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.
Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.
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
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2011 - Space Media Network. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement|