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Pictures From the Week in Business, Jan. 11

January 12, 2013 by Leave a Comment

The decontamination crews at a deserted elementary school in Naraha, Japan, are at the forefront of what the country says is the most ambitious radiological cleanup the world has seen. But much of the work at the Naraha-Minami Elementary School, about 12 miles from the ravaged Fukushima Daiichi nuclear power plant, tells another story. For eight hours a day, construction workers blast buildings with water, cut grass and shovel dirt and foliage into big black plastic bags — which, with nowhere to go, dot Naraha’s landscape like funeral mounds.

Article source: http://www.nytimes.com/slideshow/2013/01/12/business/weekly-business-photos.html?partner=rss&emc=rss

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DealBook: Daikin of Japan Said to Buy Goodman for $3.7 Billion

August 29, 2012 by Leave a Comment

7:49 p.m. | Updated

Daikin Industries has struck an agreement to buy Goodman Global for about $3.7 billion, a person briefed on the matter said on Tuesday, completing the Japanese air-conditioner maker’s long quest to buy its American rival.

An announcement is expected to be made as soon as Tuesday evening, said this person, who spoke on condition of anonymity.

Goodman is currently owned by the private equity firm Hellman Friedman, which bought the company in 2008 for about $1.9 billion. Founded in 1975, Goodman makes heating, ventilation and air-conditioning products for homes and businesses.

Hellman Friedman began shopping the company around early last year, at a time when many private equity firms were looking to lock in profits by selling off their holdings.

The move prompted interest from Daikin, one of the world’s biggest makers of air-conditioning equipment. Yet only three months after confirming its interest, Daikin said last March that it was walking away, citing the uncertain market environment in the wake of the Fukushima nuclear power plant disaster.

At the time, however, a spokesman for Daikin said that it would consider reviving deal talks if Japan’s economic outlook became clearer, according to Reuters.

Daikin, which is based in Osaka, has ample financial resources to buy its American competitor. The company reported about $510 million in profit for the 12 months ended June 30. And it had some $1.5 billion in cash and short-term investments on its books as of June 30.

Hellman Friedman, which is based in San Francisco, has been unusually active in selling off a number of portfolio companies over the last year, including Getty Images, the image service, and AlixPartners, the consulting firm.

A spokeswoman for Hellman Friedman declined to comment. A representative for Daikin was not immediately available for comment. News of the deal was reported earlier by Nikkei.

Article source: http://dealbook.nytimes.com/2012/08/28/daikin-of-japan-said-to-buy-goodman-for-3-7-billion/?partner=rss&emc=rss

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Report Condemns Japan’s Response to Nuclear Accident

December 26, 2011 by Leave a Comment

The failures, which the panel said worsened the extent of the disaster, were outlined in a 500-page interim report detailing Japan’s response to the calamitous events that unfolded at the Fukushima plant after the March 11 quake and tsunami knocked out all of the site’s power.

Three of the plant’s six reactors overheated and suffered fuel meltdowns, and hydrogen explosions blew the tops off three reactor buildings, leading to a major leak of radiation at levels not seen since Chernobyl in 1986.

The panel attacked the use of the term “soteigai,” or “unforeseen,” that plant and government officials used both to describe the unprecedented scale of the disaster and to explain why they were unable to stop it. Running a nuclear power plant inherently required officials to foresee the unforeseen, said the panel’s chairman, Yotaro Hatamura, a professor emeritus in engineering at the University of Tokyo.

“There was a lot of talk of soteigai, but that only bred perceptions among the public that officials were shirking their responsibilities,” Mr. Hatamura said.

According to the report, a final version of which is due by mid-2012, the authorities grossly underestimated the risks tsunamis posed to the plant. The charges echoed previous criticism made by nuclear critics and acknowledged by the operator of the plant, Tokyo Electric Power.

Tokyo Electric had assumed that no wave would reach more than about 20 feet. The tsunami hit at more than twice that height.

