(Bloomberg) -- Cleaning up the March 2011 Fukushima nuclear disaster, the world’s worst atomic accident since Chernobyl, will cost almost twice as much as originally expected as decommissioning expenses increase, according to Japan government estimates.
Total costs will rise to 21.5 trillion yen ($188 billion), up from a previous estimate of 11 trillion yen, Japan’s Ministry of Economy, Trade and Industry said in a statement given to reporters in Tokyo on Friday. The cost of decommissioning the reactors will increase fourfold to about 8 trillion yen, while compensation payments will rise to 7.9 trillion yen.
Tokyo Electric Power Co. Holdings Inc., operator of the stricken atomic plant, will be responsible for 15.9 trillion yen of the cleanup, the ministry said. The shares of Tepco, as the utility is better known, fell as much as 4.7 percent in Tokyo after the release and closed 3 percent down at 521 yen.
“It feels like the market is fully pricing in the fact that Fukushima costs are doubling, despite it coming as no surprise that these costs would be increasing,” said Andrew Jackson, head of Japanese equities at Religare Capital Markets in Singapore. “It also had a huge move over the last few days of about 20 percent on the Japan government raising their credit line to the company, so I’m not surprised to see some profit taking.”
The new estimates underscore the complexity of the challenges at Fukushima after an unprecedented triple meltdown more than five years ago. Tepco continues to struggle to manage hundreds of tons of radiation-contaminated water pouring into the facility daily. In the years ahead, the utility also faces the task of removing the melted fuel in the reactor buildings using technology still to be invented.
“We have never experienced a disaster as big as Fukushima. So with our limited knowledge, it was very difficult to make the previous forecast,” METI Chief Hiroshige Seko told reporters on Friday. “But as the situation became clearer, we decided it was necessary to secure more funding.”
As part of the new estimates, Japan’s government will increase its credit line to Tepco to 13.5 trillion yen, up from 9 trillion yen. The shares had rallied earlier this week after Kyodo News reported that it could be expanded to as much as 14 trillion yen.
A METI panel suggested on Monday that the nation’s new power retailers assist in paying for costs related to Fukushima. More than 300 companies have registered to sell electricity in Japan’s recently liberalized power market.
In order to support new power retailers, METI proposed that the nation’s regional utilities supply new entrants with electricity produced from coal-fired facilities and nuclear plants, the cheapest form of power generation.
Tepco will be strapped with clean-up costs rising to several hundred billion yen annually from the current 80 billion yen, Japan’s industry ministry said in October. Water management and reactor stabilization alone will cost more than 1 trillion yen in the 10-year period ending March 2025, Tepco said earlier this year.