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Japan eyes state-backed insurer to save TEPCO

(Agencies)
Updated: 2011-04-15 16:46

Govt to guarantee loans

Payments could be set at about 1 million yen per household, with all of those living within a 30 km radius of the plant eligible, Chief Cabinet Secretary Yukio Edano told a separate news conference on Friday.

More than 200,000 people were living in the 30 km Fukushima exclusion zone before the disaster. TEPCO estimates about 50,000 households are eligible for the initial payments.

Edano said the government wanted to start paying some of the victims before the "Golden Week" national holidays that start on Friday, April 29.

Under the draft plan as reported by the newspaper, the government would set up the fund using loans from private banks -- which it would guarantee -- and surcharges on other utilities that operate nuclear plants.

The fund would handle the initial compensation payments, which TEPCO would repay over the next several years by issuing new preferred shares to the fund that will pay dividends, the paper said.

Without such government support, TEPCO would likely face having its debt rating cut to below investment grade, meaning some pension funds and other institutional investors would no longer be able to hold the utility's bonds.

What is not yet clear, however, is how much TEPCO will have to ultimately pay in compensation, which would help determine the outlook for its credit rating, said Hiroki Shibata, an analyst at Standard & Poor's in Tokyo.

"How much TEPCO will have to pay or how much other Japanese utilities will have to pay and when is still unknown," he said.

The head of Japan's life insurance industry lobby said the group would "sincerely consider" a loan request from TEPCO, if asked.

Koichiro Watanabe, who heads the group, is also president of Dai-ichi Life Insurance , one of TEPCO's largest shareholders.