Fukushima Daiichi nuclear plant (R) 311.
(photo credit: REUTERS/Ho New)
TOKYO - Japan's cabinet approved a draft law to help Tokyo Electric Power Co compensate those affected by the radiation crisis at its stricken nuclear plant, sending the utility's shares up as much as 13 percent.
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The decision is a step forward in a slow process that has frustrated the victims and investors but it remains uncertain when, or even if, the scheme will be enacted into law. Prime Minister Naoto Kan faces mounting pressure to step down and his cabinet has been unable to get several disaster-related bills passed in a divided parliament.
It comes three months after a massive earthquake and tsunami triggered radiation leaks at Tokyo Electric's Fukushima Daiichi plant 240 km (150 miles) north of Tokyo, triggering the worst nuclear crisis since Chernobyl, and a month since the government first presented its plan.
The utility, also known as Tepco, said on Tuesday it was preparing to make fair and speedy compensation payouts under the scheme approved by the government.
"We hope that the proposed bill will be enacted in parliament as soon as possible," the company said in a statement.
While the scheme was designed to restore market confidence by keeping the utility solvent, Tepco shares had been sliding and its credit default spread spiked, reflecting investors' skepticism about the fate of the scheme and Tepco itself.
"It's not the problem of the scheme per se. It's just that it has not been finalized into a law yet. That's what makes (the market) anxious. And there have been many comments in the meantime," an executive at one of the Tepco's creditor banks said recently. He declined to be named given the sensitivity of the matter.
Shares in other utilities also gained after the cabinet nod on Tuesday, even though the move clears only the first hurdle for the scheme that aims to help Asia's largest utility handle compensation claims expected to run into tens of billions of dollars.
Trade Minister Banri Kaieda, whose ministry regulates Tepco and other power utilities, told a briefing the government aimed to submit the compensation bill to parliament as soon as possible.
Asked about a newspaper report that Tepco could raise its electricity tariffs to raise funds for compensation, Kaieda said: "We have to watch so that (Tepco) will not shift it (compensation fee) on to utility fees so easily."
The Mainichi newspaper reported on Tuesday that Tepco will face a total of 10 trillion yen ($124 billion) in compensation claims and will have to raise its electricity charges by 16 percent from next year to cover the costs. The paper cited documents it had obtained.
Under the plan, a fund will be set up to help Tepco compensate people
and businesses affected by radiation leaks from the Fukushima plant so
that the regional power monopoly in Tokyo and surrounding areas can keep
Thousands of residents and businesses have been forced to evacuate the area around the plant.
The country's other nuclear power operators will be required to make
annual contributions to the fund and the government will also inject
money in it if necessary. Tepco will pay back the fund over an
unspecified number of years.
The government plans to issue special-purpose bonds to help finance the
fund and has said that in return for public backing it would exert
control over management of Tepco and other power utilities "for a
certain period of time."