UPDATE 4-Tokyo Electric claims could top $130 bln on Japan nuclear crisis

* TEPCO faces up to 11 trln yen in claims over nuclear
crisis-BofA-ML

* Estimate based on crisis lasting two years

* IAEA calls for exclusion zone around plant to be widened

* Shares bounce after big buy order late Wednesday; end flat
on day

* Stock price has fallen nearly 80 percent since quake

(Adds analyst comment, updates shares)

By James Topham

TOKYO, March 31 (Reuters) – Tokyo Electric Power Co
could face compensation claims topping $130 billion if Japan’s
worst nuclear crisis drags on, Bank of America-Merrill Lynch
estimated, fuelling expectations Japan’s government will step in
to save Asia’s largest utility.

Investor concern about the future of Tokyo Electric has been
mounting after its president, Masataka Shimizu, was admitted to
hospital and the company said on Wednesday that 2 trillion yen
($24 billion) in emergency loans from Japan’s major banks would
not cover its mounting costs.

Liabilities for compensation claims alone could be up to 11
trillion yen ($133 billion) — nearly four times TEPCO’s equity
— if the nuclear crisis drags on for two years, an analyst at
Bank of America Merrill Lynch wrote in a report.

The company, also known as TEPCO, has come under fire for
its handling of the emergency at its Fukushima Daichi nuclear
complex, triggered by the March 11 earthquake and tsunami that
left more than 27,500 people dead or missing.

A series of missteps and mistakes, combined with scant signs
of leadership, have further undermined confidence in the
company. Poor communication has led to some heated exchanges in
media conferences as journalists demanded information.

The government and TEPCO conceded on Wednesday that there
was no end in sight to the crisis.

“I think in the current situation the government
has very few options left,” said Ravi Krishnaswamy, Asia-Pacific
vice president of Frost & Sullivan’s Energy and Power Systems
Practice in Singapore.

“Nationalisation isn’t a good move for the stakeholders but
at the end of the day if the government steps in then at least
creditors know their liabilities will be met,” he added.

Shares in TEPCO jumped as much as 12 percent in intraday
trade on Thursday, rebounding from three straight sessions when
the stock has hit its limit-lows.

Traders said a buy order around 40 million shares, or about
2.5 percent of all outstanding TEPCO shares, was detected at the
end of Wednesday’s session, but they were unable to confirm who
placed it.

The stock ended the day unchanged from Wednesday and down
almost 80 percent since the disaster.

BIG HIT

Bank of America-Merrill Lynch said shareholders were very
likely to take a big hit and a rapid resolution of the crisis
was the only way to keep costs down.

If the situation can be turned around within the next two
months, compensation costs may be less than 1 trillion yen.
Costs will rise to 3 trillion yen if it drags on for six months,
analyst Yusuke Ueda wrote.

Experts, however, say a final resolution of the nuclear
disaster is likely to take decades and there could be many
further setbacks. [ID:nN30198196]

TEPCO could burn through 2 trillion yen in about a
year, said CLSA equity analyst Penn Bowers, as it pays extra for
fuel to run its thermal plants, among other costs.

The U.N. nuclear watchdog, the International Atomic Energy
Agency, suggested on Thursday that Japan consider widening an
evacuation zone around the Fukushima plant, which would force
more people and businesses to move and potentially increase
compensation claims. [ID:nLDE72T0IJ]

More than 70,000 people have been evacuated from a 20-km (12
mile) exclusion zone and another 130,000, who live in a 10 km (6
miles) band beyond the exclusion zone, have been advised to
leave, or to stay indoors.

Prime Minister Naoto Kan, facing mounting criticism for not
expanding the evacuation zone, has said he was seeking advice.
Experts say an extension may be inevitable.

SPLITTING THE BILL

Still, some or all of the compensation claims may be picked
up by the government in order to limit the liability imposed on
TEPCO, a move that may avoid the need for nationalisation.

“Even without nationalisation, there is a way for the
government to help TEPCO pay for damages,” said Akihito Murata,
a credit analyst at Deutsche Securities in Tokyo. “When the
total costs have not been established and there are some other
ways to discuss, it’s just too early to talk about
nationalisation.”

Under Japanese law the operator of a nuclear
facility can be granted an exemption from damages caused by a
reactor if the accident was deemed to have been triggered by “a
grave natural disaster of an exceptional character.”