Austria - Thermal and Hydroelectric Projects

RESTRICTED p RTU e~ R p o rt No0. T.P' 115 Th is document was prepared for internal use in the Bank. In makI it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF VERBUNDGESELLSCHAFT POWER PROJECTS AUSTRIA August 6, 1956 Department of Technical Opraions TTRREV EQTTTVATNT 26 Schillings - U.S. $1.00 1 Schilling - 3.85 U.S. Cents 1-00nn Schillings - U.S. $38,500.00 TABJE OF CONTENTS Page Summa r, 4-11 I ITroduction 1 II Prreviou LUTo an t o the V. G. oM-bine1 ..L X VLU . .LJV~ LL LI .. V UIJL 'r T T I~ TI , II..LIThe V. G. Combine 1 IV Existing Installations and Production of the V. G. Combine 3 V The Power Market 3 VI The Construction Program of the V. G. Combine 5 VII The Projects 6 VIII The Financing of the Program and the Proposed Loans 8 Ix Financial Aspects of the V. G.Combine 11 X Management of Proposed Borrowers 14 XI Financial Aspects of the Proposed Borrowers 15 XII Economic Justification of the Project 16 XIII Conclusions and Recommendations 17 APPRAISAL OF VERBLOGESELLSCHAFT POWER PROJECTS A U S T R I A SUMMARY This report covers a general appraisal of the power expansion program of the 6sterreichisch Elektrizitatswirtschafts A. G. (Vcrbundge- sellschaft) and its affiliated companies (hereafter referred to as the V. G. Combine) and a more detailed anraisal of three projects included therein which the Bank has been requested to assist in financing. These consist of a large hydro electric plant on the Danube and the expansion of two steam plants in south-central Austria. The V. G. combine consists of generating companies jointly owned by the Federal Government. the Provinces. and the V. G.. which is 100o Federally owned. The V. G. owns and operates high tension transmission lines and is the selling agent for the generating comnnnies which it con- trols. In 1955 the V. G. combine sold about 59% of the electric energy consumed in Austrin. The remainder wns su-nlied by provincialv and muni- cipally owned companies. The sales of the V. G. combine are estimated to increase about 11% ypr annum at lat until 1QA1 -Pn mPt the e.timated incrPasnP inT demand the V. G. combine has under construction projcts which will in- crease its installed generatig cpacfity yT 61,000) k *by 1 (44,0 n w in hydro and 165,000 kw in steam) and extend its transmission system about 645 kilometers. The cost of this program is estimated at the equIvalent of $217 million. The Bank has been requested to finance the equivalent of $31 million of the cost of three project s inclue AA- in he r. G.I pga 1I.L.L.A.J.UIL~-Lu- U. I- I.,.J0 IJJ .J&. - , U0- F.. which will have a generating capacity of 357,000 kw. The total cost of the three projects is estimated at about $Z1'13' million evlen4. MU..- 0- &U-.. ..O t.n 4- 4-- V---n *D-n n-c,, -"-4-An+ - 1- - to n of-the-river hydro plant on the Danube, 130 kilometers by river above Vienna. It i..9s estimated to cost the eqaivalent of0 $M1 milli 4on. IT shol be o J.il L UU.L t % LV VU0 VA4e± CL. VL. W.L~ Yu. L .4..U ho.uA4ld. be com- pleted by the end of 1959. When completed, it will have a capacity of 192,000 k hw. he other TwU projects are VotJe5Ur6 Vnd SI. A1nUae, uoU expansions of thermal plants using domestic brown coal. They are estimated to cost the equivalent of $21.8 million. The expansions will coUsist of the addition of one 65,000 kw unit to the 60,000 kw already installed at voitsberg and the addition of 100,000 kw to the 67,500 kw at St. Andrae. The Voitsberg expansion is expected to be completed in October, 1956. Construction on the o. Andrae expansion is expected o start J.u unuary, 1957, and be completed by the end of 1958. All three plants are fairly close to the principal load center of Austria, Vienna, all are sound projects and will produce energy at a reasonable cost. In the past five years the profits of the V. G. combine have been relatively small. An increase of about 225 in tariffs covering the V. G.,s ii domestic sales has been approved. This increase should provide by 1960, after the completion of all projects now under construction, revenues suf- ficient to cover all operating expenses including depreciation based on revalued assets and earnings sufficient to show a rate of return of about 4 on the V. G.'s total investment. Two of the affiliated companies in the combine will be the borrow- ers with the V. r, s c-rowe enh of the two l oans pronosed. The +to thermal plants are suitable as a basis for a loan of $10 million. The types of plants involved and the construction period indicate that the term of the loan should be 20 years including a grace period of about three years. The hydro project is suitable as a basis for a loan of $21 million. loa npe of plant be 25 year incluongc period of a hou -h yer. loan should be 25 years including a grace period of about 37-1 years. APPRAISAL OF VERBUNGESELLSCHAIT POWER PROJECTS AUSTRIA I. INTRODUCTION 1. This report covers a general appraisal of the power expansion program of the dsterreichisch Elektrizitatswirtschafts A. G. (Verbundge- sellschaft) and its affiliated companies (hereafter referred to as the V. G. combine) and a more detailed appraisal of three projects included therein which the Bank has been requested to assist in financing. These consist of a large hydro electric plant on the Danube and the expansion of two steam plants in south-central Austria. The projects are estimated to cost the equivalent of about $113 million. The Bank has been requested to fi- nance $31 mill.on.of-the. tot4,0. cost ia two loans to two of the affiliated companies with the V. G. as co-borrower on each. The borrowers would use about $5.1 million equivalent of the proposed loans to pay for imported equipment and the remainder would be converted into local currency to pay for purchases in Austria and to pay for local labor. II. PREVIOUS LOAN TO TH V. G. COMEITE 2_ In July. 1954. the Bank made a loan of $12 million equivalent to the Verbundgesellschaft and the Oasterreichische Draukraftwerke, one of the nnmanie in th V. G_ combinp. as co-borrowers to assist in fi- nancing the 120,000 kw Reisseck-Kreuzeck hydro electric project in Southern Austria. It- ws primaily a loCal currencv loan as only the equivalent of about (2 million was .to be used for imports. As at 15 May 1956, the equivalent o-f; $ 4 mill ion Innil hs.Pn wi thdrnm from% the- 1on. The prect was about 52% completed in May, 1956, and 28,000 kw were in operation. The completion of the remainder of the project, now scheduled for the end of 1959, will provide an additional 92,000 kw for the V. G. combine. The total cost of the project is expected to be the equivalent of about $4ml_ lion. It will be operated by the Draukraftwerke, one of the companies which would b.- a co-oorrower unde r the 1proqposed loan. ~ '. L.44.U .. 0 ~ U j~III WJ. T HE V'. y* . COrN TTT MUVi~ U 01n rTM 3.Th,.~f G..ombine, which was est-1,14shA by the Federal 1W... of-P ZieV V. G. coLJUWJ.&fO wLI,.. WO W U4M44A~. '- .'Y U-- - _4'0 S .540 ' March, 1947, nationalizing the electric power industry, consists of four special companie jo-l ow-ed by- 4he Vederal -ovrnen an+'ek roin. uPL*~ .L uvu aL. ; J ULLLJ V VV"U.i UUU LP.L -LI4'V'1.JJU'J U 1 U 44.L- J.IV444S and of the 100d Federally owned V. G. The special companies operate large generating plants. The V. %. is the selling agent for the special compa- nies and 50% of the production of two international plants constructed jointly with Germany.:J and is bhe or-rator of the high tension transmis- sion lines ccnnecting the plants of the special companies with each other and with the provincial networks. Technically, the special companies are 4 Dcnaukraftwerke Jochenstein A. G. and Oesterreichische-Bayerische Kraftweike A. G. not subsidiaries of the V. G. but as the Nationalization Law appointed the V. G. as the Government's trustee for its 50% or more ownership of the shares in the special companies and as all revenues from the sale of elec- tricity accrue to the V. G., it is, in effect, a Federally owned holding company. Control of the special companies is exercised through the V. G.'s representation on their Boards of Directors plus the control of the funds allocated to the companies for both operation and construction. The V. G. does not buy electricity from the special companies but merely pays their operating costs. It also decides what investments vill be made in new facili- ties by the special companies. Profits of the combine have been distribu- ted by the V. G. in such manner as to result in the lowest payment of taxes by the combine. 4. At the end of 1955, the V. G. combine operated 41% of the total generating capacity 1 installed in Austria and in 1955 it sold wholesale about 591o of the electric energy consumed by the public. The V. G. does not sell energy to retail consumers. It sells to only 13 large consumers in eight of Austria's nine provinces 2/ and exports to three foreign coun- tries. The domestic consumers consist of six provincial companies, the city of Vienna, five large nationalized industries and the Fedeiral Rail- ways. The amount supplied the Railways.however, is relatively small as the Railways have their own generating plants. The special companies which are cntrolled by the V_ a. supply about 80A of the energv which it sells. The remaining 20% is purchased from a large nationalized steel plant having surplus capacity (54), from provincianl an internationa1 com- panies (8%), and from foreign companies (7%). The provincial and munici- pal co mpa 4 dist riue to ultimate consumers the energy which the huy from the A" G. along with the energy which they generate in their own .Lanus. 