Kyushu Electric Power Co has become Japan's second nuclear generator after the Fukushima disaster to seek state support this week as reactors across the country remain idled and industry losses stack up three years after the Fukushima disaster. All of Japan's 48 nuclear reactors have been shut down, pending stringent safety checks, since an earthquake and tsunami knocked out the Fukushima nuclear complex in March 2011.
Kyushu Electric, a regional monopoly that supplies power in southern Japan, said on Wednesday it was in talks with state-owned Development Bank of Japan Bank of Japan (DBJ) for financial backing. The country's nine publicly traded nuclear operators have together lost 3.2 trillion yen ($31 billion) in the two business years since then and five of them, including Kyushu Electric and Hokkaido Electric, also expect to be loss-making in the year just ended, Reuters reports. Japanese banking practices make it difficult for private lenders to extend credit, including refinancing existing loans, to companies that post three straight years of losses. That means the utilities are turning to a government-owned lender for help as the losses mount up and the cost of importing expensive fossil fuels for power generation while nuclear reactors are idle is draining their capital. "Capital funds have been continuously declining and liabilities might soon exceed assets," said a senior industry source familiar with Hokkaido Electric's finances. "Continued deficits have made it harder to borrow from banks. The way to solve this is to increase rates to boost revenue, but since this is very hard to do, other avenues are being considered." Hokkaido Electric's capital ratio - a key measure of financial health - has dropped to 8.9 percent from 24.2 percent before March 2011. Kyushu Electric's capital ratio has more than halved to 11.5 percent. The average capital ratio of Japan's top companies is 43 percent, finance ministry data shows. The utilities are also likely to be saddled with huge decommissioning costs as many idled reactors are unlikely to pass strict new standards, a Reuters analysis shows. Re-starts also face political opposition. Prime Minister Shinzo Abe's Liberal Democratic Party is moving to revive nuclear power, but hasn't been able to get its coalition partner to sign off on a plan that defines nuclear power as an important source of electricity generation. Of Japan's 48 reactors, 17 are unlikely to be restarted, and as many as 34 may have to be mothballed, the Reuters analysis shows. The cost of decommissioning a reactor is estimated at around $1 billion. According to industry ministry data, the utilities have spent 9 trillion yen ($86.9 billion) on additional fuel costs in the three years since the Fukushima disaster. To ease the strain, the companies have been raising electricity charges, but were warned by the industry minister this week that further increases must be avoided. Source: The Voice of Russia
