Wednesday, May 16, 2012

Power Woes Continue for Japan

Still ailing from the 2011 earthquake and tsunami,Japan may face rolling blackouts this summer,according to Penn Bowers,Asia-Pac Power Company Analyst at Credit Agricole.The severity of them is the big question.If they are unable to distinguish among big electricity users such as hospitals,there could be a big backlash. Power companies have been eating the costs of the disaster,cutting dividends in the process.Dominant utility TEPCO,the Tokyo Electric Power Company,has been taken over by the Japanese government,which is giving it a one trillion yen bailout to deal with its crippled nuclear plants. If Japan's 50 nuclear power plants don't restart,there will be a lot of pressure on the government to reduce the cost burden of alternative fuels such as gas and oil,Mr.Bowers predicted.TEPCO is actively seeking a permanent solution to its generation shortfall,engaging in talks for a 4.4 billion dollar stake in a Chevron Australia liquified natural gas project called Wheatstone.TEPCO has asked multinational conglomerate Mitsubishi Corporation and shipping company Nippon Yusen KK to participate in the deal,fearful that China will come in with a higher bid for the Wheatstone LNG field stake. Chevron(CVX),iShares MSCI Japan Index Fund(EWJ)

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