The people running the show at Tokyo Electric Power Company, the embattled utility that is struggling to shut down its Fukushima Daiichi nuclear power plant, were probably not out enjoying the sunny, late spring Friday in Tokyo. It’s been a bad week for the Japan’s largest utility, even given the astoundingly bad couple of months before it. On Friday, the day after Japan declared that it had sunk back into recession on the back of two quarters of negative growth, the company reported losses of $15 billion for the fiscal year ending in March, and Tepco’s president Masataka Shimizu stepped down in a gesture of taking responsibility for the disaster.
Shocking? Not so much. Japanese leaders in both the public and private spheres regularly take the fall for failings in the institutions they oversee. It’s a cultural expectation that goes all the way to the top: Prime Minister Naoto Kan is, after all, Japan’s fifth head of state in the last five years. Hatoyama, who had the job before him, only lasted eight months.
Still, Shimizu’s departure and the $15 billion loss announced today underscore the incredible snarl in which Tepco finds itself, and raise questions over whether the company will survive. The company’s stock has fallen over 80% since March 11, from about $26 to $4.3 on Friday morning. Its $15 billion loss is the largest in Japanese corporate history outside the financial sector, according to Dow Jones. But losses next year — and the years after that — will be worse: the company has a mix of exorbitant problems on its hands, including shutting down the crippled reactors and then sealing off the Fukushima plant; figuring out a way to continue to meet its energy supply obligations; and providing what is projected to be tens of billions of dollars in compensation to evacuated households and industries that are just beginning to calculate their immediate – forget about long-term — losses.
This week, a fishing organization from Ibaraki Prefecture visited Tepco’s headquarters in Tokyo to demand 420 million yen (about $5 million) in compensation for the fact that the utility’s plant both inadvertently leaked and purposefully dumped radioactive water into their fishing grounds. Fishermen along the coast of northeast Japan have been struggling to sell their catch; many have stopped altogether. The group from Ibaraki was the first to officially demand compensation but they will not be the last: agricultural co-ops from at least two other prefectures around the plant have sought another $37 million in compensation, and more fishing associations are considering doing the same.
Various plans for bailing the company out have surfaced. Tepco has reportedly considered selling a tract of protected land that it owns in Oze National Park to meet the compensation claims that have come up this week, a move that the government has urged it to reconsider, saying that other cuts, such as in employees’ salaries, could be made before it starts selling off property that it pays the upkeep for.
While the government has stopped short of the politically suicidal move of bailing Tepco out, it has tabled a plan to prevent the utility from going under entirely. Tokyo has proposed to set up a state-backed body that would help Tepco meet its compensation claims through funding provided by the federal government and other Japanese nuclear power companies. Kan’s government has insisted as part of this plan that no cap be put on the compensation claims. (A move also undoubtedly made in the spirit of self-preservation.)
Whether the administration’s plan to save Tepco – and itself – will work is another matter. The proposal still has to move through Parliament, where the nation’s two main parties can’t even agree on the much simpler task of coming up with reconstruction plans for the tsunami-struck coast. At this moment in a Japan-turned-upside-down, with the future of the nation’s energy supply up in the air and Tepco workers still trying to assess how bad the damage to the plant actually is, there is little that is certain, and even less that is sacred.