The Japanese government is set to take a majority stake in Tokyo Electric <9501.T> in return for injecting about 1 trillion yen ($12.4 billion) in public funds, the Asahi newspaper reported on Friday, in what would be a political victory for the trade minister in his battle to reform the once all-powerful utility.
Trade Minister Yukio Edano, who oversees energy policy, and the operator of the tsunami-struck Fukushima nuclear plant have been fighting over how much say the government will have in the utility's management in exchange for what would be one of the world's biggest bailouts outside the banking sector.
The government is seeking to take about 51 percent of voting rights in Tokyo Electric Power Co (Tepco) to implement reform in the powerful but troubled utility that is saddled with trillions of yen in compensation costs, the Asahi reported, citing sources close to the government and the ruling Democratic Party.
In addition to that, the government will also obtain convertible non-voting shares which, if all are converted, will give the government more than a two-thirds stake in the utility, the Asahi reported.
Japanese law defines that shareholders with a majority of voting rights can decide board members, while those with two-thirds can decide on major management issues including mergers. A share of more than one-third carries veto power.
Tepco could not be reached immediately for comment on the report.
This shows that the government is serious, said Takehiko Yamamoto, a professor at Waseda University in Tokyo.
Through injecting public funds and obtaining voting rights, the government aims to handle issues that Tepco on its own cannot, as well as improve the utility's corporate governance.
Tepco has said it wants to keep its autonomy as a private firm, while Edano has been demanding a controlling stake that would match the huge amount of taxpayer's money likely to be injected.
Tepco is set to submit to Edano in March a business plan in which it is expected to outline how it aims to rebuild the company as well as ask for a public fund injection to keep the company afloat and supply power to some 45 million people.
($1 = 80.9800 Japanese yen)
(Reporting by Miki Kayaoka and Yoko Kubota; Editing by Edwina Gibbs and Muralikumar Anantharaman)