Tokyo Electric Power Co.’s main creditor banks agreed to provide 500 billion yen ($5 billion) in loans after the utility forecast a fiscal 2014 profit based on assumptions it can restart two nuclear reactors.
The creditors will extend 300 billion yen in new loans to the operator of the crippled Fukushima No. 1 nuclear plant in addition to 200 billion yen in refinancing at the end of this year, sources in both TEPCO and the banks told The Asahi Shimbun.
The group includes Japan’s three mega-bank groups--Sumitomo Mitsui Financial Group, Mizuho Financial Group and Mitsubishi UFJ Financial Group--and the Development Bank of Japan.
TEPCO, which posted losses in fiscal 2011 and 2012, is expected to return to the black in fiscal 2013, thanks partly to cost reductions and an increase in electricity rates.
In talks with creditors, the utility forecast a profit in fiscal 2014 assuming that the No. 6 and No. 7 reactors of its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture will be brought back online. Nuclear power generation will significantly reduce the need to spend huge amounts on fuel to run thermal power plants, TEPCO has said.
TEPCO expects the reactor operations to resume in April, July or October next year. The company also showed how another hike in electricity rates would improve its bottom line, the sources said.
But the Kashiwazaki-Kariwa reactors, which have remained offline since the Fukushima nuclear crisis started in March 2011, can only be reactivated after they have passed safety screenings by the Nuclear Regulation Authority. Niigata Governor Hirohiko Izumida, who has maintained a cautious stance, must also give his consent.
The NRA is soon expected to begin full safety screenings for the No. 6 and No. 7 reactors.
Despite the uncertainties, the creditor banks appear optimistic about TEPCO’s chances of staying in the black.
The administration of Prime Minister Shinzo Abe is discussing plans to alleviate TEPCO’s financial burden by having the government bear part of the huge expenses to decontaminate affected areas and build intermediate storage facilities around the Fukushima No. 1 nuclear plant.
TEPCO and the government’s Nuclear Damage Liability Facilitation Fund plan to review the utility’s rehabilitation program, including the introduction of a holding company structure, by the end of December.
The facilitation fund on Nov. 14 interviewed officials of TEPCO’s main creditor banks for requests about the rehabilitation plan. The banks are expected to finalize their decision on extending the loans once the rehabilitation program has been reviewed.
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