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By Yoshifumi Takemoto

TOKYO (Reuters) - Japan's ruling party could set up a British-style agency to shut down the wrecked Fukushima nuclear plant, taking control of a project now managed by the station's embattled operator, a senior party policymaker said on Thursday.

A huge earthquake and tsunami in March 2011 triggered three meltdowns at the Fukushima Daiichi nuclear station, the worst nuclear disaster since Chernobyl in 1986, and exposed a lack of preparation by Tokyo Electric Power Co, or Tepco.

The company has floundered for much of the last 2-1/2 years in dealing with several problems at the site, including a series of leaks of radioactive water into the Pacific Ocean.

Tepco has proceeded with initial decommissioning steps, including the tricky removal of spent fuel rod assemblies from a badly damaged reactor building. Dismantling the plant and decontaminating the nearby area is likely to take decades and cost ten of billions of dollars.

"It is likely that the government will eventually have to take responsibility" for the decommissioning, Tadamori Oshima, head of the Liberal Democratic Party's task force on disaster reconstruction, told Reuters.

While immediate decommissioning steps should be taken by Tepco, a government oversight body should direct the utility, Oshima added, but gave no further details.

In Britain, the National Decommissioning Authority, a public body, is charged with managing the dismantling of the country's atomic power and research stations.

Oshima had pushed for a government agency to shut down the plant, but the LDP did not include this aggressive proposal in a November report on Fukushima.

Tepco, de facto nationalized after 2011, is still responsible for the ambitious decommissioning of the plant as well as for paying compensation to evacuees and cleaning up affected areas.

A plan to set up a decommissioning agency is controversial as it would reduce Tepco's responsibility and increase the burden on taxpayers.

Prime Minister Shinzo Abe has so far pledged half a billion dollars in government funds to help stem the flow of contaminated water at the plant after a highly radioactive water leak in August triggered international alarm.

Lawmakers from Abe's coalition recommended last month that the government step back from the most ambitious goals for the vast clean-up and begin telling evacuees the $30-billion exercise will miss a long-term radiation reduction goal set after the disaster.

Oshima suggested the government would informally relax the long-term target, set by the previous government, to decontaminate an area the size of Connecticut around the Fukushima plant to levels of 1 millisievert of radiation or less.

"After we bring ambient radiation (down) to between 5 to 10 millisieverts and complete the decontamination, we will take thorough measures to manage individuals' dosage and safeguard their health," he said. "But a new radiation target would be difficult to publish because it would create a big problem."

The International Atomic Energy Agency said recently that a radiation reading of up to 20 millisieverts was acceptable by world standards.

Radiation levels in the area vary greatly. For example, Tomioka, a township about 12 km south of the Fukushima Daiichi plant, had ambient radiation ranging from 1 to 50 millisieverts by March.


(Writing by Mari Saito; Editing by William Mallard and Clarence Fernandez)

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