Nuclear insanity

A mix of the criminal and the insane. The infinite growth paradigm will seek to make money until it goes down.

For "zombie" Fukushima operator, fresh financing masks long-term woes

Chicago Tribune,

6 October, 2013

TOKYO (Reuters) - Its stock price has nearly trebled this year, its near-term debt trades at par, banks have extended credit, and an enterprise value of $83 billion - a rough guide to how much it could cost to buy - makes it Asia's biggest listed electricity utility.

Yet Tokyo Electric Power , or Tepco, has lost $27 billion since the 2011 disaster at its Fukushima Daiichi nuclear plant, and faces massive liabilities as it decommissions the facility, compensates tens of thousands of residents forced to evacuate, and pays for decontamination of an area nearly the size of Connecticut.

Creditors, led by Japan's top banks, have agreed to provide Tepco with $5.9 billion - rolling over existing loans and putting in new financing [ID:nT9N0GD01Q] - and the company has applied to restart its 7-reactor Kashiwazaki Kariwa facility, the world's biggest nuclear plant, saying a restart would save it $1 billion a month in fuel costs.

All of which has prompted Tepco, which supplies electricity to 29 million homes and businesses in and around Tokyo, to say it could make a profit this financial year.

"It's all kabuki," said Tom O'Sullivan, founder of independent energy consultancy Mathyos Japan, using a Japanese term to portray political posturing. "Tepco still faces significant problems."

"You have the trade minister ... saying the utility is fine. You have Tepco's president ... applying for restarts, and you have banks falling in line to roll over loans. It's very much an orchestrated presentation."

Tepco is expected to lose 21 billion yen ($216 million) at an operating level in the year to end-March, according to Thomson Reuters StarMine SmartEstimates, which places greater emphasis on top-rated analysts' forecasts. But, at a net level, Tepco - which was nationalized last year - is seen posting a 409 billion yen profit, boosted by booking as one-off gains funds provided by a state-backed entity for compensating evacuees.

"The timing of the Kashiwazaki Kariwa restart is unclear, so even if we are not able to restart it in fiscal 2013, we will take all possible measures, including emergency financial measures, that would defer costs, allowing us to make a profit," Tepco said in response to Reuters queries for this article.

BLUE-CHIP DUMP

Investors dumped Tepco from among Japan's blue-chip stocks after its inept response to the earthquake and tsunami disaster, and the utility has since lurched from crisis to crisis, struggling to contain hundreds of thousands of tonnes of irradiated water held at the Fukushima plant.

The company's debts are almost five times its equity - a ratio more than double that of Chubu Electric Power , which services an area near Tokyo that is home to manufacturers including Toyota Motor Corp .

Japan has given Tepco a 5 trillion yen credit line for compensating 160,000 evacuees and damaged businesses, but Tepco has already said that's not enough. The Japan Center for Economic Research, an independent think-tank, reckons total decontamination costs could be at least $100 billion.

"The biggest challenge in the Tepco situation is that the total liabilities are unknown," said CV Ramachandran, Hong Kong-based head of Asia business for restructuring specialist AlixPartners. "Estimates vary widely and the latest water leakage issues are likely to further increase liabilities."

Tepco said last week that a tank holding contaminated water at Fukushima overflowed and likely spilled into the Pacific Ocean, the second such breach in less than two months.

While the big banks managed to corral reluctant smaller lenders into Tepco's refinancing, lenders still have reservations about just how viable the utility is.

"There remain lingering problems. We don't know what kind of company Tokyo Electric is going to be, and ... whether we should continue lending to them," said a senior executive at one of Japan's big three banks, who didn't want to be named due to the sensitivity of the issue. "Can we keep lending money when we can't see this company's future?"

Makoto Kikuchi, CEO of Myojo Asset Management, said Tepco shares are too risky for institutions, and are only traded by speculators and hedge funds. "From a fundamental or balance sheet standpoint, there's absolutely no reason to buy Tepco shares."

ASSET MARKDOWN

Tepco may soon have to mark down some of its stated assets as liabilities.

Fukushima’s food plugged in London

Japan Times,

6 October, 2013

LONDON – A group of Fukushima natives in London held an event to promote agricultural products from the prefecture hosting the crippled nuclear power plant at a cultural event in Trafalgar Square on Saturday.

The group, comprising people from Fukushima living in London, set up a booth at the annual Japan Matsuri (Japan Festival) to sell products grown in the prefecture, including rice, peaches, apple juice and Kitakata Ramen noodles, in cooperation with Japan’s National Federation of Agricultural Cooperative Associations.

The move was intended to dispel false information about Fukushima farm products linked to the nuclear disaster at the meltdown-stricken Fukushima No. 1 power plant in March 2011, which crippled fishing and other industries. They are aiming to tell the international community that Fukushima produce is safe to eat.

Revenue from the food sales will be donated to a charity for children in Fukushima who were displaced by the March 2011 earthquake and tsunami.

Toshiba set to buy British nuclear power firm for 10 billion yen

With the future of the domestic nuclear industry uncertain, Toshiba Corp. is looking to bolster its overseas business with the acquisition of a company planning a nuclear plant in Britain for upward of 10 billion yen ($100 million), sources said.

Asahi Shimbun,

6 October, 2013

Toshiba is in the final stage of negotiations for purchasing more than 50 percent of NuGeneration Ltd. through subsidiary Westinghouse Electric Co., a U.S. nuclear reactor builder.

Toshiba, which holds a leading 30 percent share of the global market of nuclear reactor construction with Westinghouse, hopes to close the deal by year-end, the sources said.

NuGeneration, based in Britain, is owned equally by two major electric utilities, France’s GDF Suez SA and Spain’s Iberdrola SA.

The joint venture hopes to open a 3.6-gigawatt nuclear power facility, about the capacity of two to three large reactors, in central Britain by 2023.

It will be the first time that Toshiba has acquired a nuclear plant operator overseas. Operation of the British plant will be commissioned to other companies.

Toshiba plans to reinforce its nuclear power business in Europe, Asia and elsewhere because construction of new reactors will be difficult in Japan given the crisis at the Fukushima No. 1 nuclear power plant and mounting public opposition.

The company is bidding for two reactor construction projects in Finland and also aims to win contracts in the Middle East and India. Europe is a powerful domain of France’s Areva SA, the world’s second-largest reactor builder after Toshiba.

Toshiba plans to increase sales from its nuclear power business, including construction and maintenance of reactors, to 800 billion yen in fiscal 2017 from 500 billion yen, or slightly less than 10 percent of its group revenue, in fiscal 2012.

Domestic rival Hitachi Ltd. acquired a British nuclear plant operator for 85 billion yen last year.