The government is expected to obtain a veto on key decisions at Tokyo Electric Power Co. as the utility leans toward granting voting rights of more than one-third in a government bailout.
It would then effectively control TEPCO’s operations because the utility would not be able to make important management decisions without government approval.
Voting rights of more than one-third would enable the government to reject TEPCO’s plans to raise capital, sell businesses or merge with a company.
The government and TEPCO have started discussions on the government acquiring voting rights of more than one-third when the company receives about 1 trillion yen ($12.87 billion) in public investment through the Nuclear Damage Liability Facilitation Fund, sources said Feb. 9.
TEPCO has been opposed to government involvement in its management.
However, the company has concluded that there is no choice but to accept the government plan to acquire voting rights of more than one-third because it cannot survive without public funds, according to a senior official.
The battle over TEPCO’s ownership is far from over, however.
The Ministry of Economy, Trade and Industry and the Nuclear Damage Liability Facilitation Fund are eager to increase the voting rights to more than 50 percent, which would enable the government to nominate directors at TEPCO.
TEPCO, as well as the Finance Ministry, has been opposed to increasing the voting rights.
Finance Ministry officials are concerned that the government could end up shouldering costs for compensation over the accident at the Fukushima No. 1 nuclear power plant and decommissioning of its crippled reactors.
Once the government acquires voting rights of more than one-third, the industry ministry plans to urge TEPCO to speed up work for compensation and decommissioning, which have been criticized as being delayed.
It also plans to review TEPCO’s operations in line with planned reforms of the industry, such as separation of the power generation and transmission businesses.
The government plans to invest about 1 trillion yen in TEPCO because its debts will eventually exceed its assets due mainly to huge costs required for decommissioning.
The government would obtain more than two-thirds of TEPCO’s outstanding shares.
But voting rights will depend on what types of shares the government will acquire. Common shares carry voting rights, while preferred shares do not.
The government and TEPCO will continue discussions on the government’s voting rights in the utility. The Finance Ministry is calling for public investment to be made in preferred shares.
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