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RCED-85-70 1 (1985-02-21)

handle is hein.gao/gaobabeya0001 and id is 1 raw text is: R WW r~fg.w Nit to be rllss*a £..MMtsg Offie except n the basis 01 spo.ft OweI At l by the Office of Congressional R.IatI146 . i3& BY THE US, GENERAL ACCOUNT ING OFFICE Report To The Chairman, Subcommittee On Environment, Energy, And Natural Resources, Committee On Government Operations House Of Representatives RELEASED Financial Status Of The Great Plains Coal Gasification Project Great Plains Gasification Associates and the Department of Energy (DOE) signed a loan guarantee agreement in January 1982 for up to $2.02 billion of the estimated $2.76 billion needed to construct a plant producing synthetic gas from coal. Faced with deteriorating financial projections in the wake of declining energy prices, Great Plains applied to the U.S. Synthetic Fuels Corporation (SFC) for additional project assistance. In April 1984 SFC tentatively agreed to provide Great Plains up to $790 million in price guarantee assist- ance. In return, the Great Plains partners would contribute more equity and Great Plains would repay the DOE-guaranteed loan faster and share profits with SFC. According to GAO's assessment of SFC's proposed assistance, a lower amount of assistance could achieve the same results if Great Plains' partners could fully use certain tax credits and if energy prices and other assumptions remained the same as those SFC used in April 1984. Since April 1984, however, several changes have occurred, such as a continued decline in energy prices.An August 1984 SFC analysis indicates that the decline in energy prices offset the effect of the increased tax credits. Other changes have also occurred, but SFC analyses subsequent to August 1984 showing the impact of these changes were not available to GAO. If all changes since April 1984 were incorporated into GAO's analyses, the results could be different. VDl I Il1 126322 O GAO/RCED-8570 FEBRUARY 21, 1985

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