Tokyo Electric Power Company Plans Major Cost Cuts
Tokyo—On Monday, Tokyo Electric Power Company (Tepco) announced its ambitious goal to save around 3.1 trillion yen, equivalent to about $20 billion, over the next decade, stretching to fiscal year 2034. This effort comes as part of a new and updated business strategy, which has received the green light from the government.
As part of this plan, Tepco is looking to raise approximately 200 billion yen in the next three years by selling off some of its assets. The company intends to pursue partnerships to support these reforms, aiming to find allies that can grow alongside it.
Tepco, known for operating the Fukushima Daiichi nuclear power plant, is still dealing with the repercussions of the 2011 nuclear disaster. The costs for decommissioning the plant, cleaning nearby areas, and providing compensation continue to rise, compelling the company to borrow funds from the government to cover these expenses.
Possible assets for sale may include shares in companies and real estate properties. Notably, reports have suggested the company might sell its stakes in Kandenko, a firm specializing in electrical equipment, in which Tepco holds a 46% ownership. However, Tepco has refrained from commenting on specific asset sales at this time.
In addition to its cost-cutting measures, Tepco also sees an opportunity in the growing demand for data centers in Tokyo. The utility plans to enhance its capabilities in this area by teaming up with specialists who can help secure suitable locations, as well as with manufacturers and construction firms.
Looking ahead, Tepco is targeting a recurring profit of 342 billion yen by fiscal 2034, a significant increase from the expected 135 billion yen in fiscal 2024. This projection is based on the anticipated restarts of two nuclear reactors at the Kashiwazaki-Kariwa power station, expected in fiscal years 2025 and 2029.
Tepco reviews its business plan every few years, requiring government endorsement, and this latest update marks the first major revision in over four years. Since fiscal 2012, the company has successfully reduced costs by 8 trillion yen and raised 1.1 trillion yen from asset sales.
