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Fukushima operator readies new restructuring plan

Hiroshi Hiyama
Japan's Tokyo Electric Power Co. (TEPCO) President Naomi Hirose (answers questions during a press conference to announce the company's financial results in Tokyo on October 31, 2013

Tokyo Electric Power Wednesday submitted a fresh restructuring plan to a Japanese government-backed fund that envisages the creation of a special unit to dismantle the crippled Fukushima nuclear plant.

TEPCO president Naomi Hirose pledged thorough implementation of the plan, once approved by the government as expected next month.

The utility's board Tuesday approved a draft plan that would see the creation of a holding company with several sub-units dedicated to separate tasks, including one that would be solely responsible for decommissioning the battered reactors.

The plan, which includes a cost-cutting round of early retirements, assumes the giant utility will be allowed to restart some of its idled nuclear reactors.

Supporters say this is necessary to reduce the inflated fuel bills caused by the switch back to fossil fuels in the aftermath of the disaster in March 2011.

"As the government takes a step forward (to help TEPCO), Tokyo Electric wished to demonstrate that we are taking three steps and four steps forward," Hirose told reporters of the plan, according to national broadcaster NHK.

TEPCO submitted the plan to the Nuclear Damage Liability Facilitation Fund, which gave its broad approval.

The utility and the fund will jointly submit the plan to the government next month for formal approval.

The government on Tuesday approved a budget for fiscal 2014 which includes measures to help TEPCO, such as earmarking 101.2 billion yen ($1 billion) to pay for facilities to store radioactive waste.

Local media have separately said TEPCO was likely to receive fresh loans totalling 500 billion yen from 11 lending institutions, which have been pushing for reactor restarts to ensure the utility's sustainability.

The company cannot raise money on normal bond markets because of its perceived poor credit risk.

Observers say banks are already on the hook for huge sums and are willing to lend the company more to keep it afloat, in the hope they will get back their original money and more.

If TEPCO went under, it could deal a huge blow to the viability of some of its lenders, which would have knock-on effects in other parts of the economy. Its failure could also affect electricity production in the economically-vital Tokyo area.

TEPCO and Japan have yet to figure out the exact cost of compensating tens of thousands of people who had to flee their homes and livelihoods to avoid radiation.

Nearly three years after the tsunami-sparked disaster, the final cost of shuttering damaged reactors and cleaning up tracts of agricultural and residential land coated by radioactive materials also remains unknown.

Tens of thousands still cannot return to their homes in the area around the plant, with some settlements likely to be uninhabitable for decades.

The government believes it may take 40 years completely to dismantle the plant and could require the use of technology that has not yet been invented.