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Finance GreenWatch » 8.Eathquake & Nuclear accident » Panel to urge TEPCO to cut 7,400 jobs / Suggests utility unable to repay some loans(Yomiuri)

Panel to urge TEPCO to cut 7,400 jobs / Suggests utility unable to repay some loans(Yomiuri)

A government panel will advise Tokyo Electric Power Co. to cut 7,400 staff, or 14 percent of its group’s total workforce of 53,000, by the end of March 2014, including 3,600 from TEPCO itself, according to an outline of the panel’s report.

The third-party panel also points out in the report that some of the loans financial institutions have extended to TEPCO may not be paid back, depending on the utility’s financial situation.

The panel was established to study TEPCO’s finances to facilitate the utility’s compensation payments for victims of the crisis at the Fukushima No. 1 nuclear power plant.

The panel is expected to announce the official report as early as Monday. To secure funds from the utility and to minimize a hike in electric power bills, the panel insists restructuring is necessary.

TEPCO plans to meet the recommendations by reducing new hiring and offering early retirement.

As for TEPCO’s financial standing, the panel said it is highly likely the utility will suffer a capital shortage even if it raises electricity rates by 10 percent unless it restarts nuclear reactors, which are off-line for regular inspections.

The panel estimates that TEPCO owes compensation payments of between 3 trillion yen and 4 trillion yen in addition to several trillion yen to demolish nuclear reactors.

The government plans to increase its stake and effectively put the utility under state control. Under such circumstances, the panel suggests TEPCO drastically increase its total number of shares.

The panel also demands TEPCO “fulfill its business responsibility ethically,” and will discuss further cutting remuneration of executives with the planned organization to support compensation payments for nuclear damage.

Economy, Trade and Industry Minister Yukio Edano has said it is necessary for financial institutions, currently providing a total of 4 trillion yen in loans to TEPCO, to support the utility.

In response to Edano’s views, the report will stipulate part of the 4 trillion yen “may not be repaid in consideration of the fragile cash situation TEPCO will possibly face.”

The panel urges financial institutions to maintain the current level of TEPCO’s loans for the next 10 years to support the utility’s fund management.

The panel also suggests electric power companies review their rate calculation system, known as the fully distributed cost method, which calculates rates on the basis of power generation costs and includes the utility’s profit.

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