Officials of Japan’s nuclear regulator present at the plant during the quake quickly left the site, and when ordered to return by the government, they proved of little help to workers racing to restore power and find water to cool temperatures at the plant, the report said.

Also, the workers left at Fukushima Daiichi had not been trained to handle multiple failures, with no clear manual to follow, the report said. A communications breakdown meant that workers at the plant had no clear sense of what was happening.

In particular, an erroneous assumption that an emergency cooling system was working led to an hours-long delay in finding alternative ways to draw cooling water to the plant, the report said. All the while, the system was not working, and the uranium fuel rods at the cores were starting to melt.

And devastatingly, the government failed to make use of data on the radioactive plumes released from the plant to warn local towns and direct evacuations, the report said. The failure allowed entire communities to be exposed to harmful radiation, the report said.

“Authorities failed to think of the disaster response from the perspective of victims,” Mr. Hatamura said.

But the interim report seems to leave ultimate responsibility for the disaster ambiguous. Even if workers had realized that the emergency cooling system was not working, they might not have been able to prevent the meltdowns.

The panel limited itself to suggesting that a quicker response might have mitigated the core damage and lessened the release of radiation into the environment.

“The aim of this panel is not to demand responsibility,” Mr. Hatamura said. He also said the panel’s findings should not affect debate on the safety of Japan’s four dozen other nuclear reactors.

Taro Umemura contributed reporting.

Article source: http://www.nytimes.com/2011/12/27/world/asia/report-condemns-japans-response-to-nuclear-accident.html?partner=rss&emc=rss

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Inspectors Found Preparedness Issues at U.S. Nuclear Plants

May 12, 2011 by Leave a Comment

Marty Virgilio, deputy executive director of the agency, told the commissioners that the problems had been fixed but more work was needed. Mr. Virgilio discussed the findings at a briefing on the vulnerability of American reactors to severe natural disasters like the earthquake and tsunami that hit the Fukushima Daiichi plant in Japan on March 11.

The N.R.C. engineers said they had found no glaring lapses so far, but many potential problems. One is that many of the preparations the industry took after 9/11 for “severe accident mitigation” were taken voluntarily, and thus are not routinely evaluated by commission inspectors.

Mr. Virgilio’s boss, Bill Borchardt, the commission’s chief staff official, said that some of the preparations for severe accidents, including training, procedures and hardware, “don’t have the same kind of regulatory pedigree” as the equipment in the original plant design.

Ever since the Fukushima accident began, the N.R.C. and American nuclear power plant operators have argued that steps taken in this country to respond to terror attacks would also be helpful in case of severe accidents started by natural disasters.

The five-member commission received a two-hour briefing on Thursday from the leaders of a task force that is supposed to conduct a 90-day review of the vulnerability of American reactors to such disasters. Charlie Miller, the staff member leading the effort, characterized the changes under consideration as “enhancements,” not fundamental changes.

But as laid out by the staff, some of the changes could be far-reaching. For example, current planning is focuses on handling a problem at just one reactor, even if there are multiple reactors at a single plant, which is quite common. “You have to take a step back and consider what would happen if you had multiple units affected by some beyond-design-basis events,” Mr. Miller said. At Fukushima Daiichi, there are six reactors, with significant problems at four of them.

Another problem, N.R.C. staff members acknowledged, is that they have never paid much attention to the problems of handling an emergency at a time of widespread damage to surrounding roads, power systems and communications links — something that might very well happen in a major natural disaster such as an earthquake. In the past, the commission has explicitly rejected the idea of combined events.

As the hearing opened, Representative Edward J. Markey, a Massachusetts Democrat who is frequently critical of the commission, released a report arguing that there are a variety of other shortcomings at American plants, including the frequent failure of emergency diesel generators, which are essential to plant safety if the power grid goes down.

Mr. Markey also criticized the commission for not having a requirement for a backup power source for spent fuel pools while the reactor is shut for maintenance or refueling. The Fukushima accident has cast new attention on spent fuel pools; the United States recommended that Americans stay 50 miles from the Fukushima plant because of damage to the spent fuel pool of the Unit 4 reactor, which had been shut down at the time of the March 11 earthquake and tsunami.

