Market News

 September 20, 2013
TEPCO delayed tackling radioactive water in 2011 due to bankruptcy fears

 Tokyo Electric Power Co. put off dealing with radiation-contaminated water at its crippled nuclear power plant more than two years ago because it feared the cost of fixing the problem could bankrupt the utility.

While TEPCO has grudgingly admitted it was concerned about facing bankruptcy, two lawmakers have told The Asahi Shimbun that the utility feared it would go under if it went ahead with the project.

The decision taken at the time apparently led to a delay in dealing with the radioactive water issue that has now reached crisis proportions.

The two Democratic Party of Japan lawmakers were closely involved in dealing with the disaster at the Fukushima No. 1 nuclear power plant triggered by the 2011 Great East Japan Earthquake and tsunami.

One of them is Banri Kaieda, who became DPJ president in 2012. At the time he served as minister of economy, trade and industry and was in charge of nuclear energy policy. The other lawmaker was Sumio Mabuchi who served as special adviser to Naoto Kan, who was then prime minister. Mabuchi was in charge of dealing with the nuclear accident. He said he became aware early on that steps had to be taken to deal with radiation-contaminated water.

In May 2011, just two months after the nuclear disaster unfolded, TEPCO realized that groundwater was becoming contaminated after flowing into reactor buildings. To prevent the contaminated water from leaking outside of the buildings, Mabuchi put together a report that called for constructing an impermeable steel wall sunk into the ground surrounding the structures.

However, TEPCO the following month came up with an estimate that 100 billion yen ($1 billion) would be needed to do that.

According to the lawmakers, a top TEPCO executive around that time said, "If we included the 100 billion yen construction cost as a liability, the market would consider us a company in danger of bankruptcy."

He also noted that the company was to hold a shareholders' meeting at the end of the month.

The executive asked Kaieda to be vague at a news conference about when construction on the impermeable wall would start or how much it would cost.

The DPJ government was taking the position that TEPCO bore full responsibility for the nuclear accident and it did not make a decision to inject public funds for the poject.

However, Kaieda eventually concluded that if TEPCO went bankrupt it would delay payment of compensation to evacuees. He was also concerned about the payment of salaries to workers at the nuclear plant site.

He told TEPCO he would announce at a news conference that construction of the wall would be a medium- to long-term objective that would be seriously considered only from the following year.

Mabuchi said he accepted Kaieda's decision because of a verbal pledge made by Sakae Muto, then a TEPCO executive vice president, that work on the wall would proceed without delay.

A group of plaintiffs who had been seeking criminal responsibility on the part of former TEPCO executives publicized an internal company document that said: "There is a big possibility that the market would hand down the appraisal that we were heading in the direction of excess liabilities. That is something that we must definitely avoid."

TEPCO officials have also admitted to the compilation of that document.

A TEPCO official said on Sept. 17: "The reason construction was not started did not pertain to costs, but because it was unclear whether it was feasible due to the many technical issues that arose related to the impermeable wall. There were concerns about including costs for such a project as a liability."