TEPCO must regain public trust to ensure Fukushima’s steady recovery — The Yomiuri Shimbun

” To ensure the steady recovery of Fukushima, Tokyo Electric Power Company Holdings, Inc.’s revised business plan must not be allowed to end up as pie in the sky.

TEPCO has compiled a new business plan. The utility has strengthened its steps to improve profitability to raise funds for costs including decommissioning reactors and compensation related to the March 2011 accident at its Fukushima No. 1 nuclear power plant. This is the second time the plan has been revised.

The total cost of cleaning up the nuclear accident has ballooned from ¥11 trillion to ¥21.5 trillion. TEPCO will shoulder ¥16 trillion of this amount over about 30 years. The ¥300 billion TEPCO spent in fiscal 2016 on compensation and reactor decommissioning costs will be increased to ¥500 billion annually.

TEPCO must boost its “earning power” to secure sufficient capital to meet those costs. Restarting reactors at TEPCO’s Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture will be essential for this. Each reactor brought back online will raise TEPCO’s earnings by ¥40 billion to ¥90 billion per year.

TEPCO is working to gradually restart all seven reactors at the Kashiwazaki-Kariwa plant from fiscal 2019. However, as things stand, high hurdles remain in its way. This is because even if a reactor passes safety screenings conducted by the Nuclear Regulation Authority, local government authorities also must agree to the reactors’ restart.

The recent revelation that TEPCO did not disclose data about the insufficient earthquake-resistance of the main quake-resistant building at the plant has further heightened local distrust of the utility. Niigata Gov. Ryuichi Yoneyama is not budging from his cautious stance because he believes safety measures at the plant are insufficient. “At the moment, I can’t agree to the restart” of the reactors, Yoneyama said.

An expert panel of the Economy, Trade and Industry Ministry also had some stinging criticism for TEPCO, saying it “has not earned enough trust from the public.”

Transparency vital

On June 23, TEPCO will switch to a new leadership lineup when Hitachi, Ltd. Honorary Chairman Takashi Kawamura becomes TEPCO’s chairman. Kawamura will need to work hard to regain trust in TEPCO so restarting its reactors can become a reality.

Strengthening cooperation with other electric utilities and launching new operations, such as gas retailing, also will be effective in solidifying TEPCO’s revenue base. Another issue that needs to be addressed is the overseas development of its thermal power business, in which TEPCO is pursuing integration with Chubu Electric Power Co.

The new plan stipulates TEPCO will “prepare a basic framework for cooperation with other companies” by around fiscal 2020, keeping in mind the Higashidori nuclear plant TEPCO is constructing in Aomori Prefecture.

TEPCO is considering working with Tohoku Electric Power Co., which has a nuclear power plant in that region. If this tie-up comes to fruition, it will be useful for establishing a stable supply of electricity. TEPCO’s intentions on this issue are understandable.

Other utilities that could become partners with TEPCO during a realignment in the industry hold deep-rooted concerns that cooperating with TEPCO could result in the costs of dealing with the nuclear accident being shunted on to them. TEPCO must lay the groundwork to dispel such concerns.

TEPCO and the government will, as soon as this autumn, establish a forum at which they can listen to the opinions of other electric utilities on steps to reorganize nuclear power and electricity transmission businesses.

Profits will be distributed based on the capital contribution ratio in a joint venture. Other companies should not be forced to shoulder the costs of the Fukushima nuclear accident. Highly transparent rules such as these will need to be drawn up. ”

by The Yomiuri Shimbun

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Nuclear taxes get new lease on life after Fukushima — Nikkei Asian Review

” OSAKA — Japanese prefectures with nuclear power plants are moving to ensure that utilities continue to shoulder a tax burden on reactors even as they are being decommissioned, dramatically raising the cost of cleanup efforts that can last 30 to 40 years.

Five nuclear reactors have been approved for decommissioning since the 2011 meltdowns at Tokyo Electric Power Co. Holdings’ Fukushima Daiichi plant. In each case, the host prefectural government has received approval from the ministry of internal affairs to apply a nuclear tax during decommissioning.