Article source: http://feeds.nytimes.com/click.phdo?i=c2a26e1fdb7ec2b639f08cd06c2d9c78

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Despite Bipartisan Support, Nuclear Reactor Projects Falter

April 29, 2011 by Leave a Comment

Even supporters of the technology doubt that new projects will surface any time soon to replace those that have been all but abandoned.

“My gut feeling is that there is going to be a delay,” said Neil Wilmshurst, a vice president of the Electric Power Research Institute, a nonprofit utility consortium based in Palo Alto, Calif. News on Thursday that Exelon Corporation, the nation’s largest reactor operator, planned to buy a rival, the Constellation Energy Group, only reinforces the trend; until late last year, Constellation wanted to build, while Exelon was firmly against it.

Mr. Wilmshurst said the continued depressed price of natural gas had clouded the economics of new reactors, and he predicted that construction activity would “go quiet” for two to five years. His group has shifted its efforts to helping figure out how existing plants can extend their licenses to 80 years from the current limit of 60.

Of the four nuclear reactor construction projects that the Energy Department identified in 2009 as the most deserving for the loans, two have lost major partners and seem unlikely to recover soon. In addition to low prices for natural gas, the demand for electricity is down, and the March 11 earthquake and tsunami that damaged the Fukushima Daiichi nuclear power plant could bring new rules.

Only $8.8 billion of the 2005 guarantee has been allocated — to a twin reactor project in Georgia. Ground has been broken on the fourth candidate, a twin reactor project in South Carolina, but its sponsors may get a better deal in the commercial finance market.

The initial $17.5 billion was approved during the Bush administration, but President Obama has also embraced the idea of marrying nuclear power to solar, wind and “clean coal” to reach his administration’s goal of generating 80 percent of American electricity from those sources by 2035. Mr. Obama’s call for new loan guarantees came when the administration was seeking Republican votes in the Senate for a limit on carbon dioxide emissions, but he has stuck with the loan guarantees even after prospects for such legislation died after last fall’s midterm elections.

The Republicans, who won control of the House, have portrayed such regulatory legislation as an energy tax. A White House spokesman, Clark Stevens, said that in the president’s view, nuclear power would continue to be an important part of the “clean energy economy” he was seeking.

The Senate majority leader, Harry Reid, Democrat of Nevada, said on Wednesday that he favored more nuclear reactors and that loan guarantees were the only way to get them.

The idea was approved by the Republican Congress in 2005. Senator Lisa Murkowski of Alaska, now the ranking Republican on the Energy and Natural Resources Committee, has praised the Energy Department for issuing the first nuclear loan guarantee, for the Alvin W. Vogtle plant expansion, in Georgia. Senator Mitch McConnell of Kentucky, the Republican majority leader, supports loan guarantees as a step to build 100 new nuclear reactors.

One reason for all the financial support may be the way Congress does its accounting. The guarantees cost little or nothing to approve. “It’s not real money,” Mr. Wilmshurst said.

A federal loan guarantee is a little like a parent co-signing a child’s car loan; if the child makes the payments, the parent pays nothing. Under the 2005 law, borrowers pay a lump sum to the government to compensate the Treasury for the risk it is undertaking, and if the companies finish the projects and can pay back the loans, the government makes a profit.

The precise shape of new loan guarantees is uncertain, but when “scoring” the provisions for the purpose of calculating their expense, the White House says they cost nothing, and Congress assumes they cost 1 percent of the face value. But they are not without risk.

If the builders default, as happened on some nuclear construction projects in the 1980s, the taxpayer liabilities could run into the billions of dollars.

Officials at the Energy Department, which administers the loans, said they were confident that other developers would come forward and apply for the guarantees. Jonathan M. Silver, the executive director of the loan programs office, said, “There is a significant queue of nuclear power plants in house that we will and are working on.”

