Japan government approves $11.5 bln aid to TEPCO

Japan's government on Friday agreed to give the operator of the stricken Fukushima nuclear power plant $11.5 billion to help it pay compensation to those affected by the disaster.

Economy, Trade and Industry Minister Yukio Edano met Tokyo Electric Power Co. (TEPCO) President Toshio Nishizawa at his ministry and delivered the approval in line with the company's request, a ministry official said.

The decision means the government will inject some 900 billion yen ($11.5 billion) of public funds into TEPCO "soon" while the utility will carry out comprehensive restructuring, the official said.

"I made the approval as I concluded that the 900 billion yen is necessary," the government minister told Nishizawa.

"Since you will get a huge amount of (public) money, I would like you to carry out thorough management restructuring."

In a restructuring plan also approved Friday, TEPCO said it expects a net loss of 576.3 billion yen for the current fiscal year ending March 2012, even after receiving the taxpayer money.

In return for those funds, the utility will reduce operating costs by 237.4 billion yen for the current fiscal year and slash its group workforce by 7,400 workers -- 14 percent of the total -- by March 2014.

TEPCO will also reduce pension benefits for both active workers and retirees, and maintain a 20 percent employee pay cut ushered in after the crisis, according to the business plan.

TEPCO is scheduled to release its earnings report at 0700 GMT Friday.

The utility had wanted the first tranche from a government-backed aid body so it can avoid having a negative net worth on its April-September balance sheet, analysts say.

The restructuring plan that the government had demanded also outlines cost cuts, asset sales and other steps required to help TEPCO meet compensation costs -- estimated by a government panel at 4.5 trillion yen by 2013 -- and secure further state help.

A government panel last month said the company would have to slash costs by $33 billion over the next 10 years to help pay damages for the nuclear accident.

TEPCO's woes began when the 9.0-magnitude quake and massive tsunami of March 11 knocked out cooling systems at the Fukushima plant, sparking meltdowns, a series of explosions and the release of huge amounts of radiation into the environment.

Tens of thousands of people remain evacuated from homes and businesses in a 20 kilometre (12 mile) no-go zone around the plant and in pockets beyond. Fully decontaminating those areas is expected to take decades.

The task of restoring towns and villages even in lightly polluted zones is complicated, with high costs and logistical difficulties over where to store soil contaminated with radioactive material.

Radioactive hotspots have also been found hundreds of kilometres away from the Fukushima Daiichi plant in parts of Tokyo and Yokohama, with rainfall and wind patterns blamed for the uneven dispersal.

The disaster has soured the mood among the Japanese public over nuclear power, with many worried about the health effects of the technology, which until March had provided a third of resource-poor Japan's electricity.

The stricken plant was in the spotlight again this week, with TEPCO forced into playing down fears of an uncontrolled chain reaction at the No. 2 reactor there, following signs of recent nuclear fission.

Engineers are still trying to bring the reactors to stable "cold shutdown" by the end of this year.

AFP

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