Japan pledges $473 million to contain Fukushima leak

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Government officials and nuclear experts inspect a facility to prevent seeping of contamination water into the sea at TEPCO's Fukushima Dai-ichi nuclear plant.

Japan's government has agreed to spend nearly half a billion dollars to contain a radioactive leak at the Fukushima Daiichi power plant, in an attempt to avert what industry watchers have described as a looming nuclear crisis.

Chief Cabinet Secretary Yoshihide Suga said Tuesday a total of 47 billion yen ($473 million) will be set aside, including 21 billion yen in emergency reserve funds from this year's budget.

(Read more: Fukushima nuclear leak 'can get a lot worse')

He said the money will be used to build a wall of ice by freezing the earth around tanks at the plant, which are reported to be leaking contaminated water, and to improve treatment systems meant to drastically reduce radiation levels in the water.

The measures come as frustration builds over the inability of operator Tokyo Electric Power Company (TEPCO) to resolve the crisis. The Fukushima plant was crippled by the devastating tsunami more than two years ago, and TEPCO said over the weekend that radiation near a tank holding the toxic water has spiked 18-fold.

"As a Japan resident, it's simply appalling. Nationalize it [TEPCO], get rid of the layers of useless TEPCO management. They have proven over multiple years that they are not capable of dealing with this. Let's make this a government problem with government resources and have the right people come in and fix this," said Ed Rogers, CEO & CIO of Rogers Investment Advisors on CNBC's "Cash Flow."

(Read more: Is nuclear disaster looming in Japan?)

"The government needs to step in and fix it so they can get onto the important business of Abenomics and renovating corporate Japan. We have to get to the third arrow and TEPCO is standing in the way of that. Fukushima is a solvable problem but I don't know if TEPCO has the right people to solve it," Rogers added.

Shares of TEPCO closed up 3.3 percent following the announcement. The stock has surged 160 percent since the start of 2013 amid speculation that some of its nuclear reactors may be re-started.

Nuclear power has been embraced by Prime Minister Shinzo Abe as a key component of Japan's energy policy and Tuesday's move may bolster hopes of finally getting the nation's nuclear plants back in business.

(Watch now: How Japan really feels about nuclear power)

"Now that Abe has his ruling coalition in power, there is a possibility that they are able to turn on a few nuclear power plants and that would help overall energy costs. Since about April 1, energy costs in Japan have gone up around 13-15 percent on average, and that's a big hit," said Christopher Redl, portfolio manager at Gordian Capital.

— Reuters contributed to this report.

— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC