Tokyo Electric Power Company (Tepco) confirmed a loss of Yen572bn ($7.4bn) due to charges associated with payments for the clean-up of its Fukushima nuclear power plant and compensation for people affected by the crisis.
The utility booked charges of Yen503bn as part of costs associated with the disaster, according to a statement released today. In May it announced a loss of Yen12 500bn, the biggest for a non-financial company in Japan, for the year ended 31 March.
The government will set up a state-backed entity with Yen2 000bn of funds to back-up Tepco’s compensation payments to those affected by the nuclear disaster, trade and industry minister Banri Kaieda said.
“After we start receiving funds, there will be no possibility of liabilities exceeding assets,” President Toshio Nishizawa told reporters at a news conference in Tokyo today.
The company may face as much as Yen11 000bn in claims after the March quake and tsunami caused three reactor meltdowns, Bank of America Corp’s Merrill Lynch unit said about three weeks after the disaster.
“Nobody thinks the compensation payments will be less than Yen1000m, but Tepco won’t book charges like that because it would bankrupt the company,” Reiji Ogino, an analyst at Mitsubishi UFJ Morgan Stanley in Tokyo, said before the earnings announcement.
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