Japan’s biggest utility, Tokyo Electric Power Co (Tepco) and seven other power utilities in Japan reported a combined first-half loss of 674 billion yen ($8.5 billion) on rising fuel costs to make up for lost nuclear power generation. Tepco, the operator of Japan’s crippled Fukushima nuclear plant on Wednesday dramatically slashed its fiscal-year loss projection, citing asset sales and cost-cutting for the change. The utility said it now expects to lose 45 billion yen ($564 million) this year instead of the 160 billion yen initially forecast, although it still faces huge post-disaster compensation costs and higher power generation expenses, despite a government bailout and a price hike. It also said its losses narrowed to 299.48 billion yen for the six months to September, compared with 627.3 billion yen in the same period of 2011. The company was effectively nationalised after receiving 1.0 trillion yen of taxpayer money to stay in business this year as it struggled to survive after the atomic meltdown at its Fukushima Daiichi plant that followed the quake-tsunami disaster on March 11, 2011. Fallout from the utility’s reactors contaminated surrounding farmland and forced tens of thousands of area residents to flee from their home and businesses in the worst atomic crisis in a generation. Despite the improving results, Tepco said its first-half costs rose due to firing up expensive thermal power stations as anti-nuclear sentiment kept its atomic reactors idled. Tepco said it earned 110.2 billion yen after selling assets, including stock investments, while overhauling its retirement pension plan. In July, the government allowed Tepco, one of the world’s biggest utilities, to raise household electricity rates in its service area, including Tokyo, by an average 8.46 per cent. As a result, first-half sales rose 14.9 per cent to 2.88 trillion yen, the company said. It hopes to return to profitability in 2014. The firm posted a 781 billion yen loss in the most recent fiscal year, when it had to boost fossil fuel imports as Japan switched off its reactors. Just two reactors have been restarted out of a possible 50. The clean-up of Tepco’s plant is expected to take decades, with scientists warning that some settlements may have to be abandoned. Meanwhile Tepco plans to buy coal from a wider group of suppliers in a drive to cut costs as it starts operations of new coal-fired power stations, a company official said. It would be the first time that Tepco, battered financially by last year’s Fukushima nuclear disaster, was buying cheaper low-calorie sub-bituminous coal through term contracts, traders said. “We’ll do anything we can to cut fuel costs,” Susumu Kose, a senior manager of Tepco’s coal group, said in an interview on Tuesday, adding that the company would step up purchases of the sub-bituminous coal. “We plan to expand our portfolio of coals so that we see more competition among suppliers. Our coal supply base is limited and there hasn’t been much competition among suppliers.” Tepco expects to double coal consumption to 6.2 million tonnes next year, to feed a doubling in the capacity of its coal-fired plants to 3,200 megawatts. Its use of coal to generate electricity is expected to nearly double again by 2021, Tepco said in a business plan submitted to the government. The company could hold auctions as soon as this financial year to contract out construction of three coal-powered plants of 2,600 MW total capacity to independent power producers so that it can buy electricity from 2019. That will boost the ratio of its coal-power generation to around 17 per cent by 2021, compared to 8 per cent in 2011.  Limited sources of supply and the emergence of China and India as major spot buyers have boosted premiums for power firms in Japan, the world’s second biggest importer of thermal coal, mainly in the past two years, the country’s coal producers say. That coincided with a rise in demand for fossil fuels by the Japanese firms, which have scoured the world for more coal, liquefied natural gas and oil to run power stations as all but two of Japan’s 50 nuclear reactors stay shut for safety checks. China emerged last year as the world’s biggest coal buyer, taking 139 million tonnes, against 116 million tonnes by Japan. Asian countries buy 550 million tonnes of thermal coal a year, more than double the figure for Europe, to power growth that usually beats Western industrialised nations. Tepco’s supply diversification promises opportunities for producers of cheaper coal meeting Japan’s environmental norms.