TEPCO warns more cuts needed to stay afloat

Tokyo Electric Power said on Monday it must cut $1.1 billion more in annual costs to stay afloat as the operator of the crippled Fukushima nuclear plant faces huge compensation and clean-up costs. The sprawling utility, known as TEPCO, made the comments in a business operations report, with the extra cuts of 100 billion yen coming on top of plans to shrink its expenses by 3.36-trillion-yen through to 2021. "We will carry out these cost reductions to ensure our survival and strengthen our financial position," the company said in a statement. In a bid to reach its goal, TEPCO said it had overhauled the organisation of its business and would review procurement as fuel costs soar after Japan shut down its nuclear reactors in the wake of the atomic crisis two years ago. TEPCO is facing crippling costs for decommissioning the shattered plant and compensating thousands of residents who fled in the area wake of the worst nuclear accident in a generation. The company, which expects to book a loss of 120 billion yen in the fiscal year that ended March 31, said Monday it still expects to return to the black this business year. In November, the company doubled estimates of its Fukushima-related costs to 10 trillion yen, which is equal to about two percent of Japan's gross domestic product. The utility -- one of the world's biggest -- received one trillion yen of public cash last year in exchange for granting the government a controlling stake. The money was on top of previous grants and loans. It was intended to prevent TEPCO, which generates and supplies electricity to millions of people, including in and around Tokyo, from going under. The devastating tsunami of March 2011 swamped cooling systems at the Fukushima plant, sending reactors into meltdown and spewing radiation over a large area. The clean-up is expected to take decades, with scientists warning that some settlements may have to be abandoned. TEPCO has admitted it had played down known tsunami risks for fear of the political, financial and reputational cost.