5. AlhUg h lU4,-Iawo auflh,orized the etablis4hment -f six -pecia companies, only four have as yet been established. They are located in the prvice of Uppe A-sri,_ al4g C arinthia4-,4 an-- Lower Austria. They are known as the Ennskraftwerke, the Tauernkraftwerke, the Oester- reichische DraPkraftwerke, and the Gesterreichische Donaukraftwerke. Of the two companies yet tobe establisherd, one will be in the province of Ti2rolI and th4 thriu-rrleg 6. Prior to nationalization a"Most all of the electrice sumed by the public was produced in plants owned and operated by the prov- inces and municipualities. Pri.-Ivately owned plants sLu.pi oly smaL.L s lated areas and villages. The Nationalization Law did not materially affect the privately owned sector of the power economy. Its purpose was to re- organize the publicly' owned sector and to provide for federal ownership fncluding the Austrian share of the two Invurnauional companLes sup- plying power to the V. G. network. .2. The province not included is Vorarlberg, the westernmost province in Austria. of power production and transmission. V. G. combine, has provided the major expansion of electric power in Austria in the post-war per IV. EXISTING INSTALLATIONS AND PRODUCTION OF TEE V. G. COMBINE 7. The V. G. combine had at the end of 1955 an installed capacity of 910,000W inUU.LLiG th.ELe Mu trian share of the c ie h two international companies jointly constructed with Germany. Of this total, 783,000 kw, or 86, as -h cait -ad ;17,000Iw was.he-mal. Te provincial and other companies interconnected witn the V. G. combine had - ~ ~ ~ ~ or%.u r'nnri 1--, r-1=:='nnn 1-.. a.4 ' was '.ro SUota Installed capacity of 801L,U0 kw, 0 k..w of whichnWO wasI h.ydro capacity and 246,000 kw was thermal. The V. G. combine and the inter- connected provincial companies therefore had a total installed capacity of 1,711,000 kw. This was about 77% of the total!/ generating cahacity installed in Austria. The V. G. operated ;204 km of' 110 kv transmission lines (927 km of which were double circuit), 549 km of 220 kv transmission lines (532 kia of which were double circuit), and 10 transformer stations with capacities totaling over 752 MVA. 8. In 1955 the V. G. combine alone produced about 3,320 million kwh, purchased about 427 million kWh from other domestic companies, and imported 276 million kwh. The V. G.'s transmission losses were 149 million kwh on 4,023 million kwh transmitted, or about 3.75p, which is unusually low. (Its customers assume the step down transformer losses.) V. T19 POWER MAE T Consumption in the V. G. Area 9. In the eight provinces scrved by the V. G. network,the public consumption in 1955 was 5,760 million kwh. The V. G.'s sales were 3,532 million kwh or about 61 of the total,and in addition,the V. G. exported 342 million kwh. The remainder of the domestic consumption was supplied by the provincial and municipal companies in the area. If Exclusive of industrially owned power plants. - 4- 10. The consumption in 1955 by the various classes of consumers in the territory served by the V. G. is given below: C1nas -f Cnumnr Cnnsmpimntion m nf Tntpl (million kwh) Households 853. 14.8 Small Isi-nea A?9. 11.9 Industry 3,643. 63.0 Transport (witout 183. 3.3 Agriculture 163. 2.8 Miscellaneous 339.4. Total 5,?60.10. 11. Of the total industrial consumption shown above, 1,010 million kWh (%2?. 50 ) -Was Con-su%AMed% by the aJIUMinum ind,Ustry which= Uses large mont of energy in the summer when ample stream flows provide the necessary ~~~~~~2 C.L.2 . .L~± m i Supply above theU nor'IMildmad In thne winter produton of alumiuml is5 reduced. The aluminum industry has doubled its consumption since 1951, but it is not likely to increase its consumption in the future to any ap- preciable extent as no expansion in production facilities is contemplated. Othez industrial consumptionL is expected to Inces Vewe clland11/; annually until 1960. 12. Household consumption is expected to increase by 17% in 1956, owing to the extremely cold winter. In the following years it is estimated to increase at about 11% annually at least until 1960. 13. As the other classes of consumers are expected to increase their consumption only by modest amounts, the increase of the total internal consumption is estimated to be 13% in 1956, 9% in 1957, and gradually to decrease to 6 in 1960. As consumption in the past 5 years in the area served by the V. G. has increased at an average rate of 12.4% compounded, the annual rates of increase estimated for the next 5 years are conserva- tive. V. G. Sales 14, The V. G.'s internal sales in the period 1951-1955 increased at an average of 14.2% annually, somewhat faster than the total consumption in its market area; consequently, the V. G.ts share of the market increased from 54 in 1951 to 61% in 1955. This trend is expected to continue,and by 1960 the V. G. estimates that its share of the market will be about 63%. (For details see Annex 1.) 15. The V. G.'s exports, which are mainly exports of excess summer energy, have increased very rapidly in the past 5 years, expanding from -5- 6o of total sales in 1951 to 9% in 1955; consequently, its total sales have :creased at a greater average rate than its internal sales. The total iles increased 15.3 annually compared with 14.2% for domestic sales. In ie next 6 years the V. G. estimates that its Intertal sales will increase b a rate of about 10% annually. This is conservative when compared with ie 14.2% rate in the past 5 years. 3. In 1959, as shown in the table below, the V. G. expects to in- 'ease its exports substantially (from the sale of energy from the Ybbs- )rsenbeug project now under construction). A large part of the increased cports will be summer energy exported through a contract now under dis- ission with lectricite de France and by an exchange with Czechoslovakia, )w under negotiation of two kwh of summer energy from Austria for one kwh I winter energy from Czechoslovakia. 1956 1957 1958 1959 1960 1961 (million kwhT btal Sales 3,950 4,270 4,700 5,167 5,462 6,212 tports 215 215 296 900 900 900 vtal Sales 4,165 4,485 4,996 6,067 6,362 7,112 The average increase in total sales shown above will be about . annually over the 6 year period, but it will be uneven because of the un-p in exports in 1959. 3. The electricity estimated to be sold in the period 1956-1960 is ,pected to be supplied more from energy produced from the companies in the G. combine and less from the provincial companies. Imports are also :pected to be less than in 1955 and preceding years. Whereas the V. G. Lrchased domestically 427 million kwh in 1955 and imported 276 million rh, its cztimated domestic purchases in 1956-1960 will decrease from 427 * 118 million kwh annually and imports range from 115 to 215 million kwh Lnually. (For further details see Annex 2.) VI. TE CONSTRUCTION PROGRAM OF THE V. G. COMBINE . To meet the prnspective increase in demand. the V. G. combine Ls under construction projects which will increase its installed capacity S61.3,000 kur t448-OnO kw hvrn Pnd 165-000 kw stppm) by 1960. thus bring- .g its total installed capacity to 1,523,000 kw or 48% of the 1960 total .Austria. The program includes the completion of firn hvAdro lants the pansion of two steam plants, the construction of 418.5 km of 220 kv and !r._A Irm ^ 11n Irw avenam4e4 1A nAA4d,%Yn1 f4rvnfam- r nP.P - A.4+t-h- .g stations. The capacities to be installed in each power plant and the - 6 - capacity expected to come into operation each year are shown in Annex 3. In addition, the V. G. combine plans to start construction in 1957 of 200,000 kw in two thermal plants which will be completed in 1961-2. (See Map) 20. The installed and minimum winter capacity (in a normal water year) as of the end of each year and the estimated demand on the stations are given below by years from 1955 to 1960. 1955 1956 1957 1958 1959 1960 7Thousands of kwT Installed capacity 910 1,035 1,145 1,295 1,523 1,523 W7nter capacity: a) Hy'ro 525 570 610 656 733 733 b) Thermal 127 192 192 292 292 292 Total (a & b) 652 762 802 948 1,025 1,025 Estimated winter demand 638 700 750 800 840 880 21. The cost of the program outlined above is estimated at 5,656 million schillings ($217 million". With the addition of amortization fall- ing due during the years 1956-1960 amounting to 692 million schillings, the total capital requirements of the V. G. combine during the period will be 6.348 million schillings ($244 million). For details see Annex 4. VII. TEE PROJI0TS 22. The V. G.'s greatest need is for winter power. From the various prolects in the V. G.1s program, three which will add 265,000 kw of winter capacity to the V. G. system have been selected as being the most suitable for Bank financing. The first of these is Ybbs-Persenbeug, a large run- of-the-river hydro plant on the Danube, 130 km by river above Vienna. This prolect was started by the Germans in 1939-40. Work was suspended during the war, and in 1945 the project was taken over by the Soviets as a German aset. In 1953, however, the Soviet authorities suddenly handed the proj- ect back to the Austrian Government on the understanding that work upon it wonld be penmedl 23. The plant is being constructed by the dsterreichische Donaukraft- werke A. G. It is estimated to cost a total of 2,365 schillings ($91 mil- lion) of w0hich 519 million schillings ($20 million) had already been spent by the end of 1955. It should be completed by the end of 1959. When com- pleted i+ Willn have a capacity of 192.000 kw from six generating units in- stalled in two power houses. In a normal water year it is expected to produce 1,153 million kwh, 49A milliro nf which will be winter energy. Two units will go into operation in December, 1957, and a third one in the early part of 1958. These will permit the production of qbnot 747 million -7 - kw annually, 3807 million kwh of Which.