Fukushima costs to soar to 20 trillion yen
TOKYO — The combined costs of paying compensation for the Fukushima nuclear disaster and the decommissioning of the plant’s reactors may be double the initial estimate, rising to more than 20 trillion yen ($176 billion), according to estimates by the country’s industry ministry.
At the end of 2013, the Ministry of Economy, Trade and Industry calculated the cost at 11 trillion yen, which has since become the government’s official estimate.
As electric companies other than Tokyo Electric Co. the operator of the crippled plant, will also pass part of the cost on to consumers through higher rates, an increase in the public burden is unavoidable.
According to multiple sources, the ministry has already conveyed its new estimates to members of its expert panel, which is in discussions on reforming the management structure at Tepco and measures to secure funds.
The ministry aims to reach an agreement with the Ministry of Finance during planned discussions over the expansion of an interest-free loan program from 9 trillion yen to support Tepco.
The 11-trillion estimates foresaw 5.4 trillion yen for compensation payments; 2.5 trillion yen for decontamination work; 1.1 trillion yen for the construction of interim radioactive waste storage facilities; and 2 trillion yen secured by Tepco to scrap the reactors.
The new estimates see compensation payments costing 8 trillion yen and 4-5 trillion yen for decontamination.
The cost of decommissioning reactors — a process which will span at least 30-40 years — are projected to swell to hundreds of billions of yen a year from the current 80 billion. That would add several trillion yen to the overall cost.
Combined with the cost of building interim storage facilities, the total cost is forecast to exceed 20 trillion yen.
The snowballing costs are due mainly to the expansion of the number of people eligible for damages and the difficulty of conducting decontamination work, neither of which was fully understood when the initial estimates were made.
Cost of Fukushima disaster expected to soar to ¥20 trillion
The overall cost of wrapping up the Fukushima nuclear disaster is now estimated at more than ¥20 trillion, nearly double the previous estimate, sources familiar with the matter said Monday.
The Ministry of Economy, Trade and Industry, which previously put the overall cost at ¥11 trillion, is considering passing on a portion of the costs, including for compensation and the decommissioning of the Fukushima No. 1 nuclear plant, to consumers via higher electricity prices, the sources said.
The aged, six-reactor plant, operated by Tokyo Electric Power Co. Holdings Inc., was plunged into a blackout by the March 2011 earthquake and subsequent tsunami, leading to three core meltdowns and the worst nuclear disaster since Chernobyl in 1986.
According to the new estimate, Tepco’s compensation payments will rise to ¥8 trillion from ¥5.4 trillion and decontamination costs will double to around ¥5 trillion.
Trillions more will be needed to decommission the reactors and deal with radioactive water at the plant, on top of the ¥2 trillion earlier estimated, the sources said.
The ministry has been discussing reforming crisis-hit Tepco and is about to draft a plan for the utility based on the new estimate within this year.
Combined with the cost of building interim waste storage facilities, foreseen to remain at ¥1.1 trillion, the total cost is forecast to surpass ¥20 trillion, the sources said.
The government is studying the possibility of expanding a ¥9 trillion interest-free loan program for Tepco that was set up by issuing government bonds to cover compensation payments and decontamination costs in areas hit by the disaster.
It is expected to take up to 30 years to recover the ¥9 trillion through payments from Tepco and other big utilities.
The government also plans to recover the expected increase in compensation payments and decontamination expenses by raising charges for transmission line usage for new electricity retailers.
In principle, Tepco needs to secure funds on its own for decommissioning the plant. The government will manage the funds, which will be established using profits generated by the utility. But it is not clear if Tepco alone can shoulder the cost.
Fukushima nuclear decommission, compensation costs to almost double: media
Japan’s trade ministry has almost doubled the estimated cost of compensation for the 2011 Fukushima nuclear disaster and decommissioning of the damaged Fukushima-Daiichi nuclear plant to more than 20 trillion yen ($177.51 billion), the Nikkei business daily reported on Sunday.
The trade ministry at the end of 2013 calculated the cost at 11 trillion yen, which was comprised of 5.4 trillion yen for compensation, 2.5 trillion yen for decontamination, 1.1 trillion yen for an interim storage facility for contaminated soil, and 2 trillion yen for decommissioning, the report said.
The new estimate raised the cost of compensation to 8 trillion yen and decontamination to 4-5 trillion yen, the cost for an interim storage facility remained steady, and decommissioning will rise by several trillion yen, it added.
The part of the cost increase will be passed on in electricity fees, it added, citing multiple unnamed sources familiar with the matter.
The ministry could not provide immediate comment.
On March 11, 2011, a massive 9 magnitude earthquake, the strongest quake ever recorded in Japan, created three tsunamis that knocked out the Fukushima-Daiichi plant, causing the worst nuclear crisis since Chernobyl a quarter of a century earlier.
The Ministry of Economy, Trade and Industry will discuss with the Ministry of Finance a possible expansion of the interest-free loan program from 9 trillion yen, to help support the finances of the Fukushima plant operator Tokyo Electric Power Co’s, the report said.
The cost of cleaning up Tokyo Electric Power’s wrecked Fukushima-Daiichi nuclear plant may rise to several billion dollars a year, from less than $800 million per year now, the Japanese government said last month.
The Mainichi newspaper reported in October that Japan’s utilities lobby expects clean-up and compensation costs from the Fukushima disaster to overshoot previous estimates by 8.1 trillion yen.