“They may just go forward under a different time frame,” he said, but he declined to estimate how many years it would be before the government could reach its goal of providing loan guarantees to six to eight reactor projects.

Mr. Silver said that by the time a reactor could be finished and brought on line, market factors might be more in the industry’s favor. “There are so many variables in this equation, taking a snapshot may be less relevant than watching the whole movie,” he said.

Duke Power, for example, has been seeking to build a twin reactor in South Carolina that would also serve North Carolina. Company executives said that to move forward, it would need approval to charge customers for some construction expenses before the plant is completed. The company is still trying to line up additional partners, and has not made a final decision to build, a spokesman said.

Entergy Corporation, of New Orleans, has applied to the Nuclear Regulatory Commission for permission to build reactors in two locations, but has not reached the point of applying for loan guarantees. It will build “in the event that we do decide that economics, load demand and other factors make new units favorable,” the company said.

“There’s not much else I’m aware of that’s really actively moving forward right now,” said Michael J. Wallace, a former Constellation executive who was the chief operating officer of its partnership with a French firm to build the Maryland project, the proposed Calvert Cliffs 3 reactor. With a carbon tax no longer appearing likely, he said a new kind of help, like a federal “clean energy” standard that would set a quota for nuclear and renewable electricity, might be needed.

Henry D. Sokolski, executive director of the Nonproliferation Policy Education Center, said he opposed government assistance for new reactors. He said that because the loan guarantees covered only 80 percent of the construction cost, project sponsors had to come up with the remaining 20 percent.

“Since the most likely candidates to pony up the 20 percent bailed out,” he said, “it doesn’t augur well.”

Article source: http://feeds.nytimes.com/click.phdo?i=98fd94e80f80e22793d0993fa6ae2801

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Despite Bipartisan Support, Nuclear Projects Falter

April 28, 2011 by Leave a Comment

Even supporters of the technology doubt that new projects will surface any time soon to replace those that have been all but abandoned.

“My gut feeling is that there is going to be a delay,” said Neil Wilmshurst, a vice president of the Electric Power Research Institute, a nonprofit utility consortium based in Palo Alto, Calif. News on Thursday that Exelon Corporation, the nation’s largest reactor operator, planned to buy a rival, the Constellation Energy Group, only reinforces the trend; until late last year, Constellation wanted to build, while Exelon was firmly against it.

Mr. Wilmshurst said the continued depressed price of natural gas had clouded the economics of new reactors, and he predicted that construction activity would “go quiet” for two to five years. His group has shifted its efforts to helping figure out how existing plants can extend their licenses to 80 years from the current limit of 60.

Of the four nuclear reactor construction projects that the Energy Department identified in 2009 as the most deserving for the loans, two have lost major partners and seem unlikely to recover soon. In addition to low prices for natural gas, the demand for electricity is down, and the March 11 earthquake and tsunami that damaged the Fukushima Daiichi nuclear power plant could bring new rules.

Only $8.8 billion of the 2005 guarantee has been allocated — to a twin reactor project in Georgia. Ground has been broken on the fourth candidate, a twin reactor project in South Carolina, but its sponsors may get a better deal in the commercial finance market.

The initial $17.5 billion was approved during the Bush administration, but President Obama has also embraced the idea of marrying nuclear power to solar, wind and “clean coal” to reach his administration’s goal of generating 80 percent of American electricity from those sources by 2035. Mr. Obama’s call for new loan guarantees came when the administration was seeking Republican votes in the Senate for a limit on carbon dioxide emissions, but he has stuck with the loan guarantees even after prospects for such legislation died after last fall’s midterm elections.

The Republicans, who won control of the House, have portrayed such regulatory legislation as an energy tax. A White House spokesman, Clark Stevens, said that in the president’s view, nuclear power would continue to be an important part of the “clean energy economy” he was seeking.

The Senate majority leader, Harry Reid, Democrat of Nevada, said on Wednesday that he favored more nuclear reactors and that loan guarantees were the only way to get them.

