’s biggest city, needs support from the government’s Nuclear Damage Liability Facilitation Fund to avoid insolvency. It may face 4.5 trillion yen in compensation payments by 2013 to those who lost livelihoods and homes as a result of radiation fallout from the Fukushima atomic station.

To avoid the collapse of the company, Tepco needs “an increase in electricity rates or a restart of its nuclear reactors,” said Aoki.

On Dec. 22, the company said it plans to raise electricity rates for companies from April and seek approval from the government to raise tariffs for households.

“Making a request to raise electricity rates is a right and an obligation as a utility,” Nishizawa said when the company announced the plan.

Edano disagreed with that view yesterday, telling Tepco raising electricity rates isn’t “a right” given to utilities. The company needs to win back public confidence before raising power prices, the minister said.

--Editor: Peter Langan

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Peter Langan at plangan@bloomberg.net


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