TOKYO (Nikkei)–The debate over making Tokyo Electric Power Co. (9501) a ward of the state is coming to a head, with the minister of economy, trade and industry insisting on government control as a condition for a taxpayer-funded bailout.
Yukio Edano laid out five conditions Monday for approving a proposed 1 trillion yen capital lifeline to the struggling power company. Edano sees the state owning at least two-thirds of Tepco’s voting rights.
“I have absolutely no intention of approving a plan that calls for a capital injection without securing sufficient voting rights,” he said in remarks ahead of a meeting with Tepco President Toshio Nishizawa.
Tepco and the government-backed nuclear disaster fund supporting it have until the end of March to produce a comprehensive reform plan to qualify for more aid for compensating victims of the Fukushima Daiichi meltdown. The 1 trillion yen capital infusion will be central to this plan. Mounting liabilities, including decommissioning the power plant’s ruined reactors, could push Tepco into negative net worth.
Edano, who has final say on the plan, also called for speeding up cost reductions, holding executives accountable for the company’s failings, and reorganizing its operations. He said Tepco’s plan to raise commercial electric rates an average of 17% this spring should be redrawn in light of a thorough cost review. The five conditions form a “package” with the capital injection, he said.
The minister’s tough stance reflects the controversial nature of the plan, which will include hiking rates and restarting idle reactors at the Kashiwazaki-Kariwa power plant.
With a controlling stake, the government could push through cost-cutting reforms and sales of conventional power plants. It would also be able to appoint and fire directors. With two-thirds ownership, the government could dictate mergers and other sweeping organizational changes. The government is looking to use Tepco as a precedent for a broader reform agenda that includes breaking up regional monopolies on power generation and transmission.
But Nishizawa told a news conference later that Tepco should remain a private-sector company. While acknowledging that Tepco may have to cede more than one-third of voting rights to the government, he said he hoped to stop short of one-half.
Not everyone in the government shares Edano’s views on putting Tepco under state control. Chief Cabinet Secretary Osamu Fujimura told a news conference that there is “no consensus within the government” on the issue. Ministry of Finance officials worry about the fiscal costs of getting more deeply involved in the firm.
(The Nikkei Feb. 14 morning edition)