The idea was approved by the Republican Congress in 2005. Senator Lisa Murkowski of Alaska, now the ranking Republican on the Energy and Natural Resources Committee, has praised the Energy Department for issuing the first nuclear loan guarantee, for the Alvin W. Vogtle plant expansion, in Georgia. Senator Mitch McConnell of Kentucky, the Republican majority leader, supports loan guarantees as a step to build 100 new nuclear reactors.

One reason for all the financial support may be the way Congress does its accounting. The guarantees cost little or nothing to approve. “It’s not real money,” Mr. Wilmshurst said.

A federal loan guarantee is a little like a parent co-signing a child’s car loan; if the child makes the payments, the parent pays nothing. Under the 2005 law, borrowers pay a lump sum to the government to compensate the Treasury for the risk it is undertaking, and if the companies finish the projects and can pay back the loans, the government makes a profit.

The precise shape of new loan guarantees is uncertain, but when “scoring” the provisions for the purpose of calculating their expense, the White House says they cost nothing, and Congress assumes they cost 1 percent of the face value. But they are not without risk.

If the builders default, as happened on some nuclear construction projects in the 1980s, the taxpayer liabilities could run into the billions of dollars.

Officials at the Energy Department, which administers the loans, said they were confident that other developers would come forward and apply for the guarantees. Jonathan M. Silver, the executive director of the loan programs office, said, “There is a significant queue of nuclear power plants in house that we will and are working on.”

“They may just go forward under a different time frame,” he said, but he declined to estimate how many years it would be before the government could reach its goal of providing loan guarantees to six to eight reactor projects.

Mr. Silver said that by the time a reactor could be finished and brought on line, market factors might be more in the industry’s favor. “There are so many variables in this equation, taking a snapshot may be less relevant than watching the whole movie,” he said.

Duke Power, for example, has been seeking to build a twin reactor in South Carolina that would also serve North Carolina. Company executives said that to move forward, it would need approval to charge customers for some construction expenses before the plant is completed. The company is still trying to line up additional partners, and has not made a final decision to build, a spokesman said.

Entergy Corporation, of New Orleans, has applied to the Nuclear Regulatory Commission for permission to build reactors in two locations, but has not reached the point of applying for loan guarantees. It will build “in the event that we do decide that economics, load demand and other factors make new units favorable,” the company said.

“There’s not much else I’m aware of that’s really actively moving forward right now,” said Michael J. Wallace, a former Constellation executive who was the chief operating officer of its partnership with a French firm to build the Maryland project, the proposed Calvert Cliffs 3 reactor. With a carbon tax no longer appearing likely, he said a new kind of help, like a federal “clean energy” standard that would set a quota for nuclear and renewable electricity, might be needed.

Henry D. Sokolski, executive director of the Nonproliferation Policy Education Center, said he opposed government assistance for new reactors. He said that because the loan guarantees covered only 80 percent of the construction cost, project sponsors had to come up with the remaining 20 percent.

“Since the most likely candidates to pony up the 20 percent bailed out,” he said, “it doesn’t augur well.”

Article source: http://feeds.nytimes.com/click.phdo?i=98fd94e80f80e22793d0993fa6ae2801

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Miharu Journal: Japan’s Cherry Blossoms Bloom, but Nuclear Fears Keep Tourists Away

April 26, 2011 by Leave a Comment

The town, however, may not be as resilient. The hundreds of thousands of people who come here each cherry blossom season to view the prized tree, one of the three oldest in the country and a designated national monument, are largely staying away this year, scared off by the accident at the Fukushima Daiichi nuclear power plant, just 30 miles away.

“This tree has lived through many disasters,” said Masayoshi Hashimoto, 85, a local vegetable farmer whose produce has also been rendered largely unsalable by the radioactive plume. “It may survive the nuclear accident,” he said, “but the town may not.”

