Tepco in furious debate over who will pay for Fukushima Daiichi plant accident

Tokyo Electric Power Co (Tepco), the Japanese power company, is currently involved in a heated debate over how much damages it is liable to
pay for the nuclear accident at the Fukushima Daiichi power plant.

The Japanese government has already ordered Tepco to pay the 48,000 families, who live within the 30km exclusion, approximately €12,000 each. This will be the start of a huge compensation bill. These events are expected to cause an increase in insurance premiums for Japanese utilities, which could affect the world insurance market.

Tepco is a huge company with over 38,000 employees and total assets of approximately €160bn. However, even a business of this size cannot afford all its incurred losses.

This leaves the Japanese government in a position where it has to intervene as Tepco is too integral to Japan’s electrical infrastructure to fail. Tepco has presented a formal written request to the Japanese government, asking for financial help to deal with the spiraling compensation costs.

Since the earthquake, many of the key infrastructure problems in Japan have been caused by disruptions in the power grid and the consequences that this has on the business supply chain.

Many Japanese businesses and international companies depend on component parts or goods manufactured in Japan. Businesses, investors and bankers now want to recoup some of their losses through utilities like Tepco.

The severe damage to infrastructure, especially the Fukushima accident, has impeded economic activity, leaving utility and insurance companies with a huge amount of liabilities.

As a direct result of events at the Fukushima plant, operations at the Hamaoka nuclear power station in central Japan will be suspended. The Hamaoka plant is deemed to be too dangerous due to the age of its reactors and the fact that it is located on two key subterranean fault lines.

The estimated overall economic losses for the Japanese earthquake are between $200-300bn. EQECAT has updated its previous estimate of the primary cost of the earthquake from $22 -39bn.

The debate that is currently raging in Japan's business and political circles is over who will settle the final bill.