The Bush administration last February announced the Global Nuclear Energy Partnership initiative, which includes resuming a nuclear fuel recycling program.

Constructing a nuclear plant costs hundreds of billions of yen. U.S. financial institutions appear reluctant to give loans to U.S. firms to build the facilities because the companies lack experience.

The U.S. government suspended all construction of nuclear plants after the accident at Three Mile Island in 1979.

U.S. power utilities have plans to build a number of nuclear plants as higher crude oil prices are putting upward pressure on electricity generation costs based on oil-based thermal power plants.

The pact [which is part of a larger U.S.-Japan energy cooperation effort] will help Japanese reactor manufacturers, including Toshiba Corp. and Hitachi Ltd., participate in U.S. nuclear plant projects by offering the government-backed trade insurance to cover some of the massive costs.

The insurance compensates Japanese companies for losses in the event that problems arise over exports or direct investments overseas.

In addition to the planned insurance-based Japanese support, the U.S. government plans to encourage companies to take part in nuclear plant projects by providing repayment guarantees for loans they may take out to finance construction costs.