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million.11 The parties agreed to recommend that SFC’s board and
the partnership’s management committee approve this tentative
price guarantee agreement.
In July 1984, while negotiations continued between the
partners and SFC, the gasification plant began producing
synthetic natural gas.
In January 1985, the partnership received from SFC a draft
price agreement; a draft loan agreement was expected soon
thereafter. To enable the partnership to meet its obligations
under the loan guarantee obligation, the management committee
called, at monthly intervals, for additional equity contributions
of $4 million in February 1985, of $6 million in March 1985, of
$3 million in April 1985, and of $1 million in May and June 1985.
These additional equity contributions were based on the partners’
expectation that support for the project would be forthcoming and
their belief that the arrangement would be supported by DOE.
Bolstering that belief, in April 1985 DOE Assistant
Secretary Mares appeared before SFC’s board of directors on
behalf of newly named DOE Secretary John Herrington. Mr. Mares
endorsed the understandings reached by SFC and the partnership.
11 A Comptroller General’s report to Congress on the status
of the Great Plains project as of Dec. 31, 1984, noted that over
the project’s life, the partners would realize a lower rate of
return on their equity investments even with the $790 million
price support arrangement because of the partners’ additional
equity contributions, accelerated debt repayment, and the profit-
sharing arrangement.
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