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Moody's cuts Japan's TEPCO to junk status
by Staff Writers
Tokyo (AFP) June 20, 2011

Ratings agency Moody's on Monday downgraded TEPCO, the operator of Japan's stricken Fukushima nuclear plant, to below investment grade, warning the rating was on review for further possible action.

Moody's cited a worse-than-thought situation at the Fukushima Daiichi plant and the uncertainty surrounding the level of state support for TEPCO as it faces massive compensation costs.

The Japan unit of the major US credit rating firm said it downgraded Tokyo Electric Power's long-term issuer rating four notches to B1 from Baa3. Its senior secured debt rating was cut three notches to Ba2 from Baa2.

"The latest downgrade reflects further escalation of costs and damages from the continuing Fukushima nuclear plant disaster and increased concern that government support measures may not completely protect creditors from losses," Moody's said in a statement.

The ratings agency cited TEPCO's disclosure that damage to the reactors at the Fukushima Daiichi nuclear plant was far worse than first stated with core meltdowns occurring hours after the March 11 disaster crippled cooling systems. The power company faces huge compensation costs. Tens of thousands of people remain evacuated from homes, farms and businesses in a 20-kilometre (12-mile) zone around the radiation-spewing plant, with evacuation pockets also further afield.

"The areas contaminated by radiation have been much more than previous estimates. And total costs will continue to rise until the reactors are brought into a state of safe cold shut-down, and which is not expected until 2012," Moody's said.

"The magnitude of likely damages, including compensation liability, has risen to a level that is beyond TEPCO's ability to finance without government support."

Japan's government last week put forward a bill to ensure that the utility can pay compensation to tens of thousands affected by the nuclear accident.

The bill calls for the creation of a body to handle claims made against TEPCO and will be funded by public money as well as contributions from power companies, but uncertainty still surrounds key details.

Analysts say its passage in parliament will be difficult and is likely to partly depend on whether the government can win over those opposed to it by enforcing tough restructuring on TEPCO.

Moody's noted key details were missing "such as how much other nuclear business operators will be required to contribute, how the compensation liabilities will be recognized on TEPCO's financial statements, and how long TEPCO will need to make special contributions to the entity, and whether debt holders may need to make concessions."

In May TEPCO said it would sell assets not essential to power generation to raise more than 600 billion yen ($7.4 billion), after it reported a $15 billion annual net loss, the biggest ever for a non-financial Japanese firm.

TEPCO booked a 1.02 trillion yen loss related to the cost of damage to the plant and other facilities in the mega quake that has left 23,000 dead or missing, having destroyed entire towns along Japan's northeastern coast.

Standard & Poor's in May downgraded TEPCO's long-term corporate credit rating to B+ from BBB and its short-term corporate credit rating to B from A-2.

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No 'business as usual' as IAEA meets on nuclear safety
Vienna (AFP) June 20, 2011 - The head of the UN's nuclear watchdog warned Monday that confidence in atomic energy had been deeply shaken by the Fukushima disaster as a conference began to debate lessons to be drawn from the crisis in Japan.

"The eyes of the world will be upon us in the next few days," Yukiya Amano said at the start of the five-day ministerial meeting of the International Atomic Energy Agency (IAEA) in Vienna.

"Public confidence in the safety of nuclear power has been deeply shaken."

Since the disaster at Japan's Fukushima nuclear plant in the wake of the March 11 earthquake and tsunami, several countries, such as Germany, Italy and Switzerland, have decided to abandon nuclear power.

Still, Amano noted: "Nuclear power will remain important for many countries."

"Nuclear events respect no borders so an international approach to nuclear safety is essential," he added.

"Business as usual is not the option."

States with nuclear power should accept a combination of domestic and international measures to ensure more credible, transparent and efficient monitoring of their nuclear power plants, Amano suggested.

"National assessments are the starting points, but they should be followed by IAEA international expert peer reviews," he insisted, pushing further for "systematic, periodic peer reviews by the IAEA".

"IAEA review of every one of the world's 440 operating nuclear reactors in just a few years is not a realistic proposition," he admitted, but suggested instead a "system based on random selection".

"The Agency could conduct an international safety review of one nuclear power plant in 10 throughout the world over, say, a three-year period," he went on.

Amano also proposed strengthening the IAEA's existing safety criteria and making sure it was applied in every country.

"Even the best criteria are useless if they are not applied," he said.

In a report to be handed to the agency's 151 member states, the IAEA criticised Japan's response after the Fukushima accident, especially its failure to implement the agency's convention on dealing with nuclear emergencies.

The convention lays down the rules for cooperation between the nuclear watchdog and states that may need help, in the areas of security and communication.

The IAEA report was drawn up based on an experts' visit to Japan last month.

A preliminary version of the document, presented in Tokyo earlier this month, said Japan had underestimated the hazard posed by tsunamis to nuclear plants, but praised Tokyo's response to the March 11 disaster as "exemplary".

In a later press conference Amano said he was confident of getting member countries to agree to the propositions he laid out.

"We are living in the post-Fukushima age," he said, adding that that security of nuclear plants was a priority now more than ever.

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Japan suspends waste water nuclear operation
Tokyo (AFP) June 18, 2011
Tokyo Electric Power Co. Saturday halted an operation to clean highly contaminated waste water at a crippled Japanese nuclear plant due to higher-than-expected radiation levels. The embattled operator of the stricken Fukushima Daiichi facility said it had suspended the procedure just hours after it started because a new part was needed, adding that it did not know when it would resume. P ... read more

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