Ehime Prefecture in western Japan, home to Shikoku Electric Power’s Ikata nuclear power plant, has decided to change its ordinances by the fall to enable it to collect taxes on the plant’s No. 1 reactor. Shikoku Electric decided last May to decommission the reactor and has applied to the Nuclear Regulation Authority for approval.

The continued stream of tax revenue will help the Ehime government maintain evacuation routes and other facilities and safety measures until the reactor is fully dismantled and nuclear contamination risks eliminated.

Revenue generator

Of the 13 prefectures that host reactors, only Fukushima does not levy a nuclear fuel tax. Prior to the disaster, most prefectures did not collect these taxes during periods when reactors were shut down for periodic inspections or other reasons. The handful of reactors marked for decommissioning before the disaster have not had their taxes extended.

However, prolonged nuclear power plant shutdowns since Fukushima have prompted local governments to tax reactors based on output capacity even when they are idle to try to wring revenue out of idle units. The moves to extend taxes into decommissioning mark a further step.

Ehime Prefecture’s nuclear fuel tax generated 1.46 billion yen ($13.1 million) in revenues to the government in fiscal 2016, 264 million yen of which came from the inactive No. 1 unit at the Ikata power plant. The government seeks to collect at least half of the full amount during decommissioning.

Fukui Prefecture, home to three reactors approved for decommissioning, expects to collect an annual 370 million yen in revenues from its revised nuclear tax, which comes to half of the standard level.

With the country’s nuclear regulator imposing an in-principle 40-year operating limit on reactors, decommissionings are expected to continue at a pace of one to two units a year. The costs of taking a reactor out of service and rendering the site safe are generally estimated at tens of billions of yen. The tax burden could add up to billions of yen per reactor over the course of decommissioning.

“While the taxes may have benefits for communities, if electric rates go up as utilities’ costs rise, residents will also feel the burden,” said Tatsujiro Suzuki, an authority on nuclear energy policy at Nagasaki University. ”

by Nikkei Asian Review

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Fukushima Bill — Asia Times

” Six years after Japan’s Fukushima nuclear accident three global nuclear corporations are fighting for their very survival.

The bankruptcy filing by Westinghouse Electric Co. and its parent company Toshiba Corp. preparing to post losses of ¥1 trillion (US$9 billion), is a defining moment in the global decline of the nuclear power industry.

However, whereas the final financial meltdown of Westinghouse and Toshiba will likely be measured in a few tens of billions of dollars, those losses are but a fraction of what Tokyo Electric Power Co. (Tepco) is looking at as a result of the Fukushima nuclear disaster.

If the latest estimates for the cost of cleaning up the Fukushima plant prove accurate, Tepco faces the equivalent of a Toshiba meltdown every year until 2087.

In November 2016, the Japanese Government announced a revised estimate for the Fukushima nuclear accident (decommissioning, decontamination, waste management and compensation) of ¥21.5 trillion (US$193 billion) – a doubling of their estimate in 2013.

But the credibility of the government’s numbers have been questioned all along, given that the actual ‘decommissioning’ of the Fukushima plant and its three melted reactors is entering into an engineering unknown.

This questioning was borne out by the November doubling of cost estimates after only several years into the accident, when there is every prospect Tepco will be cleaning up Fukushima well into next century.

And sure enough, a new assessment published in early March from the Japan Institute for Economic Research, estimates that total costs for decommissioning, decontamination and compensation as a result of the Fukushima atomic disaster could range between ¥50-70 trillion (US$449-628 billion).

Rather than admit that the Fukushima accident is effectively the end of Tepco as a nuclear generating company, the outline of a restructuring plan was announced last week.

Tepco Holdings, the entity established to manage the destroyed nuclear site, and the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF) are seeking ways to sustain the utility in the years ahead, confronted as they are with escalating Fukushima costs and electricity market reform.

