Power Plant Organization

TEPCO teetering on financial edge

The harsh business environment facing Tokyo Electric Power Co. has been brought to the fore after the utility posted a record quarterly group net loss, logging a 571.7 billion yen deficit for the April-June period due to the crisis at its Fukushima No. 1 nuclear power plant.

TEPCO will receive financial support from a new organization to be set up later this month by the government, which will be tasked with securing funds for the utility to pay compensation to people affected by radiation from the crippled plant.

Yet the utility's business operations will be precarious, with fuel costs and expenses involved in decommissioning the plant's reactors sure to hang heavy on the company.

The massive loss came as TEPCO allocated 397.7 billion yen for compensation--a figure the utility described as a reasonable estimate--as part of a 503.2 billion yen extraordinary loss in the April-June period.

The compensation estimate was calculated on the basis of an interim guideline, drawn up Friday by a government panel, for determining which businesses and individuals are eligible for compensation.

TEPCO President Toshio Nishizawa told a news conference Tuesday that the biggest concern held by auditors had been whether a bill on the creation of the new organization would pass the Diet. The bill passed into law on Aug. 3.

According to a source close to TEPCO, the utility was told by auditors to wait for the panel to release its interim guideline, so that the largest possible amount could be allocated to compensation costs in the quarterly account.

The massive quarterly loss put the TEPCO group's net worth at 1.009 trillion yen as of the end of June, down 548.7 billion yen from the figure registered at the end of March.

Had the creation of the new organization not been confirmed, TEPCO's net worth might have gone into the red.

Hiroki Shibata, an analyst at ratings agency Standard and Poor's, said TEPCO's financial strength has been deteriorating markedly and its profits are likely to continue on a downward trajectory.

The utility is having a hard time in its core electricity business, which posted an operating loss of 61.3 billion yen, compared to the operating profit of 54.2 billion yen booked a year earlier.

Its electricity sales in the April-June quarter were down 12 percent from the corresponding period last year, due to widespread energy-saving efforts and reduced output by manufacturers whose supply chains were disrupted in the aftermath of the March 11 disaster.

Professional Project Management Education: Improvement of ...

PVN has invested & built the first power plant since 2005 with only one Management Board (MB). The objectives of the MBs change very fast but the organization structure for all MBs is still same from the beginning. Therefore, PVN’s management for power projects has still some outstanding issues which are the weakness in organizational structure for project management. The objectives of PetroVietnam Power Plant Projects (PVN’s PPP) are usually changed very fast, but PVN has still kept the type of organizational structure which is “Functional Structure” since 2004. Although this structure has some advantages, but this structure is not suitable with growth of PVN’s PPP which has caused some weakness and disadvantages in its management so far. With four individual Management Boards, they have not achieved perfect result in time. It is very difficult to control the scope, contingency funds, overall project value; and also it is very difficult to monitor or audit the project’s progress, stakeholder’s commitment, results achieved and the leading indicators of failure, and so on. Therefore, with the study and analyses of this case study, the proposed improvement is given in which the essential issue of this proposed improvement is the recommendation to apply the Matrix Structure for One General Management Board instead of the Functional Structure for Four existing Individual PVN’s project management organizational board. Consequently, the advantages of the Proposed PVN’s project management organization will be almost same the advantages from the Matrix Structure. The most important advantage of the Proposed Improvement is efficient use of resources of the whole Proposed General Management Board where specialized individuals can be shared and transferred from one Branch to another or in any PVN’s projects. Therefore, the project management cost is minimized; the total quantity management staff shall be decreased, but the professional grade is easily increased. These are the most useful & efficiency of this proposal. With the detailed analyses and proposal, the strength & advantages of the proposed improvement are very clear and prevailed to compare with its disadvantages. Besides, there has the proposed solution to solve for these disadvantages. Therefore, it should be considered as preliminary study to apply in the PVN’s thermal power project management with the additional study needed.

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