±±01 will be valuable winter power, be fore the project is finally completed in 1959. The cost per kilowatt, with six units installed., will be the equivalent of about $474. This is a rela- tively high cost for a run-of-the-river plant, but it includes the cost of twin navigation locks, which contribute nothing to the production of power. Z4. As the plant will be "run of the river," it will not affect the flow of the Danube downstream. As the backwater from the plaU wi Lie wholly within Austria, no other country will be affected. Although the Danube is an international waterway, none of the relevant treaties govern- ing its use will be violated by the construction of the project. Naviga- tion will, in fact, be improved. No international problems are, therefore, likely to arise as a result of the project. 25. The other two projects are Voitsberg and St. Andrae, both expan- s.:.ons of thermal plants using domestic brown coal. They are estimated to cost atotal of 570.0 million schillings ($21.8 million) and are under con- struction by the Draukraftwerke, the same company which is building the Reisseck-Kreuzeck project, which is partly financed by the Bank. The ex- pansion will consist of the addition of one 65,000 kw unit to the exist- ing 60,000 already installed in Voitsberg and the addition of 100,000 kw to the 67,500 kw in St. Andrae. The Voitsberg expansion is expected to be completed in October, 1956. Actual construction of the St. Andrae ex- pansion is expected to start in January, 1957, and be completed by the end of 1958. Orders for the equipment for St. Andrae have already been placed mostly in Austria and partially in Germany after international competitive bidding. The cost of the 165,000 kw expansion is estimated to be the equiva- lent of $133 per kw, a reasonable figure. 26. The three plants are all fairly close to the princioal load center, Vienna. all are sound tndortnkings, and will produce energy at reasonable costs. For further details on each plant see Annex 5-a, b, ana c. The cost of (each plant, the amounts invested to the end of 1955, and the amounts to be in- vested in the period 1956-1959 are shown below: Estimated Costs in Millions Schillings Invested to To be Total Plant End of 1955 Invested 1956-59 Cnt Ybbs-Persenboug 519.0 1,84?.0 2,366.0 ($91.0) Voitsberg 96.0 79.0 175.0 ( 6.7) St. Andrae 394.0 394.0 ( 15 Toa 01. U,2. a.95. V$113) 4Y. The 806 million scili yo(3illon the -a-k has benr- Quested to provide in two loans for the three plants will amount to about 0 7 of their combined cost. The amount of foreign exchangeei o -8 - the three plants during the disbursement period of the loans (1956 through 1958) is estimated to amount to 134 million schillings ($5.1 million). ,iI. Tr m"- - A--I OF THE PROGRA iOM TE PROPOSED LOANS -o eore setting forth the details of how the program mentioned in paragraph 19 will be financed, some general remarks on the V. G. combine's financial problems may be helpful. Since its establishment in 1947, the combine has faced the task of meeting an unusually rapid increase in power demand and it has endeavored to do so by developing Austria's hydro-power potential since hydro power in Austria is more economic than thermal, at least up to the present, owing to the availability of relatively cheap hydro sites and the absence of cheap fuel. This policy, although economically sound, creates two problems: (a) The first is the obvious one of finding the largo amounts of capital always required for hydro-power development. (b) The second problem arises be- cause any large expnsion program based on the development of hydro power must, for reasons of economy, include large projects. This inevitably creates some inflexibility, since it becomes difficult to slow the program down in the face of a temporary shortage of funds without considerably increasing its cost. ara The problem faced by the V. G. at the present moment is therefore that it must either obtain aeditional capital outside Austria or it must cease work temporarily on one or more of its large projects and incur the additional costs and Pdverse consequences for the power supply which that would entail. The proposed loan is designed to help the V. G. over the next three years when the financial problem is particularly difficult. 31. Although the loans will be used for specific projects within the program, it is necessary to see the operation against the background of the V. G.'s overall position in order to obtain a true perspective. S2. As pointed out in paragraph 21, the total cost of this program t, to 1960, plus amortization falling due during the years 1956-1960, will amount to 6,348.6 million schillings ($244 million). The financing scheme for the program is given in the table below. It has been divided into two time periods in order to emphasize the importance of the situation dir- ing the next three years. - 9 - Period Period Total Total i arrz os of -imInlu r 1 19 Amortization of Debt 5,155.1 ($198m) 1,195.5 ($46m) 6,348.6 ($244m' Internal Sources of Financing Govern ent 565.9 341.- 906.9 NT9 Pri-t+/ 16.9 214.- 381. *9 Depreciation Allowances 721.1 698.4 1,419.5 Long-term Borrowings 1, 504. r950 - ArA A Other Receipts 215,7 47.- 2627 3,175.- 2,250.4 5,425.4 Short-term Interim Financing 79.5 - ??952 wt954.5 1 , 4?) 5,5. A Exte1-rnal S-ources of iacn Remainder of IBRD Loan to .Leis s ecI-Q6r euzeck 194.6 6.00. Suppliers Credit 200.- 200.- 394.6 6.- 400.6 Total Resources 4,349.1 ($167m) 1,476.9 ($57m) 5,826.- ($224m) Gap Remaining to be Covered 806.- ($31m) 806.- 6,632.- Surplus 283.4 283.4 (For further details see Annex 6) 33. As the above table indicates, the total funds available to the V. G. for the period 1956-1958 without the proposed Bank loans would be 806 million schillings ($31 million) short of requirements. With the Bank loans the total requirements of the program can be met, although for the first three years it will be necessary for the V. G. to obtain consid- erable short-term financing, which will reach as much as 779 million schil- lings in 1958. The proposed sources of the interim financing have been checked and it appears that there are good prospects for the V. G. to ob- tain this amount of short-term financing. The net surplus of 283 million schillings ($10.8 million) shown in the table arises entirely from opera- tions in 1960, since surpluses which accrue in 1958 and 1959 must be used for the repayment of the short-term financing. Proportionately, the net surplus is small (5-4), and should be considered as an additional contin- gency in the estimates. 1/ Based on the increased tariffs discussed in paragraph 39-. 2 ,/ Repayments. - 10 - 34. It is not realistic to expect that the V. G.could obtain addi- tional funds from any of the sources listed in the table above. In fact, for the first few years of the program, the V. G.'s financial situation will be far from an easy one, especially in view of the tightness of the Austrian capital market. However,the sources of financing have been care- fully examined, and the program as outlined is believed to be a workable proposition, provided the proposed Bank loans of $31 million can be counted upon for part of the V. G.'s long-term requirements. The V. G. has given the Bank assurance that if the nroposed loans should be made, the projects which would be financed in part by the Bank will have first call on all of the funds available to thf V. G. combine. Thus, if there should be a short fall in raising any of the funds from the sources listed in paraaraph 32, projects other than the Bank financed projects would be postponed or elimi- nated unless the Bank agreed otherwise. The V. G. has also agreed that it and its affiliated companies in the combine would undertake construction on a project not already included in the program and requiring for its completion a substantial capital investment only after the Bank, the Guaran- tor. and the V. G. have mutually agreed that the financing thereof is reA sonably assured and that the program would not be impaired thereby. Proposed Borrowers 35. It has been proposed that the $31 million equivalent requested for the nroiect bp made availabe in two loans- one of $21 million equiv- lent to the Oesterreichische Donaukraftwerke A. G. which is constructing the Yps-PeRsenbeug project Pnm n of $10 million eian1ent tn the 'rn kraftwerke A. G. which is expanding the capacity of the Voitsberg and St. Andrae thermal plants. The . would be he nnln 1o ln Estimated Expenditules -nd Tibusmetso_4nkPo^ca 36. The following table gives the estimated expenditures and disburse- ments of the proposed loans by years on the three plants selected for financ- ing by the BaQn-k. - 11 - Expenditures on the Projects and Disbursement of the Proposed loans ( mi 1 1 ions of schi 1 1 ing s) Spent up to ernet End 1955 1 95A I957 1958 1959 Tntal Dnnaukraftwerkn Ybbs-Persenbeug Ex=enditure 519 595 650 401 201 2366 (t91m) Use of Loan 374 172 - - 546 ($21m) Drau1;raftwerke St. Anirae Ex penditure - 18.5 193 182.5 - 394 ($15.2m) TT nf Lnnn A_5 BRRA R.L9 - 1R1 2 (t7m) Voitsberg Expenditrie 96.2 75.1 3.7 - - 175 (4.7m) Use of Loan - 75.1 3.7 - - 78.8 ($3m) Total Expenditure 615.2 688.6 846.7 583.5 201 2,935 ($122m) Totl Use of Loan 45?.6 96A. 8q.9 (Chr1m) If the loan,should be disbursed in thi way, +he- will i 1- - o o the cost of Ybbs-Persenbeug, about 45% of the cost of St. Andrae, and 45% of the cost of Voitaterg V.14 U± IVO.Lusberg. IX. FINANCIAL ASPECTS OF THE V. G. COMBINE Introduction 37. Although the relationship between the Verbundgesellachaft and the special companies is not that of a holding company and its subsidiaries in the technical sense, because the V. G. company itself does not own any shares in the special companies, in actual practice, however, this relationship is very similar. It is, therefore, useful to present a consolidated pic- ture of the financial position and operations of the combine. This is done in the following paragraphs. Income and Tariffs of the V. G. 38. The net Irofits of the V. G. combine in the years 1951 through 1955 ranged from about 13 million schillings to 30 million schillings. During 1952, 1953, and 1954, the average cost of production of the V. G. combine per kwh has about equalled the average revenue per kwh sold. The profits of the V. G. combine therefore have accrued from income other than - 12- the sale of electricity, such as transformer rentals, installation charges, and extraorinnrN innnme frnm sle of assets_ In 1955 the net profit shown was a little over 30 million schillings, but, if the depreciation charged had reflected the write up of' assets recently authorized hy l w the com- bine would probably have operated in the red.. (For details see annex 7.) 