TOKYO (Reuters) ? Tokyo Electric Power Co got the green light on Friday to receive $11.5 billion in its first installment of taxpayer funds to assist with compensating victims of the Fukushima nuclear crisis, while it forecast another huge loss for the year to March 2012.
The bailout money will help Tokyo Electric, also known as Tepco, to avert a funding shortfall as compensation payments start in earnest after the March 11 earthquake and tsunami triggered the world's worst nuclear crisis since Chernobyl.
With its ability to survive as a private company still in doubt, Tepco forecast a net loss of 600 billion yen ($7.7 billion) for the current financial year, exceeding an average forecast of 408 billion yen from five analysts.
The result follows last year's 1.25 trillion yen net loss, Japan's biggest ever for a non-financial company, and brings the utility's total Fukushima-related losses so far to around 1.9 trillion yen.
Tepco also unveiled an initial cost-cutting plan, which was a precondition for getting the funds for compensation, that aims to slash costs by 2.55 trillion yen over the next 10 years and cut 7,400 jobs by March 2014.
Trade Minister Yukio Edano stressed the government's expectations of bold moves by the utility, which faces public anger over the massive taxpayer bailout despite criticism that the company did not take adequate safety measures at the Fukushima plant and mishandled its response to the crisis.
"I urge Tepco and the bailout fund to implement sincere compensation and thorough restructuring, taking into account that they are borrowing a massive amount of money from Japanese citizens," Edano told reporters.
The utility still has to come up with a more comprehensive plan by next spring that will also tackle the thorny issue of hikes in electricity fees.
Tokyo Electric President Toshio Nishizawa told Edano that the company would compile a new plan to clean up the crippled Fukushima plant after it is brought to a cold shut down, which the company hopes to achieve by the end of this year.
The company also said separately on Friday that possible naturally occurring nuclear fission in one of the damaged reactors would not delay its cleanup plan.
Xenon, a substance produced as a byproduct of nuclear fission, was detected from Daiichi's No. 2 reactor earlier this week.
While Tepco initially said isolated criticality, or a nuclear chain reaction, could have taken place, it later played down the discovery, saying the xenon likely came from a phenomenon known as spontaneous fission in which an atom's nucleus splits naturally and does not cause a nuclear chain reaction.
($1 = 77.980 Japanese Yen)
(Additional reporting by Shinichi Saoshiro and Kentaro Hamada; Editing by Edwina Gibbs and Edmund Klamann)
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