The NDF, originally established by the Government in 2011 to oversee compensation payments and to secure electricity supply, had its scope broadened in 2014 to oversee decommissioning of the Fukushima Daiichi plant on the Pacific Ocean coast north of Tokyo.

The latest restructuring plan is intended to find a way forward for Tepco by securing a future for its nuclear, transmission and distribution businesses. If possible in combination with other energy companies in Japan.

But the plan, already received less than warmly by other utilities rightly concerned at being burdened with Tepco’s liabilities, is premised on Fukushima cost estimates of ¥21.5 trillion — not ¥50-70 trillion.

To date Tepco’s Fukushima costs have been covered by interest-free government loans, with ¥6 trillion (US$57 billion) already paid out. Since 2012 Tepco’s electricity ratepayers have paid ¥2.4 trillion to cover nuclear-related costs, including the Fukushima accident site.

That is nothing compared to the costs looming over future decades and beyond and it comes at a time when Tepco and other electric utilities are under commercial pressure as never before.

The commercial pressure comes from electricity market reform that since April 2016 allowed consumers to switch from the monopoly utilities to independent power providers.

Prior to the deregulation of the retail electricity market, Tepco had 22 million customers. As the Tepco president observed late last year “The number (of customers leaving Tepco) is changing every day as the liberalization continues … We will of course need to think of ways to counter that competition.”

Countering that competition shouldn’t mean rigging the market, yet Tepco and the other utilities intend to try and retain their decades long dominance of electricity by retaining control over access to the grid. This is a concerted push back against the growth of renewable energy.

Current plans to open the grid to competition in 2020, so called legal unbundling, are essential to wrest control from the big utilities.

The message of unbundling and independence, however, doesn’t seem to have reached the Ministry of Economy, Trade and Industry (METI) that oversees the electricity industry.

Current plans would allow Tepco to establish separate legal entities: Tepco Fuel & Power (thermal power generation), Tepco Energy Partner (power distribution) and Tepco Power Grid (power transmission).

Tepco Holdings will retain their stock and control their management, meaning the same monopoly will retain control of the grid. Where Tepco leads, the other nine electric utilities are aiming to follow.

Leaving the grid effectively still under the control of the traditional utilities will throw up a major obstacle to large scale expansion of renewable energy sources from new companies.

Such businesses will be ‘curtailed’ or stopped from supplying electricity to the grid when the large utilities decide it’s necessary, justified for example to maintain the stability of the grid.

The fact that ‘curtailment’ will be permitted in many regions without financial compensation piles further pain onto new entrants to the electricity market, and by extension consumers.

Further, METI plans to spread the escalating costs of Fukushima so that other utilities and new power companies pay a proportion of compensation costs. METI’s justification for charging customers of new energy companies is that they benefited from nuclear power before the market opened up.

The need to find someone else to pay for Tepco’s mess is underscored by the breakdown of the Fukushima disaster cost estimate in November.

When put at ¥22 trillion estimate, ¥16 trillion is supposed to be covered by Tepco. The Ministry of Finance is to offer ¥2 trillion for decontamination, and the remaining ¥4 trillion is to be provided by other power companies and new electricity providers.

The question is how does Tepco cover its share of the costs when it’s losing customers and its only remaining nuclear plant in Japan, Kashiwazaki Kariwa (the worlds largest), has no prospect of restarting operation due to local opposition?

What happens when Fukushima costs rise to the levels projected of ¥50-70 trillion?

The policy measures being put in place by Tepco, other utilities and the government suggests that they know what is coming and their solution for paying for the world’s most costly industrial accident will be sticking both hands into the public purse. ”

by Shaun Burnie, Asia Times

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Japan’s power industry at crossroads as Fukushima decommissioning costs rise – The Mainichi

” The Economy, Trade and Industry Ministry’s plan to add the increased costs of decommissioning the tsunami-hit Fukushima No. 1 Nuclear Power Plant was scrapped before the end of the year due to a public backlash.

