According to Bloomberg, the company expects the closure of the world’s largest nuclear plant to impact its 2007 profit by 79%. In April 2007, Tokyo Electric Power Company (Tepco) said that it expected to see net income of JPY310 billion, but has reduced this outlook to just JYP65 billion as a result of the nuclear plant shutdown.
Tepco is reported to have said that the closing of the plant, which according to the BBC provides 3% of Japan’s energy needs, will mean that is has to find alternative sources of power generation. The industry is speculating that this will involve burning oil and gas, which are much more expensive than nuclear generation, as well as the acquisition of other nuclear power sources and the use of hydroelectric power.
According to Reuters, Tepco has estimated that the plant’s closure would raise procurement costs by JPY400 billion this year alone. The BBC has reported that the plant’s closure, followed by the company’s bleak outlook, have caused Tepco’s stock to fall approximately 15% since the earthquake.
There seems to be no imminent solution to Tepco’s problems as, according to media releases, the plant could well remain closed indefinitely. According to the BBC, the Japanese government has ordered that the facility be kept shut until it is proven that it can meet safety requirements.
Meanwhile, Reuters has reported that the closure could last for a minimum of eight months. The publication also cited Standard & Poor analyst Hiroki Shibata as saying: This downward revision is for a plant closure of just eight to nine months…If the shutdown continues for a year, two years or three years, the impact would be huge.
