Japan's nuclear conundrum -The $64 billion question

Japan's nuclear conundrum

The $64 billion question

Nov 5th 2011 | from the print edition

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Once the Fukushima nuclear plant is stable, the government should temporarily nationalise its

operator

"THIS is a war between humans and technology. While that war is being fought, we should not

talk about bankruptcy." So says a Japanese official responsible for channelling the first tranche of

¥5 trillion ($64 billion) in government support to Tokyo Electric Power (Tepco) following the

meltdown of its three reactors at Fukushima Dai-ichi nuclear power plant after the tsunami on

March 11th.

The support has two valid aims. It helps pay compensation to the 89,000 people forced to

abandon their homes within a 20km (12.5-mile) radius of the plant: in the twilight zone only farm

animals and the odd feral ostrich roam the streets (see article). It also spares Tepco the chaos of

insolvency as it races towards a year-end deadline for Fukushima's full shutdown.

Don't let it off the hook

Yet the aim must surely be to create a stronger, safer energy industry as well. Tepco's continued

existence as a private, gravely crippled entity works against that. The government should act fast

to nationalise Tepco and hold it temporarily in public ownership as it clears out the old

management and oversees the clean-up. Then it should reprivatise a thoroughly reformed utility.

Three reasons argue for Tepco to be nationalised.

First, as a basis for holding the company to account. Despite failing to anticipate the devastating

earthquake and tsunami, and a dismal performance after they hit, Tepco's management remains

broadly in place, and shareholders and creditors are being bailed out. Injecting money into the

company smacks of the sort of complicity between the nuclear industry and its political overseers

that helped get Japan into this nuclear mess. Though the ¥5 trillion will pass through Tepco's

hands, the company has no legal obligation to register it as a loan on its balance-sheet or say how

it will be repaid. For now, taxpayers, not the shareholders or bondholders, bear all the risk.

Second, to ensure that Tepco's financial restructuring is safe. The firm has agreed to cut costs by

¥2.5 trillion over the next ten years, but this may well compromise safety. Already there are

reports of workers slopping about in radioactive water wearing leaky boots. In the short run the

state can better oversee this transition as an owner with day-to-day responsibilities, before

privatising Tepco in order to re-establish the necessary division between operator and regulator.

Third, as a demonstration that the government will no longer grant special favours to the nuclear

industry. Failure to intervene would underline how Tepco, along with Japan's other power utilities,

continues to intimidate the government. The utilities have huge political power, helped by a

pliant media and the support of big businesses selling services at inflated prices. If the

government fails to discipline Tepco, it will struggle to win the country's confidence over other

aspects of nuclear oversight. That includes the promise by Yoshihiko Noda, the prime minister, to

conduct "stress tests" to ensure that the rest of Japan's 54 nuclear reactors, most of them now

suspended, can safely be restarted.

At Fukushima, more bills will come due, including for removing radioactive topsoil from a vast

area. The longer the government dithers over nationalising Tepco, the more the costs will rise

and the impetus for action will wane. Tens of thousands have lost homes, businesses and

confidence in their children's health as a result of the disaster at Fukushima. Don't let their

suffering be for nought.

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