39. The tariffs governing the sale of electricity by the V. G. were established in mid 1951. fith the costs of construction and costs of opera- tions rising as a result of successive increases in wages and in prices of materials, fucl, and supplie4s, it became obvious to the V. G. that tariff increases could no longer be postponed. It therefore requested the Govern- ment aencies concerned withU 4the reglaio ofte-rc of electr,icirt authorize an increase of about 22% on its energy sales in Austria. This increase has now been approved. Wxpoort p,iCeS, however, -will not be i-1 creased, since almost all exports are sold under long-term contracts at fixed prices determined with regard to the specific provisions of each contract. In general the prices charged for exports have been somewhat higher than those charged for similar internal consumption. The approved increase, which will go into effect as of August, 1956, is estimated to provide in 1960, after completion of all projects now under construction, revenues sufficient to cover all operating expenses including depreciation based on revalued assets and earnings sufficient to show a return of about 4 on the total investment by 1961. While this rate of return is somewhat on the low side, it is considered reasonable in the circumstances. The V. G. has assured the Bank that it will review its tariffs from time to time and will request further increases as required to maintain a sound financial condition. (For details of existing and new tariffs see Annex Consolidated Bala,,e Sheet 40. T7e consolidated balance sheet as of December 31, 1955, given in Annex 9 shows that the total assets of the combine amounted to some 6.7 billion schillings, mainly represented by fixed assets of 3.9 billion schillings and construction work in progress (including advance payments) of 1.4 billion schillings. The capital structure shows a high proportion of long-term debt in relation to equity, based on present book values, With these values the average debt/equity ratio is 79/21. The real value of the assets, however, is considerably higher than the book value shown in the balance sheet owing to the inflation which occurred in Austria after the war (1945-1951). The assets of the various companies will be written up in the near future in accordance with the Schilling Opening Balance Sheet Law. Although no final decisions have as yet been made as to the exact amount of the write-up to be effected in each company, a figure of 2.5 billion schillings as total write-up was given as an approximate amount. On the basis of this estimate the net book value of the fixed assets would be increased from 3.9 billion to 6.4 billion schillings and the equity from 1.3 billion to 3.8 billion schillings. The average debt/ equity ratio for the V. G. combine would then become about 58/42, a much more favorable ratio than reflected by present book values. In considering the size of the debt of the combine it should be noted that part of the proceeds of long-term borrowing has been re-lent to associated international companies, - 13 - provincial companies, and the Federal Government. Total funds re-lent and outstanding at the end of 1955 amounted to 885 million schillings.1/ Debt service on this part will not have to come from the revenues of the V. G. combine but will be paid by these companies and the Federal Govern- ment Long-Term Debts 41. A broad specification of the long-term debts outstanding at the end of 1955 for each of the companies is given in Annex 10. Current Financial Position 42. Consolidated current assets, including 91 million schillings to be paid in by shareholders of the Donaukraftwerke during 1956, amounted to 361.4 millio,illings aainst which there were outstanding current lia- bilities of 293.3 million schillings. The net consolidated working capital, therefore, was about 78 million sdhillines. Rorecpt nf Enrnings 43 The forecast of consolidated earnings of the V. G. combine for the years 1956-60 is given in Annex 11, and for the years 1961-65 in Annex 12. The estimate of gross revenues is based on the assumotion that rate increases averaging 22o in Austria will be obtained and will become effec..-- tive in Augst of 19-5 as areadlv ainsed in naragraph 39 above. The provision for depreciation, which is based on the new values for the fixed assets expected o hP effptive in 195A is more than ndequate. The net profits are estimated to be rather small in the first two years, but would increase to bout 166 million schillings in 1961- The estimate-d annial profits after the rate increase would be sufficient to pay a dividend of about L14 o sha rholders. This, however, is -not contemplated because the nt- en ings during the period 1956-60 totaling some 380 million schillings will be retained and used in the investment program. The rpetrn on the total equity A broad specification of this amount is as follows: Millions of Schillings Donaukraftwerk Jochenstein 292.6 Gesterreichuischu-layerisch"e Kraftwerke 18. Federal Government 211.7 Provincial Companies and Others 195. 885.0 The amount shown above, on which the Federal Government is obligated to pay debt service is a part of the proceeds of a bond issue floated in 1953 by the V. G. combine and guaranteed by the Government. It was agreed that the V. G. would lend a part of the issue to the Gover=ment for the continuation of the electrification program of the Austrian railways. - 14 - in the companies, including the cnpital surplus created by the write-up of the assets (which will only be partly converted into share capital), would be about 3% in 1961, and gradually would increase to about 4.0% in 1965. (See Annex 12.) Future Financial Position 44. A forecast of the consolidated assets and liabilities at the end of 1960 is given in Annex 13. By that time total assets are estimated to amount to some 13.4 billien schillings, of which 11.7 billion schillings would be fixed assets (depreciated book value). Total long-term debt out- standing would amount to about 7.6 billion schillings and total equity to 5.5.billion schillings. These figures represent a debt/equity ratio of 58/42. This is a reasonable ratio especially considering the fact that at the end of 1960 a total of 1.13 billion schillings is estimated to be out- standing as loans granted to international companies, provincial companies, and to the Federal Government which together will have to provide debt service on this part of the debt. (See note on page 13.) The debt service of the combine will be covered about 1.4 times. Security 45, Both of the Bank1s existing loans to Austrian power companies were secured by mortgages and assignment of revenues from contracts for the export of power. In the present circumstances, however, there is no special reason for the Bank to take mortgages or assignments of revenues as security for the proposed loans. Two of the projects now under con- struction, Ypps-Persenbeugd St. Andrae, have no outstpnding mortganes and the third, Voitsberg, has only one mortgage securing an outstanding debt of about $500'000 equivalent, which is to be renaid in 1964. Since this is such a small amount and since the special reasons why the Bank required mortgaes in the previous loans do not a-plv tn the proposed loans, the negative pledges whidh will be obtained from the companies concerned are considered to be adequate protection. 46. None of the three new projects are directly connected with the export of power. However, the Verbundgesellsdaft has agreed upon a draft contract for power ePrt.to Electricite deA France. This contract was originally partly motivated by the prospect of a surplus of summer power from the Ybbs-Persenhenp nroject_ but at the preent time it is not possi- ble to say when this contract will become effective. Even without this uncertainty there is no good reason fnr the Bank to attempt to obtain secu- rity for the proposed loan in the form of an assignment of revenues from power exports in view of the fact that negative pledges will be obtained. X. MANAGEIVMNT OF PROPOSED BORROWERS Management 47. The Board of Directors of the V. G. consists of 24 members and two representatives from the labor union. Of the 24 members eight represent - 15 - the Government, eight represent the provinces, and eight represent the power consumers. The management of the V. G., which consists of four Directors, is appointed by the Board of Directors with the concurrence of the Government. The four Directors are well qualified for their positions. They manage the V. G. with reasonable efficiency, considering the diffi- culties of operating a publicly owned corporation. 