Tepco, crippled Fukushima plant's operator, admits wasting public funds

Internal probe reveals overpayments by Tepco amid continuing financial struggle after disaster

PUBLISHED : Friday, 10 January, 2014, 10:36pm
UPDATED : Friday, 10 January, 2014, 10:36pm


The operator of Japan's crippled Fukushima nuclear plant has paid way over the odds to contractors, a company spokesman said yesterday, and vowed to boost cost controls at the taxpayer-subsidised firm.

An internal probe looking at how contracts worth 1 trillion yen (HK$74 billion) were awarded has found the company routinely paid a lot more than the going rate because prices were inflated by layers of subcontractors.

The revelation comes as the Japanese government prepares to nearly double its financial support for the cash-strapped utility as part of efforts to speed up the removal of contamination in residential areas around the plant and to process compensation payments for victims.

The in-house panel found the Tokyo Electric Power Co (Tepco) agreed to pay 21 million yen for construction work linked to a nuclear power plant, but the work could have been done for about half that, the spokesman confirmed.

In another instance, Tepco was paying a contractor 49,000 yen in daily wages for one worker, but it would have paid only 12,000 yen if it had employed the man directly. "We've been making cost reduction efforts with the panel, and we will further cut costs," the spokesman said.

The ramping up of costs is the result of farming out work to contractors, who themselves subcontract, sometimes having hired retired Tepco officials, the Asahi Shimbun, which first reported the case, said.

The revelation will be a further embarrassment to bosses at the firm, which has earned a reputation for inefficiency and ineptitude since the tsunami of March 2011 sent reactors at Fukushima into meltdown. Japanese taxpayers were forced in 2012 to stump up billions of US dollars to keep the giant utility afloat as it struggled with the enormous costs of decommissioning the reactors, cleaning up the mess they have made and paying compensation to people who lost their homes to the disaster.

The government last month approved a further US$1 billion to pay for facilities to store radioactive waste. Under a restructuring plan submitted at the end of last year, Tepco said it wants to cut costs by 3.365 trillion yen between the 2012 and 2021 financial years through measures that would include a greater use of competitive bidding in procurement.

Critics say Japan's utilities, which have near-monopolies on the production and distribution of power, have little financial savvy because they have never faced competition and are accustomed to being able to pass on costs.

They add that taxpayers repeatedly find themselves on the hook because of fears that if Tepco went under, it could deal a huge blow to the viability of some of its lenders, which would have knock-on effects in other parts of the economy.

Tepco and Japan have yet to figure out the exact cost of compensating tens of thousands of people who fled their homes and livelihoods to avoid radiation.