Japan plans to announce a government-backed plan to ensure that the operator of a radiation-leaking nuclear plant fulfills its obligation to compensate tens of thousands of people affected by the crisis, officials said Wednesday.
Tokyo Electric Power Co., which operates the Fukushima Dai-ichi plant, said earlier Wednesday that it has agreed to drastic restructuring, cost-cutting and other conditions in exchange for government support in the compensation scheme.
TEPCO also promised to allow a government-appointed panel to evaluate its financial status and progress in providing compensation, according to an official in the Cabinet Office.
Chief Cabinet Secretary Yukio Edano welcomed TEPCO's response.
"Now we are on the starting line to get the compensation process going," Edano told a news conference.
The government plans to create a new fund with mandatory contributions from electric utilities, including TEPCO, in case the total compensation exceeds TEPCO's financial capacity. The government could also add public money if needed. TEPCO would be required to repay any money it uses from the fund, which would continue to operate and be available for any future accidents among its contributors.
TEPCO has sought a 2 trillion yen ($24.8 billion) loan to tide it through the initial emergency period. It also expects to pay 50 billion yen ($620 million) in initial compensation to nearly 80,000 residents evacuated from around the plant, which was hit by a giant tsunami after Japan's massive March 11 earthquake. Overall damages are expected to be much higher.
TEPCO can also receive up to 120 billion yen ($1.5 billion) in insurance from the government under an existing nuclear accident compensation law.
The government is finalizing the new compensation scheme and key members of Prime Minister Naoto Kan's Cabinet were set to approve the plan Thursday. It still must be made into a bill and be approved by parliament before taking effect.
Economy and trade minister Banri Kaieda denied Wednesday that TEPCO would be nationalized, and said the government plan is not designed to relieve the utility's burden or shoulder its liability.
"The scheme is not designed to rescue TEPCO, but to save the people affected by the nuclear accident," Kaieda told a news conference. "There are a large number of people who are entitled to receive compensation."
TEPCO has already announced pay cuts of up to 50 percent for its executives and 20 percent for lower-level employees.
The company has been struggling for two months to bring the crippled nuclear plant under control. On Wednesday, it detected a small new leak of radioactive water from an area near the Unit 3 reactor building into the sea, TEPCO spokesman Junichi Matsumoto said.
The source of the water was not immediately known, but it is suspected to be coming from the basement of the turbine building where radioactive water leaking from the reactor has been pooling for weeks.
Operators have been struggling with the need to inject enough water into the reactor cores to cool them while limiting the amount of contaminated water spilling out of them. Highly radioactive water inside the Unit 2 reactor building has disrupted work, and a leakage into the ocean in April caused widespread concern.
TEPCO is setting up a water processing system to remove and recycle contaminated water.