It is estimated that the costs of decommissioning the crippled power station would snowball from 2 trillion yen to 8 trillion yen. An internal document that the ministry had compiled by September last year stated that the costs of compensation payments as well as the decommissioning expenses should be added to power transmission fees that new power companies pay for the use of major utilities’ power grids.

If the decommissioning costs that are expected to increase by trillions of yen were regarded as TEPCO’s debts, the utility would fall into a state of capital deficit — in which the company’s debts surpass its assets. It could force TEPCO to delist its stock on stock markets and make it difficult for banks to continue loaning to the firm.

To avoid such a situation, the Economy, Trade and Industry Ministry has decided to change the accounting rules to allow TEPCO to book the decommissioning costs in separate years. To do so, however, it is necessary to guarantee that the costs can be recovered from TEPCO every year. Two plans surfaced to enable this.

One is to accumulate money to be saved through TEPCO’s cost-cutting measures and management reform at the Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NFD), which would control the decommissioning costs. The other is to add part of the decommissioning costs to transmission fees.

In October, a senior ministry official told LDP legislators behind closed doors, “It’s safer to add the costs to the transmission fees than relying on TEPCO’s management reform.”

However, experts as well as the general public intensified their criticism of the plan to add decommissioning expenses to the transmission fees despite the earlier plan to make sure that TEPCO fully secured funds for decommissioning the plant.

In response, the ministry changed its policy. In a Nov. 8 document that the ministry released when briefing LDP members, it stated the two plans as ways to certainly secure enough funds for decommissioning the plant. However, in its Dec. 1 document, the plan to add the costs to transmission fees was dropped.

“We considered the use of transmission fees but we can’t implement it because of mounting criticism of the plan,” said a ministry official in charge of the matter.

On the other hand, major power suppliers besides TEPCO have footed the costs of paying compensation to those affected by the Fukushima nuclear crisis. An expert committee dealing with the matter proposed at the end of the year that the increase in the amount of compensation payments should be raised by adding the amount to transmissions fees.

Saying that power companies that own nuclear plants should have saved money to respond to nuclear accidents, the panel recommended that new power companies should shoulder part of the costs because their customers had previously benefited from nuclear power run by major utilities.

The committee also proposed that major power suppliers be obligated to supply less expensive electricity, such as power generated at nuclear plants, to new power companies. In other words, the panel attempted to take the carrot-and-stick approach to convince new market entrants.

In response to the recommendations, the Economy, Trade and Industry Ministry will implement the proposals after soliciting public comments. As a result of the implementation of the plan, the monthly electric power bill for a standard household in Japan, excluding Okinawa Prefecture where there are no nuclear plants, would rise an average of 18 yen over a 40-year period from 2020.

The ministry patiently and carefully formed consensus among legislators over the plan. The committee’s conclusion was based on its explanatory document that the panel presented to the LDP shortly before.

House of Representatives member Taro Kono and a few other LDP legislators calling for an end to Japan’s reliance on atomic power voiced opposition, but they fell far short of a majority.

Minako Oishi, an adviser on consumer affairs who sits at the experts’ panel, repeatedly voiced opposition to adding compensation costs to transmission fees on the grounds that it would run counter to the purpose of liberalizing the power market. She also released a written statement to that effect. However, she was unable to overwhelm the firm alliance between politicians and bureaucrats.

“I have the impression that the conclusion had been drawn in advance. Such a serious matter as the additional financial burden of dealing with the Fukushima accident should’ve been discussed at the Diet,” Oishi said.

On Dec. 20, 2016, the ministry’s expert committee compiled its recommendations estimating that TEPCO needs to shoulder 16 trillion yen of the cost of dealing with the Fukushima nuclear crisis. The recommendations urged TEPCO to merge each of its divisions, including nuclear power and power transmission, with those of other companies — effectively leading to a split of the utility — and advance into the global market.

On the same day, a message by TEPCO President Naomi Hirose was released through the company’s in-house computer network. “If we steadily continue our work without hesitation, we can open up new opportunities. This is something that only TEPCO can do,” the message said.

