According to the new estimate, compensation payments will increase to 8 trillion yen from 5.4 trillion yen and decontamination costs will double at around 5 trillion yen from 2.5 trillion yen. Several additional trillion yen will be needed for decommissioning the reactors and dealing with radioactive water at the plant on top of the earlier estimate of 2 trillion yen, the sources said.

The ministry has been discussing reforming the crisis-hit Tokyo Electric Power Company Holdings Incorporated at meetings of a panel and is set to formulate a support plan for TEPCO within the year, based on the new estimate.

Combined with the cost of building interim radioactive waste storage facilities, foreseen to remain at 1.1 trillion yen, the total cost is forecast to surpass 20 trillion yen, according to the sources.

The government is studying the possibility of expanding a 9-trillion-yen interest-free loan program for TEPCO that was set up through issuing government bonds to cover compensation payments and decontamination in the areas hit by the nuclear disaster. It is expected to take up to 30 years to recover the 9 trillion yen through payments from TEPCO and other big utilities.

The government also plans to recover the expected increase in compensation payments and decontamination expenses by raising charges for the transmission line usage for new electricity retailers. TEPCO needs to secure funds on its own in principle for decommissioning the plant. The government will manage the funds, which will be established using profits to be generated by TEPCO.

However, it is not clear if TEPCO alone can shoulder all the cost of decommissioning.