48. The Boards of Directors of the two special companies consist of 6 to 7 representatives of the Federal Government, 5 representatives of the provincia. share holders, and 2 representatives of the workers. The top managements of the companies, which are appointed by their respective Boards of Directors, are in the hands of two managing directors and the chief engi- neer 'as deputy director. One of the managers is the director or President of the company. The managers have a rather wide latitude in carrying on the day to day operations of the companies, but they must operate within the frame-work of the financial and other controls established by the V. G. The managers of the two companies appear well qualified for their posi- tions, and the technical staff of each company is competent to supervise the construction programs of their companies including the projects which the Bank has been requested to assist in financing. XI. FITACIAL ASPECTS OF PROPOSED BORROWERS 49, Although the V. G. will be the co-borrower on the proposed loans, it will not use any of the proceeds of the loans for its own construction program which will be devoted entirely to transmission lines and related works. As a financial analysis of the V. G. combine, which is controlled by the V. G., has already been presented, no separate analysis of the V. G. as such is nresented. 50. The bn1ance sheets of the two snecial companies as of December 31, 1955, are given in Annexes 14 and 18, and the pro forma balance sheets showing the position of each company after the completion of the projects in 1960 are given in Annexes 16 and 20. The latter balance sheets show a debt/eauitv ratio of 65/35 for the Draukraftwerke and 73/27 for the Donau- kraftwerke. The latter is considerably higher than the average debt/equity ratio of 58/42 forecast for the V. G. combine asat the end of 1960. .91. Up to now the special companies have been reimbursed for the actual cost of production of the poww iblivered to the V. G. In addition, the net profits ancimulated by the V. G. nt the end of a vear have been divided between the companies in such a way as to result in the lowest pay- ment of taxes. A neW arrangement between the V. and the special c om- panies is being considered, according to which the special companies would continue to be reimbursed for their actual cost of production but the total profits of the combine would be distributed in proportion to the share crapi- al of each special company. The forecasts Of income of thf two speci-al companies shown in Annexes 15 and 19 assume this new basis for the distri- bution of profits. TheV cash" fLow forecasts of theL VWo copni --as - 16 - given in Annexes 15 and 19, show that the estimated receipts from operations of each company togethr wiU. th eqit ,cntiuo -47-A th- - -os e - orro- ings would be sufficient to provide adequately for the financial reauire- ments of each of the . Upj . U A~- - ~-- 'I- .- 52. ~ According to MLLNne 17, Uh nna eb evieorallngtr loans of the Draukraftwerke outstanding for the period 1961-65 would be covered by receipts from operations of the cUMpaUy 1.3 times in 1961, which would gradually increase to 1.5 times in 1965. Debt service on the Donau- kraftwerke long-term loans, however, would be covered only by narrow mar- gins. If the Donaukraftwerke were an entirely independent company, this might be the cause for some concern, but as the income of the V. G. com- bine is more than ample for all debt service of the combine, the V. G. could, with:at difficulty, transfer funds to the Donaukraftwerke to cover a cash deficit if, in any one year, the cash available to the Donaukraft- werke from operations should not be sufficient to cover its debt service fully. Therefore, there should not be any concern that the Donaukraftwerke would not be able to meet its debt service. XII. ECONOMIC JUSTIFICATION OF TE PROJECT 53. Although the increase in demand for electricity in Austria in the past few years has been met through an equivalent expansion of generat- ing facilities, there is at present no reserve capacity in Austria. During the winter months, imports of electricity are required to meet a part of the demand. 54. The V. G. combinets construction program in 1956-60, which the Bank has been requested to assist in financing, is designed to meet a con- servatively estimated increase in power demand until 1961-62. Expansion of power capacity included in this program is necessary if the supply of electricity in most of Austria is not to be curtailed in the near future. The economic consequences of any substantial curtailment of supply would be far reaching and could affect Austrials balance of payments as imports of electricity would undoubtedly be increased to meet the lack of domestic supply. This is confirmed by the fact that substantial increases in im- ports were made in the first quarter of 1956 to meet substantial increases in demand resulting from a severe winter. The cost of these imports was above the V. G.1s selling price of electricity. Obviously, imports to the extent available are preferable to reduced industrial production and ex- ports. 55. Assuming as one of the elements of cost a 5.5% return on the total investment in each project, the cost of power would range from the equivalent of 7.2 mills/kwh for the hydro project to 8.5 mills/kwh for one of the thermal projects. This is a reasonable economic cost. The rate of return assumed is equal to the interest on the last public bond issue for power expansion. 56. The actual return on net investment in plant in service in recent years has been lower than that assumed, amounting to 3.2' in 1955. However, - 17-- if allowance is made for the proposed write-up of over 60% ia net fixed as- sets to compensate for the greatly increased price level, the return would have been only 2% in 1955. After the increased tariff charges go into effect in 1956, the rate of return in 1957 is estimated to be about 3.3% after taking into account the write-up of assets and consequent higher de- preciat'on -harges. After the completion of the V. G.'s program, now under constructIon, the rate of return will approximate about 42% in the early 1960t. 57. The price (tariff) readjustment should have two effects, 1) eas- ing somewhat the burden of financing current and future expansion of Austrian power capacity, and 2) discouraging investment heavily dependent on arti- ficially low power rates, unsustainable in the long run. XIII. CONCLUSIONS AND RECONvENDATIONS 58. The engineering work on all three projects is entirely satisfac- tory and the construction work in place on the two projects under construc- tion is well executbd. 59. The estimated costs of the projects, which are based on present wage scales and prices, are reasonable. 60. Although the V. G. and its affiliated companies operate under the Ministry of Transport and Nationalized Industries, the combine has a wide latitude in day to day operations. It is reasonably well managed, but it must operate within the framewrok of government administration which impairs its efficiency to some extent. 61. The financial position of the V. G. combine, upon completion of its cosrcinprogram- will bep sondla nd i+ts "et/qut nrti^ will be reasoiiall. 62. The ability of the V. G. combine to raise the local currency financing, includin the short-term finncing requireA fnr its- cntruc- tion programs, appears to be reasonably assured. The increase in its tar- iffs, which will be made effectIve in the near future, should provide re- sonable profits for the V. G. combine in the future. 63. The Draukraftwerke and the Donaukraftwerke are suitable borrow- ers. The V. 0. should be the co-borrower on each of the two proposed loans. 64. The expansion of the capacitIes of two thermal plants by the rau- kraftwerke is suitable as a basis for a loan of $10 million. The type of -1 t i- ^ " A A +1 c- ,. + -, 4-~ 4S ^- -L - j 4 -A A +. +,-4 4- 1~ 4-4 -± -- - V U - Ule pla. t involved and -he contrction Ye-o indcat that the ter of 4.L theL loan should be 20 years including a grace period of about three years, 65. The Ybbs-Persenbeug hydro project under construction by the Donau- k-raftwerke is suitab'le as a 'asi s for a locan of $21milli-1on. The tye ofV project indicates that the term of the loan should be 25 years and the date of the initial prod-ction from the project indicates that there should bea grace Eriod of about 21 years within the term of the lcan. Annex 1 r-nrPPT D', "TCý-'jQ"TrrTn' TMý rf`I-M IT rl P~' r-- ~ D ýM T Q. ATVQc ToTAL PL CONUlTIoNDrV IN TEn ch.rc. i o ND- AA (li~iE"onsF Kiloviatt-hours) Ju~~eLIUJui .1 0L O. u. (.LU o)). 1951 n I95 195r3 3 95 1955c'4" :>useholds 5 7. 5. 60. ~ 71. 853.U ricuture 102.7 110.2 123.0 7? .8 163.0 adustry 2337i9 2628R 2861. 32h8.6 3643.0 ransport / & ia- 5 2 7Q 37Q 1 l) -n. )22n neous TOTAL 3749.9 4124.5 4468.5 5113.9 5760.0 .G. -rntArnal sales 2153-0 2367.o 264,., 3046.0 3532.0 of total consumption 54.0 57.5 59.0 59.5 61.3 Estimated Consumption and Sales 1956-1960 1956 1957 1958 1959 1960 >useholds 100.0 1140.0 1240.0 1370.0 1510.0 iall business 670,0 710.0 780.0 830.0 890.0 ;riculture 210.0 230.0 240.0 260.0 280.0 tdustry 4190.0 454o.o 4920.0 5860.0 5540.0 .i T -ansport -/ & Miscella- 440.0 470.0 490.0 490.0 490.0 neous TOTAL 6510,0 7090.0 7670.0 8210.0 8710.0 G. Interial sales 3950.0 4270.0 4700.0 5167.0 5462.0 of total consumption 60.6 60.2 61.2 62.9 62.7 ilithout Federal Railways vhich operate their own generating stations ANNEX 2 fNNUL PRODUCTION. PRCH.SES AND `IUORTS OF V,G. COMBfTiRIE 1951 1952 1953 195h 1955 (milIf7nrs of 'PMn\watt ho~rn s) Generation off the V .G special companies 1,545 1,829 2,454 3,012 3,320 Purehases from the provincial tries 750 669 508 452 427 Import 25 55 114 135 276 Toa 0~1sup~ply 15TI=n 7,5 Tr~n 76 r ~5, ,2 Transmission losses of' the .O . 