Sakura, or cherry blossom season, reaches its peak this week along the Tohoku coast, a region still reeling from the March 11 quake, tsunami and accident at the Fukushima Daiichi plant. Tohoku’s famous sakura trees usually draw hundreds of thousands of visitors, many from greater Tokyo, bringing precious tourist income to villages and towns that have little industry to speak of.

Even though many cherry trees in the disaster zone have survived, it will very likely take years to rebuild the tourism industry, officials warn. The troubles are many: severe damage to the tourism infrastructure, fears of heightened radiation levels in areas around Fukushima and an overall plunge in travelers in a country still shell-shocked by its worst disaster since World War II. JTB Corporation, Japan’s largest travel agency, said last week that it expected travel to fall 28 percent during a holiday period known as Golden Week, which starts this month.

Damage to tourism in the area adds to the woes of a local economy that has suffered severe blows: many fishing and farming communities were decimated in the tsunami, and many of the factories in the region are struggling to rebuild or restart production lines.

In Miharu, the weeping sakura has been an important source of income for an aging farming community. About 300,000 people descended on the town to view the 40-foot tree last year, spending generously at local inns and eateries, as well as on produce.

This year, the town expected the number of visitors to fall by about 80 percent. Though the town is not affected by the evacuation zone, which is now a 12-to-18-mile radius around the Fukushima plant, visitors “are playing it safe and staying away,” said Susumu Yamaguchi, a tourism official at Miharu’s town hall. “It’s a big blow for us,” he said.

In a bid to attract visitors, the town abolished its usual $3.60 viewing fee and went on a media offensive. “There won’t be any crowds this year, no traffic jam,” Miharu’s mayor, Yoshinori Suzuki, told a local paper last week.

Helped by sunny weather on Sunday, the tree attracted a larger-than-expected throng of visitors, though still far fewer than usual, according to officials.

Asuka Kimura, 29, a homemaker and mother of four from nearby Iwaki City, said that the thrill of an outing to see the cherry tree at Miharu had outweighed concerns over radiation. “I’ve had the kids play indoors for so long,” she said. “Today we’re spending the day outside, just for the day.”

The town has been desperate to protect its prized tree. Visitors were scarce during World War II, elders recall, but villagers still tended to the tree, preparing for the return to more peaceful times. Five years ago, when a blizzard threatened to overwhelm the tree, local farmers lovingly brushed off the snow and erected wooden supports to keep its branches from breaking.

They again raced to the tree after the devastating March 11 quake, which damaged some homes in the area. The tree remained intact and was far enough inland to escape the tsunami, but the bad news came the next day as the plant spewed radioactive steam toward the town. Local inns, which had been booked solid with reservations ahead of the sakura season, were inundated with cancellations.

Still, as the trees bloom, sometimes amid mountains of rubble, they have become symbols of resilience.

“These cherry trees blossom each year despite any catastrophe,” said Noriyuki Kasai, the mayor of Hirosaki, a city on the edge of the disaster zone, some 400 miles north of Tokyo. Though the city and its 2,600 cherry trees escaped the brunt of the damage, far fewer visitors are expected this season. “Like the trees, we will also recover,” he said.

Article source: http://www.nytimes.com/2011/04/26/world/asia/26blossom.html?partner=rss&emc=rss

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Japan Weighs Nationalizing a Stricken Utility

March 30, 2011 by Leave a Comment

TOKYO — Japanese lawmakers publicly debated nationalizing the Tokyo Electric Power Company on Tuesday, as there seemed no end in sight to the problems at the company’s crippled nuclear power plant.

The prime minister’s office said the government was not considering a takeover of Tokyo Electric “at the moment.” But the plunging stock price indicated investors were abandoning hope that the company could cope with the cost of its rebuilding and the potential liabilities from its nuclear disaster.

The share price plunged an additional 19 percent Tuesday with virtually no buyers, and trading was suspended by an automatic stop.

The closing price of 566 yen ($6.86) was the stock’s lowest close since at least 1974. The day before the March 11 earthquake, the shares closed at 2,153 yen (about $26). The stock collapse has already erased more than 2.5 trillion yen ($30.3 billion) in market value.

