--Tepco president says it will be impossible to restart Kashiwazaki reactors soon
--Tepco still aims to return to profit in fiscal year beginning April 1
--Tepco doesn't rule out another rate hike, but won't ask for another government cash injection
TOKYO--The president of Tokyo Electric Power Co. (9501.TO) acknowledged Monday it would be impossible to restart reactors at the Kashiwazaki-Kariwa nuclear power plant anytime soon, putting a major hole in the company's financial plan. But he pledged the company would return to profitability over the next year.
"If we don't get back in the black, we would no longer exist as we are," Tepco President Naomi Hirose told reporters. "We will use all possible means to achieve that."
In the summer of 2012, Tepco--owner of the stricken Fukushima Daiichi nuclear power plant--announced a plan to streamline operations in exchange for government approval of a rate hike and an injection of public money to remain afloat.
The plan assumed one of Tepco's seven reactors at the Kashiwazaki-Kariwa plant in northwestern Niigata prefecture would restart this month, followed by the other six over 17 months.
At that time, Mr. Hirose said it would be impossible for the company to meet its goal of returning to profitability this fiscal year, which began Monday, without restarting the Kashiwazaki-Kariwa reactors.
Mr. Hirose said Monday the company won't seek additional government funds. It has received 2 trillion yen ($21 billion) to date to pay compensation to those affected by the Fukushima accident, in addition to a Y1 trillion capital injection last summer.
But he left the door open to a possible rate increase--something that would be an extra drag on the corporate sector just as it tries to come out of the 2012 recession.
He offered no specific reason for ruling out restarts at Kashiwazaki for now. Since the Fukushima accident, Japan's utilities have kept most reactors offline after shutting down for regular maintenance due to public concerns over safety. Only two of Japan's 50 reactors are currently operating.
Japan's Nuclear Regulation Authority has been compiling new safety guidelines that factor in lessons from the Fukushima accident. The guidelines will take effect in July, with decisions on the safety of individual reactors to follow. The process is expected to take at least six months after the new guidelines are in place.
Idling the reactors has been costly for the company. The expensive assets are bringing in no revenue while the electricity they once supplied must now be generated by conventional power stations using imported fossil fuel.
Imports of liquefied natural gas surged in the aftermath of the Fukushima accident, both in volume and value terms. Last year, the country imported 87 million metric tons of LNG, up 11% from the year before. With the yen's decline, the cost was about Y6 trillion, 25% higher than a year earlier. Tepco's LNG demand was roughly a quarter of Japan's total, according to data from the government and Tepco.
But financial analysts didn't seem concerned about the extra costs.
"The issue at Kashiwazaki isn't worsening sentiment in the market," said Yasunobu Katsuki, chief credit analyst at Mizuho Securities. The bond market isn't expecting Tepco to return to profitability anytime soon, but thinks the government will take a "realistic approach" to keeping it intact, he added.
Mr. Hirose justified his new stance by saying the business environment is changing constantly and the company needs to be flexible. He didn't offer any concrete examples of what it would do now to end its losses.
Tepco expects to post a group net loss of Y120 billion in the fiscal year ended March 31. In the previous two financial years, the company posted net losses of Y781.6 billion and Y1.247 trillion, respectively.
--Kosaku Narioka contributed to this article.
Write to Mari Iwata at mari.iwata@dowjones.com
--Tepco still aims to return to profit in fiscal year beginning April 1
--Tepco doesn't rule out another rate hike, but won't ask for another government cash injection
TOKYO--The president of Tokyo Electric Power Co. (9501.TO) acknowledged Monday it would be impossible to restart reactors at the Kashiwazaki-Kariwa nuclear power plant anytime soon, putting a major hole in the company's financial plan. But he pledged the company would return to profitability over the next year.
"If we don't get back in the black, we would no longer exist as we are," Tepco President Naomi Hirose told reporters. "We will use all possible means to achieve that."
In the summer of 2012, Tepco--owner of the stricken Fukushima Daiichi nuclear power plant--announced a plan to streamline operations in exchange for government approval of a rate hike and an injection of public money to remain afloat.
The plan assumed one of Tepco's seven reactors at the Kashiwazaki-Kariwa plant in northwestern Niigata prefecture would restart this month, followed by the other six over 17 months.
At that time, Mr. Hirose said it would be impossible for the company to meet its goal of returning to profitability this fiscal year, which began Monday, without restarting the Kashiwazaki-Kariwa reactors.
Mr. Hirose said Monday the company won't seek additional government funds. It has received 2 trillion yen ($21 billion) to date to pay compensation to those affected by the Fukushima accident, in addition to a Y1 trillion capital injection last summer.
But he left the door open to a possible rate increase--something that would be an extra drag on the corporate sector just as it tries to come out of the 2012 recession.
He offered no specific reason for ruling out restarts at Kashiwazaki for now. Since the Fukushima accident, Japan's utilities have kept most reactors offline after shutting down for regular maintenance due to public concerns over safety. Only two of Japan's 50 reactors are currently operating.
Japan's Nuclear Regulation Authority has been compiling new safety guidelines that factor in lessons from the Fukushima accident. The guidelines will take effect in July, with decisions on the safety of individual reactors to follow. The process is expected to take at least six months after the new guidelines are in place.
Idling the reactors has been costly for the company. The expensive assets are bringing in no revenue while the electricity they once supplied must now be generated by conventional power stations using imported fossil fuel.
Imports of liquefied natural gas surged in the aftermath of the Fukushima accident, both in volume and value terms. Last year, the country imported 87 million metric tons of LNG, up 11% from the year before. With the yen's decline, the cost was about Y6 trillion, 25% higher than a year earlier. Tepco's LNG demand was roughly a quarter of Japan's total, according to data from the government and Tepco.
But financial analysts didn't seem concerned about the extra costs.
"The issue at Kashiwazaki isn't worsening sentiment in the market," said Yasunobu Katsuki, chief credit analyst at Mizuho Securities. The bond market isn't expecting Tepco to return to profitability anytime soon, but thinks the government will take a "realistic approach" to keeping it intact, he added.
Mr. Hirose justified his new stance by saying the business environment is changing constantly and the company needs to be flexible. He didn't offer any concrete examples of what it would do now to end its losses.
Tepco expects to post a group net loss of Y120 billion in the fiscal year ended March 31. In the previous two financial years, the company posted net losses of Y781.6 billion and Y1.247 trillion, respectively.
--Kosaku Narioka contributed to this article.
Write to Mari Iwata at mari.iwata@dowjones.com
