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Japan’s Tepco facing uncertain future with surging fuel costs

Japan’s largest power utility Tokyo Electric Power Company, or Tepco, has fallen into sharp deficit for two consecutive years after suffering from nuclear accidents caused by the earthquake and tsunami on March 11, 2011.

Not only does Tepco have to pay a huge amount of compensation for damages caused by the accidents, but rising fuel costs have also harmed the company.

The company, which sells about one third of the electricity generated in the 120 million population country, carries out a vital role in supplying power to people.

But to ensure its survival — and eventual return to profitability — requires a huge injection of government funds and a drastic change in its structure of ownership. And in addition, in a move that is already meeting resistance, a significant increase in its electricity prices.

On May 14 this year, Tepco reported a net loss of Yen 781.6 billion ($9.8 billion) for fiscal 2011-12 (April-March), its second net loss in a row, though narrowing from the record Yen 1.247 trillion loss recorded the previous year. Revenues declined 0.4% year on year to Yen 5.349 trillion because of lower electricity sales. 

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