Jan. 30 (Bloomberg) -- Tokyo Electric Power Co., forced to shut the world's biggest nuclear plant after an earthquake, predicted a record loss for the year ending March because of higher costs for oil and natural gas.

Asia's biggest utility expects a net loss of 155 billion yen ($1.5 billion) in the year ending March 31, compared with the 95 billion yen loss it forecast in October, the company said in a statement today. The forecast loss, the first in 28 years, is the biggest since the utility started announcing consolidated earnings in the year starting April 1, 1994.

Tokyo Electric's stock has slumped 27 percent since last year's costliest global disaster on concern that higher fuel oil and natural gas costs will erode earnings. The utility on Oct. 31 said it will spend 164 billion yen to repair the station, which has been shut indefinitely after the July 16 quake.

``Fuel costs are leaping far more than we expected,'' Managing Director Masaru Takei told reporters Tokyo today. ``Spikes in oil prices force us to pay more for liquefied natural gas as well. Sellers are taking a tough stance to increase their fuel prices.''

The power producer posted a net loss of 3.1 billion yen for the nine months ended Dec. 31, compared with net income of 255 billion yen a year earlier. Sales rose 2.4 percent to 3.97 trillion yen, it said today.

For the full year, it left its sales outlook unchanged at 5.47 trillion yen. It had a 298 billion yen profit in the previous year. Tokyo Electric dropped 1.4 percent to 2,770 yen at today's close.

Higher LNG Prices

The utility restarted decommissioned thermal power plants to make up for the decline in nuclear generation. The Kashiwazaki Kariwa station has the capacity to generate 8,212 megawatts, or about 10 percent of the company's total output.

The company will spend an additional 90 billion yen on LNG, crude and fuel oil purchases this fiscal year because of increases in prices and volumes, Takei said. Of the total, 40 billion yen is due to a ``revision'' of LNG prices, he said.

``LNG is still cheaper compared with crude, but we will need to accept some hikes in gas prices,'' Takei said. ``Because of oil prices spikes, sellers are insisting on raises.''

Tokyo Electric estimates it will buy 19.6 million metric tons of LNG this fiscal year, up from a planned 17.5 million tons, he said. It expects to purchase 1.95 million tons from the spot market, of which 1.47 million has been secured, Takei said.

Fuel Costs

Tokyo Electric agreed to pay Nippon Oil Corp., Japan's biggest refiner, a record 71,220 yen a kiloliter ($627 a metric ton) for low-sulfur fuel oil in the three months to March 31, according to documents obtained by Bloomberg News. That's 5.8 percent more than in the pervious quarter.

It plans to double consumption of crude and fuel oil to 10.4 million kiloliters, of which about 1 million kiloliters may be purchased from the spot market, Takei said. Tokyo Electric bought 620,000 kiloliters from the spot market in the nine months ended Dec. 31.

Japan's LNG import bill rose 9.9 percent in 2007 to 47,006 yen a metric ton, according to data compiled by the finance ministry. The country paid record prices in November for the chilled gas from Australia, Brunei, Malaysia and Indonesia as crude oil benchmarks jumped to records.

Crude oil in New York rose 57 percent last year and reached a record $100.09 a barrel this month.

President Katsumata and 47 other executives had their pay cut in October, the second reduction in the year that began April 1. In March, 16 executives faced cuts after the utility admitted to hiding accidents and fabricating safety records at its nuclear stations.

Plant Inspection

The International Atomic Energy Agency on Jan. 28 began its second inspection of the Kashiwazaki Kariwa plant. The United Nations nuclear safety watchdog first visited the plant in August and said the earthquake damage was ``less than expected.''

The quake in Niigata prefecture, measured at magnitude 6.8 by Japan's meteorological agency, caused about 3,000 cases of ``improper incidents'' at the nuclear facility, according to Tokyo Electric.

The utility said Jan. 29 it had completed inspections at four reactors at the plant. As of Oct. 18, cases found by the company included that of a control rod being jammed in the reactor's core. This didn't affect the plant's safety, it said then.

The Niigata earthquake was the most costly global disaster of 2007, Japan's Asahi newspaper said Jan. 21, citing a report from a UN agency.

The tremblor caused $12.5 billion in economic losses, mostly due to the closure of Tokyo Electric's nuclear station, according to the Jan. 18 report from the International Strategy for Disaster Reduction, the newspaper said.

Japan operates 55 reactors, which generate about a third of the country's electricity. The government aims to increase the share of atomic power to more than 40 percent of total output.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net; Shigeru Sato in Tokyo at Ssato10@bloomberg.net.

Last Updated: January 30, 2008 04:56 EST