“There’s room for debate on the future of Tokyo Electric,” Koichiro Gemba, a member of the lower house of Parliament, said at a news conference. Mr. Gemba represents Fukushima Prefecture, home to Tokyo Electric’s damaged plant, Fukushima Daiichi. He is also the national strategy minister in the cabinet of Prime Minister Naoto Kan.

Mr. Gemba spoke not long after the country’s largest newspaper, Yomiuri Shimbun, cited unidentified people as saying the government was considering a plan to temporarily acquire a majority stake in the company, help it shoulder the liabilities that are likely to be incurred, and then eventually take it private again.

But fearing that a debate about the future of the company could create a divisive and costly distraction at a time of crisis, Mr. Kan and his chief spokesman, Yukio Edano, sought to tamp down the speculation.

“At the moment, the government is not considering” nationalization, Mr. Edano said Tuesday in a televised news conference. He added: “The first priority is the accident response. Then it needs to help those who’ve been affected.”

If the government were to acquire a majority stake, Tepco — as the company is known — would presumably issue new stock to the state, diluting existing shareholders.

The utility’s image has been hurt by the rolling blackouts it has imposed to cope with the loss of generating capacity after the earthquake and by the fact that its president, Masataka Shimizu, was not seen for several days after the quake. Tepco said Monday that Mr. Shimizu had been sick but has since returned to work.

Taxpayers outside the greater Tokyo area that the company serves are likely to balk at the cost of what could be seen as a bailout.

But with no end in sight to its nuclear problem, Tokyo Electric will have to lean on the state for support, analysts say.

“If you were the government, would you let it go bust?” said Paul J. Scalise, a former financial analyst who is writing a book on Japan’s electric power system. “I think the answer is no. The effect on the larger economy at a critical time would be too great.”

Estimates in the Japanese news media had already put the damage from the radiation leak to local homes, businesses and farms in the trillions of yen, even without knowing if anyone would suffer health damage. But it is impossible to calculate what the ultimate cost to the company will be. That is partly because the crisis appears to be far from over, and partly because it is not clear how much of the liability will actually be Tepco’s to bear.

Mr. Scalise said that under Japanese law governing compensation for nuclear damage, companies were liable for the cost of all nuclear accidents resulting from reactor operations except when the accidents were provoked by a “grave natural disaster of an exceptional nature or by an insurrection.” The company might plausibly seek to avoid liability altogether within that definition, he said.

Nicholas Benes, a former investment banker who is head of the Board Director Training Institute of Japan, an executive training group, said Tepco’s legal liability related to the Fukushima Daiichi plant would be covered by private and government insurance up to 120 billion yen, and even over that amount the government had wide latitude to provide financial assistance.

“I just don’t see the case for nationalization at this point,” Mr. Benes said. “Unless it’s for safety reasons — for example, if you think the company is utterly incapable of managing itself. But even then you’d have to assume that a bunch of nuclear engineers put together hodgepodge by the government would do a better job than the company’s own management. I don’t think the bureaucrats possibly believe that, or would want the responsibility.”

He and others said that Mr. Kan might also prefer to keep the company at arm’s length to avoid having it serve as a lightning rod for criticism of his administration.

Kazuma Ogino and Toshihiro Uomoto, credit analysts at Nomura Securities, suggested in a report that what was under discussion might best be described as “a virtual nationalization,” in which the state would provide the company “with the means of paying compensation on almost all fronts.”

If the state is going to end up paying most of the cost anyway, they wrote, “it would make more sense to temporarily nationalize Tepco” to “move ahead with the recovery work, rather than just paying compensation.”

The decline in the stock does not immediately endanger Tepco’s survival, although its cost of capital is tied to its share price. Tepco is in negotiations for loans of as much as 2 trillion yen ($24.25 billion), a person close to potential lenders said last week.

Article source: http://www.nytimes.com/2011/03/30/business/global/30tepco.html?partner=rss&emc=rss

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