Financial Status of the Great Plains Coal Gasification Project
RCED-85-70: Published: Feb 21, 1985. Publicly Released: Mar 1, 1985.
- Full Report:
Pursuant to a congressional request, GAO reviewed certain aspects of the financial viability of the Great Plains coal gasification project. Specifically, the report examined the financial status of the project as shown in Great Plains' May 1984 cash-flow projection to the Department of Energy and the effect of proposed assistance from the U.S. Synthetic Fuels Corporation (SFC) on the project's finances.
GAO found that in 1984, Great Plains, faced with deteriorating financial projections in the wake of declining energy prices, applied to SFC for additional project assistance. SFC tentatively agreed to provide Great Plains with up to $790 million in price guarantee assistance. 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. However, the May 1984 cash-flow projection showed that, even with SFC assistance, accelerated repayment of the DOE-guaranteed loan, and 100-percent production tax credits, the project would still not be as financially viable as anticipated in January 1982. Further, an August 1984 SFC analysis indicated that the decline in energy prices offset the effect of the increased tax credits. GAO concluded that changes since April 1984 in the energy market conceivably could have significant effects on the report's findings.