However, the message reflects Hirose’s anxiety. Hirose told TEPCO executives the following day at the headquarters, “I’m worried whether employees can maintain their morale. Please try not to make them feel weak.”

TEPCO failed to achieve its goal of getting out of state control as early as fiscal 2017 by improving its business performance — because there are no prospects that its idled Kashiwazaki-Kariwa Nuclear Power Plant in Niigata Prefecture can be reactivated in the foreseeable future.

TEPCO Director Keita Nishiyama sat at the news conference on July 28 with Chairman Fumio Sudo and President Hirose, and read a statement saying that “the government needs to clarify its policy” on how to shoulder the costs of dealing with the nuclear crisis, which is expected to worsen. Nishiyama is a bureaucrat that the ministry loaned to TEPCO as a board member after placing the utility under state control.

His tough statement indirectly asks the government for assistance. A TEPCO executive said, “It’s not a type of statement written by a private company insider.”

At the news conference, the ministry suggested that it would take the opportunity of discussions on how to shoulder the costs of dealing with the Fukushima nuclear crisis to embark on its long-cherished goal of restructuring the electric power and atomic energy industries.

About two months later, the ministry set up two expert panels — one on TEPCO reform and the other on the reform of the electric power system.

“In Japan, the demand for power has stagnated. In particular, regulations on the atomic energy business are stiff. Therefore, the power industry is a declining industry. There’s no time to lose in promoting business tie-ups and overseas expansion. Discussions shouldn’t be limited to TEPCO reform,” said a ministry official.

However, some TEPCO officials have expressed displeasure at the move. “Infrastructure companies like us are different from manufacturers. It’s important to ensure stable power supply. It’s not true that we should just increase our profits,” one of them said.

At the same time, executives of other major power companies reacted coolly to TEPCO.

“We don’t know how much of the costs of dealing with the Fukushima accident we’ll be required to shoulder,” one of them said.

“TEPCO’s arrogance that stood out in the industry is still fresh in our memory,” another commented.

The ministry and the expert panel on TEPCO reform share the view that TEPCO needs to carry out the largest-scale reforms since Yasuzaemon Matsunaga, the “king of the power industry” who established major power companies’ regional monopolies in order to ensure stable power supply.

However, Japanese semiconductor and liquid crystal manufacturers and other companies that were integrated on the initiative of the Economy, Trade and Industry Ministry have not grown as the ministry had aimed.

As such, it remains to be seen whether TEPCO will join hands with other power companies and gain entry into the global market as the ministry envisages. “

by The Mainichi

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Britain and Japan sign nuclear energy cooperation agreement — The Telegraph

” Britain and Japan have signed an agreement that significantly expands cooperation in the nuclear energy sector and paves the way for Japanese companies to construct nuclear plants in the UK.

It also covers cooperation in the areas of decommissioning and decontamination and it is anticipated that the deal will give British companies with advanced technologies greater access to projects at the Fukushima Daiichi nuclear plant, where three of the six reactors suffered melt-downs after the March 2011 earthquake and tsunami disaster.

The memorandum of understanding was signed in Tokyo on Thursday by Hiroshige Seko, the Japanese trade and industry minister, and Greg Clark, the business and energy secretary.

The agreement is the first of its kind for Japan, while Mr Clark described it as “vital” to the UK’s industrial strategy and the development of clean energy sources.

One of the key components of the agreement is the proposals by Hitachi and Toshiba to build new reactors in Britain.

Horizon Nuclear Power, bought by Hitachi from a German company in 2012, has delivered the outline of a project at Wylfa Newydd in Wales, and has plans to build as many as six reactors in the UK. Toshiba joint venture NuGeneration is planning a nuclear plant in Cumbria and is considering additional projects.

Speaking in Tokyo last week, Philip Hammond, the Chancellor, said: “The technology is proven and well-known. Hitachi and Toshiba have the technology. The challenge really is financing, not a technical or commercial challenge.”