12 117 156 Jh9 119 AvLaCtble n^Po r ..- domnestic sales and exp=rts 2R96 2,436 2.920 3,450 3,874 ESTIV.TED PRODUCTION, PURCYASES AND IMPORTS 1956~1960 1956 1957 1958 1959 1960 (miTlions or~lowatt~Hours) Estimated generation of the V.G. special companies 3,842 4,319 5,026 6,160 6,364 Purchases from the provincial supply companies and indus- tries h27 287 118 118 118 Import 115 115 115 215 215 Total supply 4364 h, 721 5,259 9179-3 ~6,-97 Transmission losses of the V.G. 219 236 263 326 335 Available for V.G. domestic sales and exports h,165 h,h85 4,996 6,167 6,362 ANNEX 3 PROJECTS TO BE COMPLETED BY V. G. COMINE 1956-1960 1956 1M 158 p959 160 Total - - - - - - - - (Capacities in MW) - - - - - ILro Power Stations Kaprun (main station and upper statio toge.ther) 8.0 - - - - 8.0 Jochonstein 32.5 7.5 - - - 40.0 Reisseck-Kreuzeck 20M0 40.0 20.0 8.0 - 88.0 Ybbs-Persenbeug - 62.0 - 130.0 - 192.0 Schwarzach-St.Veit - - 30.0 90.0 - 120.0 Steam Power Stations Voitsberg 65.0 - - - - 65.0 St. Andrae - 100.0 - - 100.0 Grand Total 125.5 109.5 150.0 228.0 - 613.0 Transmission Lines (Kilometers) 110 kv 45.4 - 81 - - 126.4 220 kv - 6.5 232 - - 297.5 220 kv - - - - 180.0 l/ This plant is being constructed jointly by Austria and Germany. The capacity shown is the Austrian share of the 80 MW to be installed. 2/ Line from Kaprun to Oetz; the amount to be constructed in each year not yet determined. ANNl'EX h ESTIVATED EXPEIDITURES ON V.G, COMBINE CONSTRUCTION PRG1AM 1956-1960 Total Companies and Projeets 1956 1957 1958 1959 1960 1956-i960 - - - - - - - -(mfilions of schillings-- - - --- Donaukraftwerke A.G. Ybbs-Persenbeug 595.0 650,0 401.0 201.0 - 1,847.0 Draukraftwerke A.G. Reisseck-Kreuzeck 276.2 231.6 113.0 18.4 - 639,,2 Voitsberg 75.1 3.7 - - - 78.8 St. Andrae 18.5 193.0 182.5 - - 394.o minor investments and planning 28.6 6.0 4.o 2.0 2.0 h2,6 F-nskra.ftwerke A.G Minor investments and planning 22.6 4.0 2.0 2.0 2.0 32.6 Johnstein AA0. ä~chenstein~TAustrian part) 139.5 92.4 - - - 231,9 Tauernkraftwerke A.G. K2-priin (open 75_h 20..0 - --95. 4 'chwarzach-St. Veit 313.6 393.4 227.5 32.7 4.4 971.6 Minor investments and planning 22.1 «11.0 300 2.0 2.0 40.1 Verbundgesellschaft Transmissionlisan substations 88.0 192.0 192,0 116.0 95.o 683.0 Thermal Plants to be completed 1961-1962 __-_ 20.0 200.0 250.0 130.0 600.o Total Construction Program 1,65h.6 1,817.1 1,325.0 62.1 23.h 5,696,2 PAffmor-tization Payment i08. 1. 1,31_R 163.1 i7.- Grand Total 1,762.8 1,923.5 1,68.8 787.2 L06.3 6,3R8. Annex 5-A a The Ybbs - Persenbeug Project Location - On the Danube 130 Km by river above Vienna. Teg of P t - Run of the River (No storage) with two powerhouses (one on each bank) which will be an integral part of the dam and two navigation locks on the left bank each 24 m. wide and 290 m- Ino inrsin. The nam - 'Nhe Re m r ninina the two nowprhouses, will be 365.8 m. wide. The wier section between the two powerhouses will bel10m. wide. Five leaf type gates on the crest of the wier will control the flow over the spillway which has a capactyof 14,000 M/ sec. There will ea n rona 9.8 m wide on top of the dam and powerhouses. Two gantry cranes of 135 tons cpiya w.ill o prallPl to the road. Fo RJeWor - NYl Yearl.IUa4._ Ow low 1,100 .LAJ .LJAWW- - - Average flow 1,700 MIm,__*-. flIow IZ,7nn .IEe_e Reccords IjUW LUW -' '5-W Maxim Flow (1899) 10,000 (1955J ) 7,800I Flow records cover 60 years. Head on Turbines - Average low water 12.14 M Average flow 10.09 M Average high water O.uu IvI Turbines - 6 Kaplan type. Capacity at 1U.6 'l hea= 46,000 IL R.P.M. - 68.2 Water requirement per turbine - 350 ±isee. Generators - 6 Air cooled, 3 phase, 50 cycles, 45,000 KVA each. Generating voltage 10.3 Kv. Capacity at average head of 10.6 M - 32,000 KW. Capacity at maximum head 12.4 MXI - 36,000 KW. Project Capacity - Related to head and volume of flow. Capacity at average head is 192,000 KW; this is also maximum capacity as theoretical maximum capacity with maximum head cannot be attained because at maximum head (which occurs at low water season) the volume of flow is insufficient to operate all six units. When maximum flow occurs, the tailwater rises and reduces the head. The capacity at extreme low flow is 55,000 KW; at average low flow about 100,000 KW. (Annex 5-A Conttd) -2- Estimated Generation - With _uits in oreration With 6 units in operation Million Kwh Winter 387 496 Summer 26O _6,; 747 1xif.2 *less than in winter because of les.- head on turbines. Estimated Cost - Tnvested to To be invested end 1995 '-6...lc00& Total --- ilion Silings - - - - 1. Frenaratorv work. camns. roadr. etc. 20.6 97.5 118.1 2. Reservoir, including land, property, reconstruction work, etc. 743 372.7 Z4.0 3. Civil Engineering Work 294.6 613.2 907.8 4. Mechnnical uFipinmon+ 8!.0 2.1 36 5. Electrical Equipment 23.8 170.8 194.6 6. Se s and Aditri 9.9 al.-1 OI 0 7. Interest during construction 10.5 97.7 108,2 51 16l42. 2.366.o Cost of Production - The cost of production at the bus bar with 6 units in operation, exclusive of interest on borrowed funds or a return on equity capital, is estimated at 7.59 groschen or 2.92 mills per kwh. If a return on the investment of 5.5% is assumed, which is the interest rate on the last public bond issue for the power industry, the cost of production would be 18.86 groschen or 7.2 mills per k-h. Annex 5-B Voitsberg Steam Power Plant - Expansion Location - At Voitsberg in Central Austria. Existine Plant Capacity - 60,000 Kw, of which 20,000 Kw was completed in 1940. 20,000 Kw in 1941 and 20,000 Kw in 1952. Equipment - 3 Turbo generating units 20,000 Kw each 2 Boilers 70/tons/hr. each 2 Boilers 100 tons/hr. each Pressure 600 psi gauge; Temperature 8700F. Heat Rate - 15,400 BTU/Kwh 2 cooling towers 3 main transformers 10.5/110 Conventional Auxiliaries Fuel - .1ron cal! 4,500 BTU/lb (2,500 kg/ca per kg) 23"25% ash; 32-33% moisture. 80% from 5 mines by cableways - 20% by raiLwauy from nearby mines. pE ion Capacity - 65,000 Kw. Construction started in 1954. Expected to be completed in October 1956. Equipment- Tuo generator '5,000 Kw (82,000 KVA @ .8 P.F.) 3 phase, 50 cycles. 3,000 RPM. Generating Voltage 10.5 Kv 1 Boiler 190/210 tons per hr. Pressure at superheater exit 1,985 psi; at turbine valve 1,620 psi. Temperature 9869F. Oil burners will be installed for starting up. Heat rate 10,200 BTU/Kwh. Thermal efficiency at full load 32. 1 main transformer 82 MVA 10.5/110. 1 cooling tower 11,00 m00 /r. Conventional auxiliaries. Fuel - Brown coal from mines now supplying existing plant. Reserves adequate for at least 30 years. Ash disposal presents no particular problem. Estimated Cost - The estimated cost in millions of schillings is given below. As the plant is to be in operation in 1956 the contingency item is practically nil. (Annex 5-B Cont1d) -2- Item Total Cost Civil Engineering Work 34.0 Boiler Plant 64.9 Turbine Plant 34.3 Mechanical Equipment, including cooling towers, ash disposal, coal handling equipment, pumps, etc. 17.4 Electrical Equipment 17.3 Interest during construction 7.1 Total 17 Of the total. 96.2 million schillings was spent to the end of 1955, and 78.8 will be spent in 1956-1957. About 33.5 million schillings will be spent in foreign exchange by the end of 1957. Estimated Production - The new plant will be operated on base load and is expected to produce 325 million Kwh annuallv. h-JnntPr Co-,t. of' Production - The cost of production at the bus bar, exclusive of in tere-s t on borro.ed funds or -P retu-irn on-- equity capital, is estimated at 16.38 groschen or 6.3 mills pe KTh. If a . ret ur--n on +3h investmnt is assumed the cost would be about 7.4 mills per Kwh. Annex 5-C St. Andrae S'eam Power Plant Expansion Location - At. St. Andrae in Southern Austria. Eisting Plant Capacity - 67,500 KW, completed in 1952. Equipment - 3 Turbo generating units of 20,000 KW each 1 Turbo generating unit of 6,700 KW each 3 Boilers 100 tons/hr. each 1 Boiler 50 ton/hr. Pressure 600 psi. gauge; Temperature 8700F. Heat Rate - 15,000 BTU /Kwh 3 Main Transformers 25 MIVA - 10.5/110 KV. 2 Cooling Towers Conventional Auxiliaries Fuel - Brown Coal - 5,000 ETU/lb. (about 2,800 Kg.cal/KWH) 25% ash 20% moisture. Coal is transported about 1 mile from mine shaft to plant by aerial ropeway. ProDosed ExDansion C~pai~ ~- 100.000 Kw. Enijnoe - 1 Turbo generating unit of 100.000 to 110.000 KW: (125,000 0VA at .8 PF). Hydrogen cooled, 3 phase., 50 cycles. 3,000 RPM -Generatiln voltnage 10.5 KV. 1 Boiler 280/330 tons/hr. Pressure at super heater exit 0 '7p Y-ai; at +,'4in Tale 25?0 ;nal Tomnpraure qP50F Oil burners for starting up will be installed. Heat rate 10, 000 BTI/Kwh. Thermal eff+icien,r at full load 34.5. 3 Main transformers 10.5/.220 with total capacity of 129 DRTA. Conventional auxiliaries. Cooling Water - Obtained from nearby lavant Creek, tLerefore no additional cooling tower is required, but water cleaning plant will be necessary. Fuel - Brown coal from mine now supplying existing plant. Mine production and capacity of aerial ropeway will be increased. Quantity of known reserve sufficient to operate both the existing plant and the prUPosU expansiu for al 30 years. Ash Disposal - Ash will be transported by aerial ropeway to nearby ravine. (Annex 5-C Cont1d) -2- Estimated Cost - The estimated cost in millions of schillings is given below: Foreign Local Items Exchangge Currenc Total Civil Engineering Work - 64 64 Boiler Plant 19 69 88 Turbine Plant 40 11 51 Mechanical Equipment 10 44 54 Electrical Equipment - 52 52 Ash Disposal Plant 20 20 Contingencies 7 26 33 Interest during construction -_ _R _2 76 318 394 Estimated Production - The new plant is planned for base load operation and is expected to produce about 550 million Kwh annually. Etiaed Cost of Production - The cost of production at the bus bar, exclusive of interest on borrowed funds or a return on nequity capital, is estimated at 18.2 groschen or 7 mills per km hIf a 5.5% return on the in-shmpent is assumed the cost would be about 8.5 mills per Kwh. Amex 6 V.G.