Japan cabinet agrees TEPCO support bill, shares soar

TOKYO, June 14, 2011 (AFP) - Japan's cabinet on Tuesday approved a bill to help embattled TEPCO compensate tens of thousands affected by the crisis at its Fukushima Daiichi nuclear plant, as shares in the company soared in Tokyo.

The support bill, which is yet to be approved by parliament, will see the creation of a body to handle claims made against TEPCO and will be funded by public money as well as contributions from power companies.

Shares in the utility closed limit up, rising 25.12 percent to 249 yen Tuesday, after the stock recently plunged to all time lows amid worries the firm would be forced to de-list from the stock exchange.

Analysts said a move by the stock exchange to hike margin requirements on shares in Tokyo Electric Power Co. to clamp down on short selling also encouraged buying.

On Tuesday the Tokyo Stock Exchange hiked the margin rate on TEPCO shares to a minimum of 50 percent -- of which at least 20 percent must be cash -- from an earlier 30 percent, making short sales more expensive to put off speculators.

The government-devised aid plan for TEPCO will include the purchase of its corporate bonds, stocks and assets to support the company's operations, but analysts warned that uncertainty still surrounded the bill.

"Investors are buying back TEPCO shares believing that the government will pay a decent price for shares, but nothing concrete is known yet and it's too soon to make that assumption," Mitsuhige Akino, chief fund manager at Ichiyoshi Investment Management told Dow Jones Newswires.

The bill's passage through parliament is expected to meet resistance over the idea of public support for the firm at the centre of the world's worst nuclear crisis since Chernobyl 25 years ago.

"We will aim to get the bill through parliament as early as possible," said Minister of Economy, Trade and Industry Banri Kaieda.

Under the plan, TEPCO would be required to eventually pay back all funds it received from the organisation. Some politicians have suggested TEPCO's creditors should also waive some of the utility's debt, adding to uncertainty.

The Mainichi newspaper reported Tuesday the government would allow the utility to raise its electricity prices by 16 percent to help finance increased fossil fuel costs as it relies more on thermal power generation.

In May, TEPCO posted a record annual net $15 billion loss, the biggest ever for a non-financial Japanese firm and its then-president resigned to take responsibility for the crisis.

The company has come under fire for its response after a 9.0 magnitude earthquake triggered a tsunami on March 11 that crippled cooling systems at the Fukushima plant, leading to reactor meltdowns.

The disaster has prompted Japan to review plans to boost its use of atomic power as tens of thousands of people remain evacuated from homes, farms and businesses in a 20-kilometre (12-mile) zone around and also beyond the radiation-spewing plant.

Asia's biggest power company, TEPCO supplies electricity for the megacity of Tokyo and the wider Kanto region, an area that contributes more than a third of the nation's gross domestic product.

TEPCO has said it would cut jobs and draft a streamlining plan this year as it looks to raise funds to pay a compensation bill that some analysts have estimated could run into tens of trillions of yen.

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