Photo/IllutrationThe Asahi Shimbun

  • Photo/Illustraion

TOKAI, Ibaraki Prefecture--Costs to safeguard the Tokai No. 2 nuclear plant here will run at least 70 billion yen ($642 million) more than the plant operator’s estimate, raising the likelihood that consumers will get stuck covering the difference through their power bills.

Japan Atomic Power Co. (JAPC) is seeking to restart the plant, idled since the 2011 Fukushima nuclear disaster, as soon as possible to secure much-needed revenue by selling power from it to electric utilities.

The plant operator has been negotiating with leading general contractors over the cost of work to increase safety at the single-reactor plant along the coast of Ibaraki Prefecture. It aims to ink contracts for the work by March 2020. But the difference over the cost between the two sides has rarely narrowed.

Construction of a 20-meter-tall seawall and an emergency facility to protect the plant from possible tsunami and other natural disasters are among the protective measures scheduled.

In October 2018, the Nuclear Regulation Authority approved the plan to implement the measures under more stringent regulations that went into force in July 2013 after the triple meltdown at the Fukushima No. 1 nuclear plant.

JAPC estimated that the project would cost 174 billion yen, according to officials at some construction companies.

Six major general contractors--Kajima Corp., Taisei Corp., Obayashi Corp., Shimizu Corp., Hazama Ando Corp. and Penta-Ocean Construction Co.--were asked to give quotes for each portion of the project. Only one company will be chosen for each portion.

Their quotes, all submitted by around November 2018, pegged the overall cost at least 250 billion yen more than JAPC envisaged.

The plant operator is also required to build a facility to respond to a possible terror attack, estimated at costing 61 billion yen, bringing the overall cost to protect the plant to more than 300 billion yen.

The ballooning price tag is blamed on a spike in the cost of civil engineering materials, machine tools and workers, according to officials familiar with the matter.

The plant operator urged contractors to rethink their estimates, but they refused, maintaining that the higher price was inevitable in order to complete the project on time.

With JAPC’s self-imposed March deadline to conclude contracts fast approaching, industry analysts say the operator will likely give in to the contractors' demands.

In October, five regional electric utilities, including Tokyo Electric Power Co. and Tohoku Electric Power Co., which used to purchase electricity from JAPC, announced they would increase financial support to the company to 350 billion yen from the 300 billion yen they pledged in March.

The rise is attributed to a surge in the costs for the seawall and emergency facility.

JAPC and the six contractors declined to comment when asked by The Asahi Shimbun to provide more details of specific cost overruns.

Japan's major electric power companies usually directly select individual contractors for projects and do not open contracts for bidding.

Under such contracts, disparities between estimates and final costs rarely emerge.

An official at one of the power companies who is familiar with the matter called the 70 billion yen cost overrun “extremely unusual.”

JAPC maintains that its initial 174 billion yen estimate is more than adequate for contractors to complete the work.

But an official at one of the construction companies accused the power company of low-balling the amount needed for the project.

An official close to a utility financially supporting JAPC said the operator should have contractors compete for each project segment and require them to submit estimates.

The Tokai No. 2 nuclear plant started operations in 1978. The Nuclear Regulation Authority authorized a 20-year extension on the reactor’s life in November 2018.