Japan nuclear compensation bill passes key hurdle
TOKYO |
TOKYO (Reuters) – A lower house committee of Japan’s parliament on Tuesday passed a bill to help Tokyo Electric Power pay billions of dollars in compensation to those hurt by the Fukushima nuclear disaster, ensuring a law will soon be in place to guarantee the utility’s survival and get aid to victims.
The bill, now set for passage in a lower house plenary session as early as this week and to go into law soon thereafter, will establish a fund backed by taxpayer money and contributions from other utilities to handle compensation, which analysts have estimated could cost up to $130 billion.
But the bill, a product of more than a month of wrangling between ruling party and opposition lawmakers following the initial announcement of a draft in May, leaves several key issues unresolved.
Lawmakers agreed to a future review of the bailout scheme, including how costs would be shared among the government, Tokyo Electric and other utilities, as well as whether shareholders should be asked to shoulder some of the burden.
“Overall, it’s a positive development. The passage of the bill is the biggest point to watch for Tokyo Electric’s credit risk. It will help stem a worsening of its credit status,” said Mana Nakazora, chief credit analyst at BNP Paribas Securities.
“But details remain unclear, including how much of a stake the government will take in Tokyo Electric, how to ensure the company’s cash flow and how much other power utilities have to contribute to the fund.”
The crisis at Tokyo Electric has destabilized Japan’s entire $860 billion corporate bond market. The utility, commonly known as Tepco, is the biggest bond issuer accounting for 8 percent of the market.
Since the disaster, ratings agency Standard and Poor’s has slashed Tepco’s rating deep into junk territory. The company’s stock price tumbled by as much as 90 percent at one point, forcing Dai-ichi Life and other shareholders to book special losses.
Rising expectations that the bill would pass triggered a sharp rebound in Tepco’s stock over the past few weeks to a four-month high of 643 yen on Friday. Investors have since taken profits, knocking it back to 512 yen as of Tuesday’s close.
It remains to be seen whether Tepco’s lenders will be asked by the government to make concessions. Sumitomo Mitsui Banking Corp and two other leading banks held about $27
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