Japan’s Cabinet approves Bill to help embattled Tepco
Japan’s Cabinet yesterday approved a Bill to help embattled Tepco compensate tens of thousands affected by the crisis at its Fukushima Daiichi nuclear plant, as shares in the company soared in Tokyo.
Analysts said a move by the stock exchange to hike margin requirements on shares in Tokyo Electric Power Co. to clamp down on short selling also encouraged buying sentiment.
The support Bill, which is yet to be approved by Parliament, will see 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.
Shares in the utility closed limit up, rising 25.12 per cent to 249 yen yesterday, after the stock recently plunged to all time lows amid worries the firm would be forced to de-list from the stock exchange.
Yesterday, the Tokyo Stock Exchange hiked the margin rate on Tepco shares to a minimum of 50 per cent – of which at least 20 per cent must be cash – from an earlier 30 per cent, making short sales more expensive to put off speculators.
The government-devised aid plan for Tepco will include the purchase of its corporate bonds, stocks and assets to support the company’s operations, but analysts warned that uncertainty still surrounded the bill.
“Investors are buying back Tepco shares believing that the government will pay a decent price for shares, but nothing concrete is known yet and it’s too soon to make that assumption,” Mitsuhige Akino, chief fund manager at Ichiyoshi Investment Management told Dow Jones Newswires. Under the plan, Tepco would be required to eventually pay back all funds it received from the organisation. But the Bill’s passage through Parliament is expected to meet resistance over the idea of public support for the firm at the centre of the world’s worst nuclear crisis since Chernobyl 25 years ago.
“We will aim to get the Bill through Parliament as early as possible,” the Minister of Economy, Trade and Industry, Banri Kaieda, said.
The Mainichi newspaper reported the government would allow the utility to raise its electricity prices by 16 per cent to help finance increased fossil fuel costs as it relies more on thermal power generation. In May, Tepco posted a record annual net $15 billion loss, the biggest ever for a non-financial Japanese firm and its then-president resigned to take responsibility for the crisis.