Tepco Plunges by 19% Daily Limit Amid Speculation It Will Be Nationalized
Tokyo Electric Power Co. fell 19 percent after speculation the government is considering nationalizing the utility in the wake of its nuclear accident.
The stock slumped for fifth day, dropping by the maximum allowed to 566 yen by the market close in Tokyo. Tepco, as the utility is known, has plunged 74 percent since the March 11 earthquake and tsunami crippled its Fukushima Dai-Ichi nuclear power plant.
“It is possible that the government is discussing nationalization,” said Reiji Ogino, an analyst at Mitsubishi UFJ Morgan Stanley in Tokyo. “Tepco can’t take the initiative. The next steps will all be based on political decisions -- Tepco’s future, the amount of tax money to be spent, power supply in Tepco’s service areas, and compensation. These questions won’t be answered in terms of rational economics.”
Koichiro Gemba, Japan’s national strategy minister, told reporters today a government takeover of Tepco is something to be discussed. “Naturally, there will be a debate on how Tepco should exist or be,” he said. “Containing the situation is necessary more than anything else.”
Japanese Chief Cabinet Secretary Yukio Edano denied a report by the Yomiuri newspaper saying the government may buy a majority stake in Tepco so that the company can pay for damage related to the accident.
Prime Minister Naoto Kan said for the first time today that the Fukushima Dai-Ichi plant’s tsunami defenses were inadequate.
Tepco’s sea wall, designed to withstand a 5.5-meter (18- foot) wave, was breached by a surge estimated by the government to be almost three times higher following the magnitude-9 earthquake. Back-up diesel generators for cooling systems, which could have prevented the nuclear disaster, were positioned in a basement swamped by the wave.
To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Drew Gibson in Osaka at dgibson2@bloomberg.net
To contact the editor responsible for this story: Drew Gibson at dgibson2@bloomberg.net
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