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Earthquake Is Likely to Slash Profits of Japan's TEPCO

The earthquake-induced shutdown of a nuclear plant in northwest Japan last week could cost operators Tokyo Electric Power (TEPCO) some 200 billion yen (US$1.65 billion), the Nikkei financial daily reports.

The magnitude 6.8 quake that killed 10 people in Niigata also damaged the Kashiwazaki-Kariwa nuclear plant, the world's largest, and the facility has been closed indefinitely.

If TEPCO is unable to restart the reactors by the end of the fiscal year in March, the costs could mount to about 200 billion yen, which is half the utility's forecast pre-tax profit, the paper said.

Prospects for restarting the plant soon are dim. The quake sparked low-level radiation leaks and a fire, prompting local government to order that the facility remain closed until safety could be ensured.

TEPCO says the utilization rate for its nuclear reactors will be around 40% for the three months through September, the paper said.

If that level continues into the autumn, the annual operating rate will decline to about 47% - 48% from the 72% projected at the beginning of the year, the Nikkei said.

Each percentage point drop in the utilisation rate reduces profit by 9.5 billion yen, the report said.

TEPCO will also likely suffer from higher than forecast crude oil prices, the Nikkei said. If the price remains at $65 a barrel, this could also slash profits by 60 billion yen for the financial year, the paper said.