TOKYO (Nikkei)–Tokyo Electric Power Co. (9501) sees the appointment of Yoshikiko Noda as the nation’s new prime minister as an opportunity to improve its strained relations with the government before the second stage of its corporate rehabilitation begins.
Tepco is keen to build a good working relationship with the new administration after Noda’s predecessor, Naoto Kan, grilled the utility for months over its response to the Fukushima nuclear disaster.
“We intend to make swift and fair compensation payments, and are very eager to work together (with the new administration),” Naomi Hirose, a Tepco managing director, said Tuesday in a press conference to outline the utility’s compensation payment program for individuals and companies that sustained losses from the nuclear accident.
With the announcement of the compensation program and the appointment of the head of a new body to help the utility with compensation payments, the company’s rehabilitation process has entered its second phase.
Tepco has been hobbled by its crippling compensation burden, and is exploring the implications of the change of prime minister.
Change of plan?
The central question is whether Noda will change the government’s plan for dealing with the dire problems at the utility.
A pundit who, like Noda, graduated from the Matsushita Institute of Government and Management — an institution for training future political leaders — believes this is unlikely.
“He’s a man of great tenacity and not the kind of person who employs outlandish schemes,” the pundit said. “I bet there will be no major change in the government’s policy (concerning the Tepco bailout) such as switching to a legal bankruptcy process.”
Another reason that the new administration can be expected to stay on track with Tepco’s reconstruction plan is that it was Noda’s proposal (when finance minister) to create an entity to help the utility make compensation payments.
One of the main aims of the plan is to minimize the burden on taxpayers by forcing Tepco and other electric power firms to contribute to the funding.
With Kan continually berating the company over its handling of the accident, some members of the business community see Tepco being treated as a scapegoat.
Despite being a member of Kan’s cabinet, Noda does not necessarily share Kan’s views about the accident and the utility’s response.
The new leadership represents a great opportunity for Tepco to build a closer, more cooperative relationship with the government.
Tepco may also benefit from the personal ties between Noda and Hiromasa Yonekura, chairman of Japan Business Federation (Keidanren), Japan’s most powerful business lobby.
Yonekura is sympathetic toward Tepco and critical of the Kan administration’s handling of the nuclear crisis. He holds regular telephone conversations with Noda. The business community may also wield greater influence over the issue of Tepco’s rehabilitation under the new administration.
The next important event in the Tepco rebuilding process will be the formulation, possibly next month, of a detailed business plan for the utility. The plan will be a blueprint for getting the utility back on its feet. It will include compensation and earnings projections, as well as plans for restructuring and asset sales.
The utility will not receive financial aid from the bailout entity until the government approves the reform blueprint.
The appointment of former Takehiko Sugiyama, former president of Hitotsubashi University, as chief of the entity (which is working with Tepco to draw up the blueprint) could also have huge implications for the utility.
It is not yet clear what kind of stance Sugiyama will take toward key issues such as the electricity rate hikes Tepco is considering to help pay for higher fuel costs stemming from operating thermal power plants to make up for output losses following the nuclear accident.
Filed under: 8.Eathquake & Nuclear accident