Japan's TEPCO to post huge loss

The operator of Japan's crippled Fukushima nuclear plant, Tokyo Electric Power Company (TEPCO), was expected to announce more than $6.5 billion in quarterly losses Tuesday, media reports said. The utility faces massive compensation payouts to tens of thousands of people who had to flee their homes and saw their livelihoods destroyed by the world's worst nuclear disaster since Chernobyl 25 years ago. TEPCO, long one of the world's biggest power companies, has also suffered large shortfalls in electricity output as the reactors at Fukushima Daiichi and other plants have stayed offline since the March 11 disaster. When the company reports earnings for the April-June quarter at 0600 GMT, it is expected to book an extraordinary loss of about 500 billion yen ($6.5 billion), the Nikkei financial daily and other reports said. The group net loss for the quarter would be above 500 billion yen, the Nikkei said, while Kyodo News reported that the net loss for the three-month period will reach 600 billion yen ($7.7 billion). The Nikkei said TEPCO's electricity sales volume fell more than 10 percent from the same quarter last year, while fuel costs rose as it has had to run more thermal power plants to make up for the offline reactors. The initial impact of the disaster hit TEPCO in the previous quarter, when it reported a 1.24 trillion yen net loss for the fiscal year to March, the biggest ever for a Japanese non-financial company. TEPCO shares -- which have plunged more than 80 percent since the start of the crisis -- were down 11.56 percent at 344 yen by the lunch break Tuesday. The nuclear disaster started when a magnitude-9.0 seabed quake and a massive tsunami hit the six-reactor plant almost five months ago, knocking out cooling systems and sparking meltdowns and a series of explosions. The plant has since leaked radiation into the air, ground and sea, forcing the evacuation of more than 85,000 people from a 20-kilometre (12-mile) zone around the plant and more from radiation hotspots further afield. The disaster has contaminated regional farm produce including green vegetables, dairy products, fish, mushrooms and green tea. Beef shipments have been banned after cattle were found to have eaten contaminated rice straw. The company will have to make provisions for as much compensation as it can estimate at this point, including payouts for mental distress caused to people who have had to flee their homes, the Nikkei said. Japan's parliament last week passed a law to create a state-backed entity that would pool funds from TEPCO and other nuclear power companies as well as the government to guarantee that compensation can be paid out.