The Japanese government may establish a state-owned insurance fund to facilitate the compensation payouts for Tokyo Electric Power (TEPCO), expected to arise from the recent incidents at Fukushima Daiichi nuclear plant.
The proposal is aimed at protecting the Tokyo Electric Power from the financial loss it expects from massive compensation bill, which the Tokyo Electric will repay over several years through dividend payouts, according to the Reuters, citing the Nikkei newspaper.
The utility Tokyo Electric has not yet estimated the compensation costs from the March 11 earthquake and tsunami.
The Bank of America-Merrill Lynch has estimated that the compensation bill for the TEPCO could reach up to $130bn, if the crisis continues to unfold, while the JP Morgan estimates the $24b for the utility in its current financial year.
According to the news agency report, the government would create an insurance fund, with the funds raised from government-guaranteed loans via private bank as well as through premiums from other electric companies with nuclear reactors.
The initial layout of the compensation payments, from the ‘to be formed insurance fund’, are expected to recouped through dividend payments spread out over several years from Tokyo Electric on preferred shares to be newly issued to the fund.