Financial Situation of the Great Plains Coal Gasification Project

Gao ID: RCED-84-59 October 17, 1983

Pursuant to a congressional request, GAO discussed the financial situation of the Great Plains Coal Gasification Project, focusing on: (1) how current Department of Energy (DOE) oil price projections compare with the March 1983 Great Plains cash flow estimates; (2) what the after-tax cash flow to partner companies would be, based on the DOE estimates; and (3) what the effect on the after-tax book earnings of the partner companies will be if the DOE projections are used. GAO would not address a question concerning price guarantees because it involved legal issues that cannot be answered by GAO.

GAO found that the DOE estimates are generally less optimistic than the Great Plains projections and that the differences are easily noted in individual price comparisons. In this respect, the price estimates are the basis for the oil sales cost restrictions incorporated into the price formula. GAO used charts and figures to illustrate the varying individual differences between the Great Plains and DOE annual projections for cash flow payments and after-tax book earnings that partner companies would receive.



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