Japan on Monday approved a fresh $8.9 billion in aid for the operator of the Fukushima nuclear plant as the company said it expected to lose a similar amount this year.

The decision means TEPCO stays solvent, but continues to run up costs as it struggles to clean up the mess left behind by reactor meltdowns and meet claims for compensation following the March 11 quake disaster and resulting nuclear crisis.

The 690 billion yen aid package was announced after Tokyo Electric Power revised up its estimate of what it would need to compensate victims of the worst nuclear accident in a generation, to 1.7 trillion yen from 1.01 trillion yen.

The new government cash will come on top of the 890 billion yen in aid that it has already agreed to give the troubled utility, making a total 1.58 trillion yen. The company must find other sources of cash to plug the gap.

Announcing its earnings forecast for the year to March, TEPCO said Monday it expected to lose 695 billion yen ($8.95 billion), worse than its previous forecast of a 600 billion yen shortfall because of expanded compensation.

TEPCO increased the estimate of the amount of money it would need after the government widened the eligibility criteria for claimants and altered the evacuation zone restrictions around the stricken Fukushima Daiichi nuclear plant.

The utility said sales were down 4.0 percent from a year earlier in the first three quarters to 3.8 trillion yen as "customers cooperated in saving electricity, and industrial activity declined," it said in a statement.

On the expenditure side, TEPCO cut personnel costs by reducing salaries and bonuses and also cut procurement and operational costs. "But a decline in nuclear power generation led to a large increase in fuel costs," the company said.

The bulk of Japan's nuclear reactors are offline in the wake of the crisis at Fukushima, with local communities unwilling to give the green light for them to be restarted after safety checks.

This has meant electricity companies have been forced to ramp up their use of fossil fuels, such as coal, which has increased costs.

TEPCO said it had recorded an extraordinary profit of 1.62 trillion yen including the 1.58 trillion yen it is to receive from the state to help it meet compensation claims.

On the other side of the ledger it showed an extraordinary loss of two trillion yen, including 1.64 trillion yen it expects to pay out in compensation and 312.2 billion yen needed to repair assets damaged by the March disasters.

The government's decision to grant the cash came as Industry Minister Yukio Edano on Monday met TEPCO president Toshio Nishizawa.

During the meeting Edano stressed that the government would take partial control of the utility if it were to officially ask for a capital injection, which would be used, amongst other things, for the decommissioning of Fukushima Daiichi.

This move would be separate from the compensation cash the company has requested.

TEPCO and the state-backed Nuclear Damage Liability Facilitation Fund are drafting a business plan, due to be released next month, to restructure the utility while compensating residents and dismantling the Fukushima reactors.

The business plan is a condition for the government to continue assisting TEPCO, which faces skyrocketing costs and is in danger of holding more liabilities than assets.

"As long as I hold this post, I will absolutely not approve a plan that asks for a capital injection but does not offer adequate voting rights (to the government), commensurate with the money," Edano told Nishizawa in front of journalists.

In one piece of good news for the company, scientists said a faulty thermometer was probably to blame for a rapidly rising temperature reading at one of the reactors.

Two gauges showed a stable 35 degrees Celcius (95 degrees Fahrenheit), but a third gradually rose sparking fears a spontaneous nuclear reaction had begun.

But when it shot up to 342 degrees on Monday with no other signs fission, workers concluded the equipment was not working.