Loan Guarantees
Great Plains Synfuels Plant
Recapture of Original Loan Guarantees
The Great Plains Synfuels Plant was constructed with financial assistance from the DOE through $1.55 billion in loan guarantees. Of the original amount at risk, about $330 million remains unfunded thus far, and the DOE is still contracted to receive shares of the plant revenue through 2009 to further offset this amount.
Original Construction
The plant was originally constructed by private investors for a total investment of $2.1 billion in the early 1980's. The investors provided $550 million and borrowed $1,550 million. The borrowed money was guaranteed by the DOE.
Original Owners Default
The original investors defaulted on August 1, 1985, about one year after first gas was put in the pipeline, due to the very low price of natural gas. The DOE refused to provide further assistance.
DOE Operation Period
The DOE operated the plant from 1985 until 1988 when they sold the plant to Basin Electric Power Cooperative. During this time the DOE accumulated $135 million in operational cash flow.
Sold to Basin Electric Power Cooperative
Basin Electric purchased the plant from the DOE in 1988 for the sum of $85 million plus an agreed revenue sharing mechanism, access to an environmental trust fund ($30 million), access to an operational trust fund ($75 million) and the forfeiture of $755 million in tax credits.
Revenue Sharing to Date
The revenue sharing has provided payments to the DOE of $235 million through 2005 and an estimated $40 million for 2006 for a total of $275 million through 2006. Basin Electric did call upon the $30 million environmental trust fund, but did not use any of the $75 million operational trust fund.
Financial Balance to Date
Of the original 1.5 billion loan guarantee, all but $330 million has been recouped by the US government so far, and DGC will continue to share profits through 2009 to further offset this amount.
The following table lists the original loan guarantee amount and how the U.S. Government has recouped its money to date.
$ in millions
|
Original Construction Cost of Plant |
$2,100 |
|
|
Financing from Original Owners |
550 |
|
|
Loans guaranteed by DOE |
|
$1,550 |
|
|
|
|
|
Loans Defaulted and Covered by DOE |
1,550 |
|
|
Operational Cash Flow while under DOE Ownership |
|
135 |
|
|
|
|
|
Net Deficit at time of sale to Basin Electric |
1,445 |
|
|
|
|
|
|
Sale Price to Basin Electric |
85 |
|
|
Environ. Trust Fund Payment to DGC |
(30) |
|
|
Profit Sharing through 2006 |
275 |
|
|
Production Tax Credits Waived by DGC |
755 |
|
|
|
|
|
|
Net payments from DGC to US Gov. |
|
1,085 |
|
|
|
|
|
Total US Government recapture from original loss |
1,190 |
|
|
|
|
|
|
Net US Government loss from loan guarantee to date |
|
330 |
|
Note: DOE is still to receive |
|
|
|
profit sharing through 2009 |
|
|
|
that will further reduce this number |
|
|
DGC has also invested about $430 million in capital to upgrade the Synfuels Plant since its purchase in 1988.
$ in millions
|
Capital invested in plant since purchase: |
|
$430 |
|
Environmental Compliance |
$115 |
|
|
Ammonia Plant |
115 |
|
|
CO2 Sequestration |
120 |
|
|
By Products |
30 |
|
|
Debottlenecking |
50 |
|