Crisis-hit TEPCO gets $12.5 bn government bailout
TOKYO - Promising to infuse $12.5 billion capital, the Japanese government effectively took control of the Tokyo Electric Power Co. (TEPCO), a year after the utility's operations were hit following the Fukushima nuclear disaster.
According to the 10-year-plan, approved by Trade and Industry Minister Yukio Edano Wednesday, the government would control more than 50% of the company, and could also increase its share to two-thirds.
"Without the state funds, (TEPCO) cannot provide a stable supply of electricity," Edano said at a news conference. However, he said the government hoped to give up control within two years if the restructuring plan helps the firm to return to profitability. "It will depend on how well TEPCO carries out restructuring measures," Edano said.
Talks on the capital infusion had been going on for almost a year. TEPCO, which supplies power to nearly 30 million people in the Tokyo region, has been on government support ever since the March 11, 2011, quake and tsunami.
The Fukushima Dai-Ichi nuclear station was hit badly, causing reactor meltdowns and almost 80,000 people had to be evacuated from nearby areas.
TEPCO is facing compensation claims from residents as well as businesses that were forced to relocate.
Meanwhile, news of the government capital infusion sent TEPCO shares surging jumping as much as 15% to 211 yen on the Tokyo Stock Exchange.
"Tepco has become a partially nationalised company and nationalised firms do not default," Martin Schulz of Fujitsu Research Institute in Tokyo told the BBC.
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