The two governments are to review investment and lending for Horizon through the Japan Bank for International Cooperation and the Development Bank of Japan. Financing of the project from the Japanese side is expected to reach Y1 trillion (£7 billion).

Japan is particularly keen for the projects to go ahead after its previous attempt to export nuclear energy technology, to Vietnam, fell through.

Japan and Britain will also collaborate on nuclear research and development, as well as security.

The deal on nuclear energy with Japan has progressed smoothly, in contrast to the problems the £18 billion Hinkley Point C project encountered earlier in the year.

That scheme is a joint venture between EDF, which is 85 per cent owned by the French state, and China General Nuclear Power Corp. It was put on hold in July, over concerns about China’s involvement, before subsequently being given the go-ahead.

by Julian Ryall

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Fukushima’s ¥8 trillion cleanup leaves foreign firms in the cold — The Japan Times

” Cleaning up the Fukushima nuclear plant — a task predicted to cost 86 times the amount earmarked for decommissioning Japan’s first commercial reactor — is the mother of all salvage jobs. Still, foreign firms with decades of experience are seeing little of the spoils.

Safely dismantling the Japanese power plant, wrecked by the 2011 earthquake and tsunami, will cost about ¥8 trillion ($70 billion), the Ministry of Economy, Trade and Industry said on Dec. 9, quadrupling the previous estimate. While a contract to help clean up the facility would be a windfall for any firm with specialized technology, the lion’s share of the work has gone to local companies that designed and built most of Japan’s atomic infrastructure.

The bidding process for Fukushima contracts should be more open to foreigners, as Japan has never finished decommissioning a commercial nuclear plant, let alone one that experienced a triple meltdown, according to Lake Barrett, an independent adviser at Japan’s International Research Institute for Nuclear Decommissioning. While the Fukushima cleanup is unlike any nuclear disaster in history, foreign firms that have experience decommissioning regular facilities could provide much-needed support, according to Barrett, and even the plant’s operator, Tokyo Electric Power Co. Holdings Inc.

‘Cultural Resistance’

“Internationally, there is a lot more decontamination and decommissioning knowledge than you have in Japan,” Barrett, a former official at the U.S. Nuclear Regulatory Commission, said in an interview in Tokyo. “I hope the Japanese contracting system improves to get this job done safely. There is this cultural resistance — it is almost like there is an isolated nuclear village still.”

An opaque bidding process plays to the heart of criticisms put forward by independent investigators, who said in a 2012 report that collusion between the government, regulators and the plant’s operator contributed to the scale of the disaster.

Of 44 subsidized projects publicly awarded by the trade and economy ministry since 2014, about 80 percent went to the International Research Institute for Nuclear Decommissioning. The group, known as IRID, was established in the wake of the Fukushima disaster and is comprised entirely of Japanese corporations, according to the ministry’s website.

Japan’s trade and industry ministry awarded funds directly to only two foreign firms during the same period. Many of the contracts had only one or two bidders.

Of about 70 contracts awarded since the March 2011 disaster, nine have gone to foreign companies, according to an official in the ministry’s Agency of Natural Resources and Energy who asked not be named, citing internal policy.

To provide opportunities for foreign companies, the ministry has created an English website for bids and also provides English information sessions to explain the contracts, the official said.

Toshiba, Hitachi

IRID’s contracts are given to its members, including Toshiba Corp., Hitachi Ltd. and Mitsubishi Heavy Industries Ltd., which have partnerships and joint ventures with foreign firms, spokesman Yoshio Haruyama said by phone. While it doesn’t directly contract work to companies overseas, IRID taps foreign experts as advisers and participates in international collaborative projects, he said.

Mitsubishi Heavy has about five or six contracts through IRID, but can’t share how many partnerships it has with foreign firms, spokesman Shimon Ikeya said by phone. Hitachi has sub-contracts with foreign suppliers related to the Fukushima cleanup, but can’t provide details about these agreements because they aren’t public, a spokesperson said by email.

