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Japan nuclear plant operator promises compensation
  • | AFP | April 15, 2011 04:02 PM

The embattled operator of Japan\'s crippled nuclear power plant on Friday promised an initial one million yen ($12,000) in compensation to each family living close to the facility.

The sun sets over debris still piled up five weeks after the earthquake and tsunami devastated the city of Ishinomaki in Miyagi prefecture.

"We have decided to offer necessary payment as provisional compensation so that we can provide as much support as possible," Masataka Shimizu, president of Tokyo Electric Power (TEPCO), told a news conference.

Tens of thousands of people living in a 20-kilometre (13-mile) zone around the plant were ordered to leave due to radiation fears, and people within 30 km were first told to stay indoors and later encouraged to also evacuate.

"We will pay the provisional payment to families who lived in areas where people were ordered to evacuate or stay inside their houses," Shimizu said.

Japan\'s economy suffered a big blow in the triple earthquake, tsunami and nuclear disaster, but the country should have no problem financing reconstruction, the central bank chief said in a speech at the Council on Foreign Relations in New York.

Bank of Japan Governor Masaaki Shirakawa conceded problems in the economic supply chain, power generation, tourism and other important sectors.

But he said the financial system could cope.

"As long as Japan continues to work tirelessly towards rebuilding it is unlikely that financing problems will arise," he said.

Shirakawa said the three-pronged disaster struck "at a time when Japan\'s economy was gradually returning" to strength. He said the disruption mean "it is inevitable" that production and supply will suffer.

And given the global nature of economy, closely linked countries such as China and the United States could also be affected. "The impact on supply chain could spread internationally," he said.

However, Shirakawa insisted that Japan has the resources to bounce back.

"Japanese society has shown resilience. The work of rebuilding has started to get underway gradually but steadily," he said.

"The first challenge is ensuring the necessary financing for rebuilding. In this regard, Japan has had an excess of saving over investment for a protracted period. From a macro-economic perspective, this financing will not be difficult," he said.

"Japan\'s capacity for foreign currency funding is extremely strong, given that the country is the biggest creditor nation in the world."

"Private financial institutions are fully able to meet an increase in financing demand for rebuilding. Meanwhile, Japanese government bonds have been issued quite smoothly," he said.

"Most private economists believe that Japan\'s GDP growth rate will turn positive again from the third quarter of 2011."

Power cuts are now the greatest threat to Japan\'s economic recovery, the Asian Development Bank\'s top economist said Thursday, as the pain from the disaster showed few signs of relenting.

After initial concerns that the disaster would wreck Japanese and global manufacturing supply chains, Changyong Rhee said the main fear had become a prolonged power cuts and brownouts.

Power cuts "can hurt not just the affected area, but the whole of Japan," Rhee said, pointing to disruptions that could hobble the economy for months to come.

"Initially, we thought that power supply would be normalized by the end of April; it looks like it is going to be a bit longer than that."

Power shortages have plagued the country since the quake, which caused 11 of Japan\'s 55 nuclear reactors to be at least temporarily closed.

The government has already imposed electricity-saving targets to reduce consumption by up to 25 percent, even as it battles to contain leaks at the ailing Fukushima plant.

More than a month after a devastating 9.0-magnitude earthquake hit the country, Rhee and other economists are still trying to understand the long-term impact on the world\'s third largest economy and its neighbors.

The biggest question mark might now be the fate of those 11 nuclear power plants, which account for around six percent of the country\'s electricity production.

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