TOKYO: There are some who would consign the Tokyo utility embroiled in Japan's worst-ever nuclear plant disaster to the corporate graveyard. Its share price has collapsed by 80 percent, it may take a year or more to regain control of leaking nuclear reactors, and compensation claims could run to an eye-watering $120 billion. Yet Tokyo Electric Power Co. will probably survive and the company, which is better known as TEPCO, might even go on to prosper. There are plenty of precedents of companies emerging from major disasters — even if self-inflicted. Just think back a year to the Gulf of Mexico oil spill, which ranks as one of the world's biggest environmental calamities. The share price of the culprit, BP PLC, has largely recovered since the April 20, 2010 explosion, which spilled more than 200 million gallons of crude oil in the four months it took to cap the burst Deepwater Horizon well a mile (1.6 kilometers) beneath the sea. Despite an estimated $40.9 billion in costs from the disaster, the energy giant is forging ahead with new ventures and seeking to explore again in the Gulf of Mexico, after a moratorium on deep-water drilling was lifted in October. Right now, TEPCO's path to recovery looks somewhat less certain but analysts say it holds cards that make it likely the government will do what's necessary to keep it alfoat — even if in a new guise. For one, it's the main source of power for the Tokyo region — home to 30 million people and a heartland of Japanese manufacturing. “Government support will be forthcoming because TEPCO is really too big to fail,” said Thomas Grieder, analyst for Asia-Pacific energy at IHS Global Insight. That's not to say the utility won't end up paying in some form for the radiation leaks and other disruptions from its Fukushima Dai-ichi nuclear plant that was wrecked by the March 11 tsunami that walloped northeastern Japan, killing about 25,000 people. “For TEPCO, this is obviously going to have a very long lasting financial impact, and also hurt its reputation as a leading electricity generator,” Grieder said. Investors dumped 1.06 trillion yen ($12.8 billion) of its shares last month, though its share price has recovered slightly since. TEPCO has sought a 2 trillion yen ($24.2 billion) loan to help tide it through the initial emergency. Last week, it said it expects to pay 50 billion yen ($600 million) in an initial round of compensation to the nearly 80,000 residents who were evacuated from near the plant due to radiation leaks. Investment bank Merrill Lynch estimated TEPCO could face compensation claims of 2.4 trillion to 3 trillion yen ($29.1 billion-$36.4) if it takes six months to regain control of the nuclear reactors _ the best-case scenario under the company's plan for ending the crisis. That could rise to 10 trillion yen ($120 billion) if it takes two years. The company faces many billions of dollars more in costs in the years it will take to clean up and close down the plant. TEPCO has laid out a blueprint for getting Fukushima Dai-ichi's overheating, radiation leaking reactors into a cold shutdown within six to nine months, but regulators say prospects are uncertain. The company will likely seek limits on its liability based on Japan's 1961 Act on Compensation for Nuclear Damage. It exempts plant operators from paying compensation for accidents caused by a “grave natural disaster of an exceptional character or by an insurrection.” Unlike BP, TEPCO has few overseas assets it can sell to raise cash, and its leeway for raising already high electricity rates is constrained. The company has said it is considering job cuts and other moves to reduce costs, but has given no details. “Everything hinges on the law,” said Paul Scalise, an expert on Japan's power industry and research fellow at Temple University in Japan. “TEPCO will go bankrupt otherwise.”
