The makeshift systems that Tokyo Electric Power has been using to stave off disaster at its crippled Fukushima Daiichi nuclear power plant are not pretty. At various times, the Japanese utility has tapped everything from riot trucks to a Chinese cement-pourer and a floating fishing park to pump cooling water into its overheating reactors and store the radioactive run-off.
So it is perhaps fitting that the government’s new scheme for containing the economic damage caused by Tepco’s troubles is also an ungainly and rather ad hoc affair. Unveiled on Friday, the “support framework” is a convoluted flowchart of institutions, obligations and assurances intended to ensure Tepco can pay compensation to the more than 100,000 people whose lives have been turned upside down by the crisis.
There is plenty of financial pain to go around. Compensation claims are expected to total least Y2,500bn ($30bn). Final calculation cannot even begin until stability is achieved at the plant, which had its safety systems knocked out by the earthquake and tsunami that devastated the Japan’s north-east coast on March 11.
But there is also room for argument about the degree to which Tepco should be held liable for the financial fallout of the world’s worst nuclear disaster in 25 years.
Critics point to Tepco’s habit of blandly insisting its nuclear plants could withstand the “largest conceivable earthquake” even when experts suggested otherwise. There is also the utility’s ugly record of falsifying nuclear safety reports.
But it was the state that designed Japan’s nuclear power industry and built the regulatory regimes that failed to ensure its safety. Kaoru Yosano, minister of economic and fiscal policy, insists it would be wrong to put all the responsibility for the crisis on Tepco, however tempting a scapegoat the utility appears. “Bullying people is not a beautiful thing,” Mr Yosano says.
Nor could Tepco shoulder the burden of compensation alone. The company, which serves the sprawling greater Tokyo area, had forecast revenues of nearly Y5,400bn and an operating profit of Y275bn for the 12 months that ended in March.
Now, however, it faces the loss of the Fukushima Daiichi’s nearly 4,700MW of generating capacity, attendant huge decommissioning costs, the need to repair earthquake damage to other plants, and hefty bills for extra oil and gas imports to keep its other conventional plants operating at full tilt. Without help, Tepco says, it could soon run short of cash.
The “support framework” aims to tackle these conflicting imperatives by making Tepco the primary vehicle for compensating crisis victims, while spreading the burden as widely as possible and providing state backing to ensure the company does not collapse.
It does this by creating an as yet unnamed state-backed organisation that will judge compensation claims and provide funding – including capital injections – to Tepco so that it can make the pay-outs. Tepco is intended to gradually repay this support from its profits.
The new organisation will also act as an insurance body for future nuclear accidents – a role that will allow it to immediately begin gathering a levy from other nuclear power operators as well. Meanwhile, another new government body will tightly monitor Tepco’s management.
To many, this is an unappealing fudge. Embarrassingly, the scheme’s announcement was delayed because of protest after members of the ruling party bemoaned its failure to put a ceiling on Tepco’s obligations or give the state a more direct role in paying compensation.
The government has also sparked stock market dismay and a business sector backlash by suggesting the plan’s promise to seek the “co-operation of all stakeholders” actually means demanding banks waive part of Tepco’s debts.
The effort to ensure lenders suffer too is politically understandable, but it highlights unresolved questions about the degree to which the framework will protect Tepco’s shareholders – who might be expected to take primary responsibility for the company’s failings. Tepco’s shares have fallen 79 per cent since the crisis began, but that still leaves a market capitalisation of Y728bn.
The government has also been unable to decide when vital details such as financing terms will be set or when the scheme may be submitted for Diet approval.
This is bad, but not fatal. A much more urgent task than divvying up the long-term burden is making sure that compensation starts flowing as quickly and fairly as possible to Fukushima’s displaced residents and suddenly impoverished farmers.
By setting the basic terms for future battle, the support framework – however makeshift — should at least help accelerate payments. Like the atomic plant’s stopgap cooling systems, it is better than nothing.
Source: http://www.ft.com
So it is perhaps fitting that the government’s new scheme for containing the economic damage caused by Tepco’s troubles is also an ungainly and rather ad hoc affair. Unveiled on Friday, the “support framework” is a convoluted flowchart of institutions, obligations and assurances intended to ensure Tepco can pay compensation to the more than 100,000 people whose lives have been turned upside down by the crisis.
There is plenty of financial pain to go around. Compensation claims are expected to total least Y2,500bn ($30bn). Final calculation cannot even begin until stability is achieved at the plant, which had its safety systems knocked out by the earthquake and tsunami that devastated the Japan’s north-east coast on March 11.
But there is also room for argument about the degree to which Tepco should be held liable for the financial fallout of the world’s worst nuclear disaster in 25 years.
Critics point to Tepco’s habit of blandly insisting its nuclear plants could withstand the “largest conceivable earthquake” even when experts suggested otherwise. There is also the utility’s ugly record of falsifying nuclear safety reports.
But it was the state that designed Japan’s nuclear power industry and built the regulatory regimes that failed to ensure its safety. Kaoru Yosano, minister of economic and fiscal policy, insists it would be wrong to put all the responsibility for the crisis on Tepco, however tempting a scapegoat the utility appears. “Bullying people is not a beautiful thing,” Mr Yosano says.
Nor could Tepco shoulder the burden of compensation alone. The company, which serves the sprawling greater Tokyo area, had forecast revenues of nearly Y5,400bn and an operating profit of Y275bn for the 12 months that ended in March.
Now, however, it faces the loss of the Fukushima Daiichi’s nearly 4,700MW of generating capacity, attendant huge decommissioning costs, the need to repair earthquake damage to other plants, and hefty bills for extra oil and gas imports to keep its other conventional plants operating at full tilt. Without help, Tepco says, it could soon run short of cash.
The “support framework” aims to tackle these conflicting imperatives by making Tepco the primary vehicle for compensating crisis victims, while spreading the burden as widely as possible and providing state backing to ensure the company does not collapse.
It does this by creating an as yet unnamed state-backed organisation that will judge compensation claims and provide funding – including capital injections – to Tepco so that it can make the pay-outs. Tepco is intended to gradually repay this support from its profits.
The new organisation will also act as an insurance body for future nuclear accidents – a role that will allow it to immediately begin gathering a levy from other nuclear power operators as well. Meanwhile, another new government body will tightly monitor Tepco’s management.
To many, this is an unappealing fudge. Embarrassingly, the scheme’s announcement was delayed because of protest after members of the ruling party bemoaned its failure to put a ceiling on Tepco’s obligations or give the state a more direct role in paying compensation.
The government has also sparked stock market dismay and a business sector backlash by suggesting the plan’s promise to seek the “co-operation of all stakeholders” actually means demanding banks waive part of Tepco’s debts.
The effort to ensure lenders suffer too is politically understandable, but it highlights unresolved questions about the degree to which the framework will protect Tepco’s shareholders – who might be expected to take primary responsibility for the company’s failings. Tepco’s shares have fallen 79 per cent since the crisis began, but that still leaves a market capitalisation of Y728bn.
The government has also been unable to decide when vital details such as financing terms will be set or when the scheme may be submitted for Diet approval.
This is bad, but not fatal. A much more urgent task than divvying up the long-term burden is making sure that compensation starts flowing as quickly and fairly as possible to Fukushima’s displaced residents and suddenly impoverished farmers.
By setting the basic terms for future battle, the support framework – however makeshift — should at least help accelerate payments. Like the atomic plant’s stopgap cooling systems, it is better than nothing.
Source: http://www.ft.com
No comments:
Post a Comment