-Combine Forecast of Capital Re uirements and Sources of Funds 1956-1960 (n 1Mons of Schillings) Total Capital RequIreente 1956 1957 1958 1959 1960 1956/1960 Construction to be completec during 1956/1960 1,654.6 1,797.6 1,124.5 374.1 105.4 5,056.2 Con3truction to be completed by 1961/1962 - 20.- 200.- 250.- 130.-. 600.- Total Constructiorn I,5. u7 ,2 6, Awortization of debt (existing and proposed) 108.2 106.4 143.8 163.1 170.9 692.4 Total Capital Requirements 1.762.8 9 Sources of Funda A. Internal Sources: (1) Equity Contributions (mainly from Goverrmt) 160.5 199.1 206.3 184.7 156.3 906.9 (2) Net profits 13.5 58.2 96.2 99.7 114.3 381.9 (3) Depreciation alowances 206.- 234.5 280.6 342.2 356.2 1,419.5 (4) Other Receiptsi 94.2 79.4 42.1 23.4 23.6 262.7 (5) Borrowing (long term): (a) Bond Issues 27.- 650.- -- 650.- - 1,327... (b) ERP Funds 220.- 200.- 150.- 150.- 150.- B70.- (c) Other 162.7 94.7 -- - 257.4 (6) Short-term Credits (net) - See note below 321.3 81.- 377.2 (-) 668.8 (-) 110.7- (779.5) B. External Sources: (1) Borrowing: (a) Remainder IBRD loan for Reissecki-Kreuzeck 100.- 62.6 32.- 6.- 200.6 (b) Proposed IBRD loan for Ybbs.-Persenbeug, ) Voitaberg and St. AndLe ) 457.6 264.5 83.9 806.- (c) Suppliers Credite 200.- '_200.- CashSp - -- ..- - 283.4. 283.4 WoE- Shortferm borrowing and repaymen is estimated to be as follow: Borroing 321.3 402.3 779.5 110.7- - Repayment - 321.3 402.3 779.5 110.7 Net Receipt or Payment (-) n21.3 -l.- 371.2 - 68 (W -) 110.7 .ALLlex Pat Income StatemTnnr V--Combinr (Consolidated Fitirps) (in millions of Schillings) 1951 1952 1953 1954 1955 1/ Sales of energy (in millinns of kwlh) 2179 2h07 2866 3?91 3809 Average rat perv kwh sol (in groschen) 19.9 22.5 21.6 21.1 21.4 Gross revenues from sal of4 n c32. *1 6A17 0 716.2 9 15. Other Income 6.4 6.7 6.6 5,- 6.9 Total Income 439.2 548.5 624.5 721.2 822.2 Cost of Operations: maintenance, cost of' fuel, genera-l aUnd adNstratv expenses) 79.4 122.7 204.4 190.3 227.- Cost of pu:rchased power 215.2 218.5 191.8 256.5 313M2 Taxes (prooerty and income) - 1.- 8.9 11.3 16.5 2/ Depreciation o88 o 8,. 40 120.7 159.8 162.1± 38, 3-.1 525.8 617.9 98--T Net Income from Operations 52.2 109.4 98.7 103.3 123.4 Add: extraordinary income -6, 9.6 3L.2 18 79 -2-5-8 10.3 13Z-3 Tl2-5 2 Interest deductions: Total interest 44.4 111.7 95.h 112.2 139.8 Less: charged to construction 14.4 -- -- -- hh.8 30.- 111.7 937 112.2 Net Profit for year 29.2 14.1 12.9 2203 30.2 2/ 1/ Provisional figures 21 Does not include taxes on profit because it is estimated that extra depreciation can be made on certain assets under the tax law-s which will eliminate the net profit of Sch. 30 million shown for the year. Note: The above earnings record for 1951 to 1955 shows varying small net profits for each of the years in the period. The figures, however, do not give a true picture of the result of operations during the period. In the first place, profits in each year were determined mainly in such a way as (Annex 7 Cont'd) to result in the lowest payment of taxes by taking advantage, for instance, of extraordinary depreciation quota allowed by the tax laws, Further, operating expenses were overstated (in each year in varying degree) through the fact that certain expenditures were charged to operations, which should have been charged to construction, This in particular applies to the - charges for interest, none of which was capitalized during the years 1952, 1953 and 1954. On the other hand, in spite of the extraordinary deprecia- tion recorded during the period, the amounts charged for depreciation can- not be consic2ered sufficient, if the real value of the assets had been taken as basis instead of their book values, If this had been done, the annual charges for depreciation during the last three years would have resulted probably in figures which would have been from Sch. 30 million to Sch. 40 million higher than the actual depreciation recorded. If this is taken into account operations during 1955 would probably have resulted in a small net loss. gowever. pending the wri+te-upn of the assets ncorain to the Opening Balance Sheet Law, the Company was only allowed to calculate depreciation on the basis of the original c f the assets. Annex 8 V* G. Tariffs The charges for energy in Austria are regulated by the Ministry cf rior in consultation with the Minister for Transport and Nationalised rprises. The existing rates applicable, both wholesale and retail, were Iolished in mid-1951. The V.G. tariffs apply to wholesale consumers only. For all of these ;umers, except the aluminium industry which is the largest single user of ,gy in the V.G. system, there is a demand charge and an energy charge. The tnd charge is a fixed amount per Kw and the energy charges per kilowatt 's vary according to the season and the time of day. The present and pro- ;d tariffs are: Charges to all consumers except aluminium industry Present Proposed .nd charge (Schillings/Kw) 336 ($12.92) 408 (815.69) 7gy charges in groschen (and Mills) per Kwh. Gro, Yills Gro. Mills Winter, daytime (Oct,thru Mar.) 26 (10) 28 (10.7) Winter, night time -do- 16 (6.1) 20 (7.7) April and Sept., daytime 12 (4.6) 20 (7.7) -do- night time 4 (1) 13 (5-0) Summer, daytime (May thru Aug.) 12 (4.6) 15 (8) Summer, night time -do- 4 (1.5) 5 (1.9) Charges to Aluminium Industry ind Charges None ;gy Charges For firm power up to 52,000 Kw per year 17.0 (6.5) 20Ah (7.8) For additional summer energy 7.5 (2.9) 9.0 (3.5) The revenues produced by the tariffs depend to some extent on the ants of energy sold in winter and summer. The present tariffs have pro- ed average revenues varying from 20 to 22 groschen per Kwh. The proposed iffs are expected to produce average revenues of about 24 groschen per Kwh, Annex 9 Consolidated Balance Sheet 1/ as of December I1, 109 .In millions of Schiings) Pre sent ro forma book written-up values values Assets Fixed Assets4,7. Less: Reserve for depreciation 617.2 Net book va"lue 3941 6441] 'I'ork in progress, including con- struction materials and prepayments 1,382.7 1,382.7 Investments 9.8 9.8 Loans (long term) 885.- 885.- Current Assets: Cash and Banks 34.6 34.6 Inventories 28.3 28.3 Accounts receivable - for sale of electricity 125.1 125.1 Other receivables 82.4 82.4 Due from shareholders 186.- 2/ 186.- 2/ Miscellaneous 53 6 53.6 6,741.6 9,241.6 .hare capital (paid in) 1203. 1,2A3? Statutory and Free reserves 91.7 91.7 Surplus (nalancA Prnfit n Loss Ac.) 0.1 Capital surplus due to Revaluation of Assets (approximate) -- Equity 1,325.4 3,825.4 Long term debts 4,938.1 4,938.1 Current Liabilities 293.3 293.3 Special Provisions, Accrued and deferred items 18oll.3 18oll.3 MisLcellaneous.5. 6,741.6 9,241.6 (See notes on next page) (Annex 9 Cont'd) NTotes:- 1/ Provisional figures only 2j Represents part of the subscribed share capital of the T)onankraftwerke A.r- which has not yet been naid in. Payments by shareholders are to be made according to the following schedule: 195' qnc1. 91 Million 1957 " 9 " Sch1. 186 million '4 This column shows the approximate new values for the fixed assets (net book value) which will be the result of the proposed write-up. IN f inal decisions ha-Ve as- yet been taken by the companies in question as to the amoun,r of 4-he wvTite-u= to be effectod, but a figreo Sch. 2,500 million, which was given as a very rough IIUtL o .LVIfo I.Lit Wit-up, has been assumed in th"1.4sis statement. Summary of outstanding Long Term Debts 1/ as of December 31, 1955 (inr. mil-lions of Schil lings) Bond Issues Mis,cellaneous (Energy Insurance Cos loans 1953 E.R.P. I.B.R.D. Landesgesell- Company and 1955) CrEditEs loan A.E.W. 2/ schaften, etc. TOTAL Verbundgesellschaft h1240 469.5 - 101.8 71.0 1,084.3 Donaukraftwerke 254,9 -- -- 13.4 268.3 Ennskraftwerke >l.3 389.6 - 73.9 68.1 572.9 Draukraf twerke 333,5 380.7 i11.4 3. 119 5 15.9 961.0 Tauernkrajftwerke 548.7 1 ,301 . 7 -69.9 131.3 2,051 6 162.4 2 5 ilL,4 365. 2997L9.8 'In¯tercopany dabts not inc.luded. 2, Alpen Elektrewerke-A.G. The debts of ScI. 365,1 million owing to the AEW by the various companies are the result of the settlement of clains for nationalized properties formerly own,d by AEW. The AEW was originally founded in 1938 by G-ernan interests for the purpose of bringing in, in one company, holdings in various Aust.an power companies and also for the purpose of constructing new power plants. As a r o t Austi State Treaty the ownership of AEW, as former German property, was transferred[ to t.,e Austrian Government. Most of AEWis assets of about Sch, 570 million now consist of outsta.iding loans due from companies (VG, special and provincJal companies) in which part of AEWis clairs for nationalized plants were converted. The Austrian Government plans in th-e near futur•e to bxing in the assets of the AEW in the VG ccmpan-y. This means that the debts of the VG group of co%panies considered on a consolidated basis will be reduced by the Sch. 365.1 illion now o,wing to AiDW. 3/ This fIgure rep,resents withdrawals up to December 31, 1955 equivalent to approximately Wh.3 million. Annex 11 V.G, - Combine ForecastofConsolidaTed Income (inZi2lions-of Schil~ings) 1956 1957 1958 1959 1960 Sales of energy (in millions of kvwh) 4165.0 4485.0 4996.0 6167.0 6362.0 Average rate per kull (in groschen) 21.1 23. 