Boston, MA -- (SBWIRE) -- 11/20/2012 -- BMI View: Although the latest statistical data indicates an increase in construction activity in H112, reports from the ground indicate that the reconstruction effects are not taking place uniformly or at the same pace across Japan, with several factors (ie, radiation fears, slow debris clearance and concrete shortages) causing delays in rebuilding certain prefectures. Therefore, we believe that the reconstruction efforts could take place over a longer time-frame. As such, we have revised down our real growth construction forecasts for 2012 to 3.9% (previously 4.1%) and revised up our forecasts for 2013 and 2014 to 2.1% and 0.8% respectively (previously 1.8% and 0.1%).
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Key developments in the sector include:
- In August 2012, Kansai Electric Power is set to resume construction of a 3,700-megawatt (MW) thermal power plant in Wakayama city and is currently holding discussions with the prefectural government about the project.
- In August 2012, Tohoku Electric Power Company announced that it will borrow JPY230bn (US$2.9bn) from a number of Japanese banks, reports Reuters. Tohoku Electric Power Company will use the funding to finance its purchase of fossil fuels. The electricity utility has been forced to invest in alternative fuel supplies following the Fukushima nuclear disaster in 2011. The loan has been arranged with a syndicate encompassing six Japanese banks, including Mizuho.
- In July 2012, all of Japan's 50 nuclear reactors are shut down, except the Ohi No.3 and No.4 reactor in Fukui Perfecture. Both nuclear reactors, owned by Kansai Electric Power, restarted in July 2012 and accounted for 2.9% of all electricity generated in July 2012.
- In July 2012, the Japanese government approved the construction of three new extensions by Japan Railway Construction. The 211km Hokkaido Shinkansen to Sapporo railway line is scheduled for completion by 2035; the 125.2km extension of the Hokuriku Shinkansen railway line from Kanazwa to Tsuruga is scheduled for completion by 2024; and a 21km extension between Isahaya and Nagasakii is scheduled for completion by 2022. At present, the Isahaya- Nagasakii extension has already started construction.
- On June 18 2012, the Japanese government approved the feed-in tariffs (FiTs) proposed by a government panel earlier this year (see our online service, June 20, 'A New Age For Renewables'). The scheme will come into effect on July 01 2012 and will require Japanese utilities to buy electricity from renewable sources at the FiT rates for up to 20 years.
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