Bloomberg News

Tepco Under State Control as Government Gets Shares for Cash

July 30, 2012

Tepco Under State Control as Government Gets Shares for Cash

Tokyo Electric Power Co., known as Tepco, has been on government support with tax payers funds since the March 11, 2011 quake and tsunami crippled the Fukushima Dai-Ichi nuclear station, causing three meltdowns and radiation leaks that forced about 160,000 people to evacuate. Photographer: Tomohiro Ohsumi/Bloomberg

Tokyo Electric Power Co. received 1 trillion yen ($12.8 billion) from the government in return for giving up corporate control to the state after the Fukushima disaster left the utility on the brink of bankruptcy.

The company, which supplies electricity to about 30 million customers in the Tokyo metropolitan area, is under “temporary public control” as the government-backed Nuclear Damage Liability Facilitation Fund obtained preferred shares, President Naomi Hirose said today in a statement.

Known as Tepco, the utility has been on government support with tax payers funds since the March 11, 2011 quake and tsunami crippled the Fukushima Dai-Ichi nuclear station, causing three meltdowns and radiation leaks that forced about 160,000 people to evacuate.

“We are sorry and take very seriously” that taxpayers will have to bear the costs of the capital infusion, Hirose said in the statement. “We will do our best to become ‘a newborn Tepco.’”

Ownership of the preferred shares give the state-owned compensation fund 50.11 percent voting rights, as announced earlier, spokesman Masateru Araki said today by phone.

Japan’s government approved the effective nationalization of Tepco in May. Last week, the state endorsed the utility’s request to raise electricity rates for households and small users by an average of 8.46 percent.

The rate increase and the government’s investment are milestones required by banks to extend additional loans to Tepco, which was once the world’s largest private power supplier, according the book “The Nuclear Barons” by Peter Pringle and James Spigelman.

Tepco expects to receive additional bank loans “soon,” spokesman Araki said. He declined to be more specific on the timing.

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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