As of March, IRID had about ¥30 billion worth of ongoing contracts primarily related to research and development of fuel removal and waste treatment. IRID, which aims to “gather knowledge and ideas from around the world” for the purpose of nuclear decommissioning, doesn’t disclose how much of their money ultimately goes to foreign businesses, according to its spokesman. Barrett, its adviser, said he thinks it’s “very low,” but should ideally be 5 percent to 10 percent.

‘Nuclear Village’

Japan’s biggest nuclear disaster isn’t void of foreign technology. Toshiba, which owns Pennsylvania-based Westinghouse Electric Co., and Hitachi, which has a joint venture with General Electric Co., are tapping American expertise. A giant crane and pulley system supplied by Toshiba to remove spent fuel from the wrecked reactors employs technology developed by Westinghouse.

“We bring in knowledge from foreign companies, organizations and specialists in order to safely decommission the reactors,” Tatsuhiro Yamagishi, spokesman for Tepco, said by email. While the company can’t say the exact number of foreign firms involved in the Fukushima cleanup, companies including Paris-based Areva SA, California-based Kurion Inc. and Massachusetts-based Endeavor Robotics are engaged in work at the site, according to Yamagishi.

For foreign firms, however, independently securing contracts is still a tall order.

“When it comes to Japan’s nuclear industry, the bidding system is completely unclear,” Hiroaki Koide, a former assistant professor at Kyoto University Research Reactor Institute, said in an email. “The system is designed to strengthen the profits of Japan’s nuclear village,” he added, referring to the alliance of pro-nuclear politicians, bureaucrats and power companies that promote reactors.

Tepco’s annual cost to decommission its Fukushima plant may blow out to several hundred billion yen a year, up from the current estimate of ¥80 billion, the trade and industry ministry said in October. As of June, almost ¥1 trillion has been allocated for decommissioning and treating water at Fukushima, according to Tepco’s Yamagishi.

‘Ripe for Corruption’

With that much money at stake, Japan has become ground zero for a plethora of companies looking to benefit from the cleanup work. The structure of Japan’s nuclear industry and the closed procurement preferred by the utilities that operate atomic plants means that the most lucrative opportunities for foreign companies are in the area of subcontracting, according to a report by the EU-Japan Centre for Industrial Cooperation released in March.

“Foreign firms have long argued that the Japanese bidding process is one that is ripe for corruption due to a lack of openness and transparency,” Daniel Aldrich, professor and director of the security and resilience studies program at Northeastern University in Boston, said in an email. For nuclear decommissioning “there is even less clarity and transparency due to security and proliferation concerns,” he said.

Rigging Bids

The Japan Fair Trade Commission raided the offices of five companies last year in relation to rigged bids for maintenance contracts from Tepco, according to Jiji Press. Eleven road-paving companies were fined in September on projects to repair roads following the March 2011 earthquake and tsunami, Jiji reported.

Andrew DeWit, a political economy professor at Rikkyo University in Tokyo, agrees that the contract-awarding process isn’t transparent. A lot of foreign companies seek Japanese partners to better their chances, he said.

Purolite Corp., a closely held water purifying company, spent millions of dollars developing and testing a system that could be used to treat radioactive water at Fukushima. Pennsylvania-based Purolite partnered with Hitachi to help win a contract to use its technology at the wrecked facility.

Those plans didn’t pan out. Purolite is suing Hitachi in New York and Tokyo, alleging that Hitachi is using its technology at Fukushima in breach of agreements made in 2011, shutting it out of more than $1 billion in contracts, according to court documents filed in September.

Hitachi doesn’t comment on ongoing legal matters, a spokesperson said by email.

“With a smaller pool of competitors, firms can expand their profit margins,” said Northeastern University’s Aldrich. “There are French and Russian firms that have the technical expertise to participate in nuclear decommissioning processes, but it is unclear if they will be able to compete on a level playing field with Japanese firms, which have far more experience with Japanese regulations and expectations.” ”

by Stephen Stapczynski, Bloomberg

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