21. 23.1 23k42 Gross Revenues from sale of er "79.3 102 9. 6 10in 1 1121 n 1 r76 6 Other Income 9.9 9.6 9.2 9,1 8.3 Total Income 889.2 1039.2 1209.6 1431,0 1484,9 Cost of Operations: Operating expenses (including maintenance, cost of fuel, general and administrative expenses) 224.5 255.7 303.6 3417 34837 Cost of purchased power 275.3 259.7 207.8 206.9 204.7 Taxes 37.2 63.3 89,2 101.3 111.7 Depreciation 206.0 234.5 280.6 342.1 356.2 Total Cost of Operations 743.0 813.2 881,2 992.0 1021.3 Net Income from Operations 146.2 226.0 328.4 439c-0 463.6 Less: Interest deductions (net) 132.7 167.8 232,2 3393 349,3 Net Profit 13.5 58.2 96.2 99o7 114.3 Annex 12 V.G, - Combine Forecast of Consolidated Income (inmillions of Schillings) 1961 1962 1963 1964 1965 Sales of energy (in millions kwh) 71120 73620 7362,0 7362.0 7362.0 Average rate per kwh (in groschen) 24.0 24.0 24.0 24.0 24,0 Gross revenues from sale of energy 1702.6 1778.0 177C.0 1778.0 1778.0 Other income 83 803 3 80 83 Total Income 710.9 176 1706.3 1786T 3 Cost of Operations: Operating expenses (including maintenance, cost of fuel, general and administrative expenses) 457.6 495.5 495.5 495.5 495.5 Cost of purchased power 204.7 204.7 204.7 204.7 204.7 Taxes 134.7 146.7 148.7 154.7 159.7 Depreciation 381.2 390.2 390,2 390.2 390.2 Total 1178,2 127.1 123971 1245*I 1250,1 Net Income from operations 532.7 549.2 547.2 541.2 536.2 Less Interest deductions (net) 366.9 365.5 3493 334.2 316.7 Net Profit 165oQ 1830? 197.9 207.0 21905 Total Receipts from operations (net profit, before deduction of interest and depreciation) 9139 939.4 937.4 931.4 926.4 Total debt service (interest plus amortization) 642.5 655.1 710.4 675.7 703.4 Margin after debt service 271.4 284.3 227.0 255.7 223,0 Number of times total debt service covered 1,42 1.43 1.32 1.37 1.32 Number of times interest covered 1.46 1.5 1.56 1.62 1.68 Return on total equity 31 3.35 3.6% 3.75 4% Earnings expressed in percentage of nominal value of share capital 5.9% 6.5% 7% 7.4 7.7% AnTeT (b V.G. - -obn Pro Forma Consolidated Balance Sheet (in millions of Schillings) A ssets 23ixed Assots 13,147.4 Less: Reserve for Depreciation 1,4195 11,727.9 1/ Construction in Progress 100,0 Investments 15.6 Loans (Long Term) 1,132.3 Net Current Assets (cash, receivables, etco less current liabilities) 384,1 Miscellaneous 22 8 13,382 .7 Capital, Reserves and Liabilities Share Capital 2.846.1 Surplus and Reserves 2.6Z,7.7 Equity 5,493.8 1/ Long Term Debts 7,698.5 Special Provisions and Miscellaneous items19. 13,382,7 1/ Includes proposed write-up of assets of about Sch. 2,5 billion, Annex i) eerrhis4 c r a--r A.- - Balance Sheet as of December 31, 1955 (.Ln mi.Llions. oL Scilins Present Pro forma 9/ book written-up va.lues vle Assets Fixed Assets O Less: Reserve for Depreciation 145.7 Net book value 706.5 1,006.5 Work in progress, including construction materials and prepayments 492.7 492.7 Loans 14-5 14.5 Current Assets: Cash and Banks 11.- 11.- Inventories 16.1 16,1 Accounts receivable - for sale of electricity 9.6 9-0 Other receivables -- VG for Part of Energy Loan 1955 70.0 70. - Other 14.5 14.5 Miscellaneous 2.5 __2 13L1,24 -13637 -4 Capital., Reserves and Liabilities Share Capital 265.- 265.- Statutory and Free Reserves 15.- 15.- Surplus (Balance Profit and Loss Account) 11.- 11.- Capital Surplus due to Revaluation of Assets kApproximate) ---_ Equity 291.- 591.- Long term debts: IBRD loan 111.41 Other 858.6 858.6 Current Liabilities 45.- 45.- Special provisions,accrued and deferred items 31.3 31.3 Miscellaneous .1 1 '12337.4 jp637-4 1/ Provisional figures only This column shows the approximate new value for the fixed assets (nnt bnnk value) which will be the result of the proposed, write-up. No final decisicn has as yet been taken as to the .exact amount of the write-up to Ie effected. but a figure of Sch. 300 million, ::hich tas given as an estimate, has been assumed in this statement. Annex 15 Cesterreichische DraukraftTrerke A.G. Statement of Estimated Incomie and Forecast of Receipts and Expenditures (in millions of Schillings) 1956 1957 1958 1959 1960 Gross Income from sale of energv 235.1 31400 37500 449o8 44203 Other Income 3,0 3,0 3,0 3.0 3.0 Total Income 73 81 31777. 3'7.0 5 4P q. Operai-4ng Expenses (incluing;mainten_ V1 LaC.. -e klic-,.LUU 116. ME~JL-I'U c-'11 ance, cost of fuel, general and adiisrtieexese)15. 180.2 20. '23406 '234.3 Depreciation 55.4 71.4 81.3 97.8 97.8 Taxes Total Cost of Operations 214,5 263.6 30500 353.9 351.7 Net Income from Operations 23.6 53.4 73.0 98.9 93.6 Less Interest 20,6 41,4 53o0 75,0 72.7 30 12-0 20.0 23_9 20,9 Net Profit 3.0 12.0 20.0 23.9 20.9 Depreciation Allowances 55.4 71.4 81.3 97.8 97.8 IFRD Loan for Reisseck-Kreuzeck 100.0 62.6 32.0 6,0 - Proposed IBRD Loan for Sto Andrae, Voitsberg 83.6 92.5 83.9 - - Other Borrowing 10010 120.2 53.0 - - Equity Contributions by Shareholders - 92.5 54.9 - - Payment by V. G, 70.0 -- - - Other Receipts 15.0 - - -- Total Receipts 427.0 451, 2 '251 12r77 118-7 Capital Expenditures: a) Reisseck-Kreuzeck 276.2 231,6 113,0 18.4 - b) Proposed BRD Projects: (i) St. Andrae 18.5 193,0 182.5 - - (ii) Voitsberg 75.1 3.7 - - - c) Other Capital Expenditures 28.6 6.0 4.0 2.0 - Total Capital Expenditures 398.4 434.3 299.5 20,4 - Amortization of Debt: ) TRRT Tnan nn isk-m1n.Ack (1O2-AUA) - - - 4.6 9.5 -) PropA NTer Trn- - 51 1. A c) Other 25,2 20.3 25.6 35.7 36.6 Total Expenditures 423.6 454.6 325,l 65.8 56.7 Cash Accrual - annual 3.4 (-) 3.4 - 61,9 62.0 - cumulative 3.4 - - 61.9 123.9 Anex16 Cesterreichische Draukraftwerke A,G. Pro For.ia Balance Slieet as of December 31, 1960 (in millions of Schillings) Assets Fixed Assets (less depreciation) 2,251.9 Loans 10.1 Net Current Assets (cash, receivables less current liabilities) 115.6 Liscellaneous 2,5 2 380.1 Capital, Reserves and Liabilities Share Capital Z47. Surplus and Reserves 370,g LogT Tnons IBRD Loan No. 102 297.9 Proposeo. Second IrD- Lo-an 24/03 Other Debts 988.4 Spec 1 2, 0 .1U0 U Y V 2,380,1 Annex 17 Esti-mated Coveratge of Deut Service for Draukraftwerke and Donaukraftwerke (money figures in millions of Schillings) 1961 1962 1963 1964 1965 Draukraftwerke 1) Receipts from, Operations (available for total debt service) 189.8 188.4 136.9 185c6 184-3 2) DeprecLation 97.8 97,8 97,8 97.8 971.8 3) Available for Interest (1 - 2) 92.0 ~ 89.1 87.8 ~U6.5 4) Interest 68.4 63.9 59,3 55.0 51.0 5) Net Profit (3 - 4) ~ 2-)S 328 3535 6) Total Debt Service (interest and amortization) - 145.9 145.9 141.8 133.2 123.5 7) Excess Ooverage of Total Debt Service by Receipts from Operations (1 - 6) 43.9 42.5 45.1 52.4 60,8 8) Coverage Ratios: a) Tota D - . er- (l : 13 1 li4 1 b) Ilumber of times Interest earned (3i : ). i 17 -) Receipts from Operations (avilable for total debt service) 181.6 180.3 178ý8 177.2 175.7 r_s._59. 5-~ 2) Depreciation 58.6 58.6 58.6 5. 58ó6 3) Available f'cr Interest (1 - 2) 123.0 121.7 12.2 1I8.-6 117.1 4) 1nberst 93.7 69.7 4r8 79.9 74.9 5) Net Profit (3 - 4) 29.3 32.0 5.74 - _ ~2 6) Total Debt Service (interest and amortization) 154.7 163.0 173.4 168.5 163.6 7) Z:cess Coverage of Total Debt Ser-ice by Receipts from Operations (1 -.6) 26.9 17.3 5.4 8.7 12.1 8) Coverage Ratios: a) Total Debt Service (1 6) 1.18 1.10 1.03 1.05 1.07 b) Number of times Interest Parned (3 : lA) i . 1.45 i .1 i i.5 Annex 18 nesterreichische Donaukraftwerke A.rr Balance Sheet as of December 31, 1955 1/ (in milli;-o ns o f S chillings)- A a+ o Fixed Asset-s 1 103 Less: Reserve for Depreciation 2.5 11 8 Construction IWork in Progress, including construction materials and prepayments 5S0.9 Due from Shareholders 186.0 2/ Cash and Banks 3.3 Accounts Receivable 7.2 ,,iscellaneous 20,.Z 809,6 Capital Reserves and Liabilities Share Capital 400.0 3/ Long Term Dobts 268,3 Current and Accrued Liabilities 68.7 Temporar- Credit V. G, 70.0 Special Provisions, etc. 2.6 809.6 1/ Provisional figures only, 4/ Due from shareholders for part of subscribed share capital not yet paid in. Payments are to be made according to the following schedule: 1956 Sch. 91 million 1957 11 95 if Sch. 186 million 3/ Of which paid in Sch. 214 million. (NJote: No write-up of assets of the Donaukraftwerke will be effected.) Annex 19 Oesterreichische Donaukraftwerke AeGa ( riillions of Schilings) 1956 1957 1958 1959 1960 Gross income from sale of energy - 6.5 97.5 1610 228,3 Operating expenses (including maintenance, general and administrative expenses) - 6.5 -13 18.7 22,0 Depreciation - - 30.4 50.3 58.6 Taxes - - 5.6 9.0 23.7 Total cost of operations - 6.5 47.3 78.0 104.3 Net profit from operations - - 50.2 33.0 124,0 Tess interest - -r50-2 13.0 97.0 Net Profit -- - 27.0 RECE ITS Net Profit - - -- 27,0 Depreciation allowances - - 30.4 50.3 58.6 Proposed IBRD Loan 374.0 172.0 - - - Proposed other borrowing 190.0 365.0 293.0 - - Equity contributions by shareholders 91,0 95.0 62.6 137.4 - Other receipts 100 18.0 i5.0 -10 Interim financing - - - 33,5 - Total Receipts 665,0 650.0 401.0 221.2 85.6 EXPEND ITURES Construction Ybbo-Persenbeug 595.0 650.0 401.0 201.0 - Debt amortization: a) Proposed IBRD Loan - - - - 15.3 b) Other - - - 20.2 20.0 Repayment Short Term debt 70.0 - - - 33.5 Total Expenditures 665.0 650.0 401.0 2212 68.8 Cash Surplus - - - - 16,8 Ane209 Oesterreichische Donaukraftwerke A.G. Pro Forma Balance Sheet as of December 31, 1960 (in millions of Schillings) Assets Fixed Assets 2,346-6 Less: Reserve for Depreciation 139,3 7 2,2070.3 Cash, Accounts Receivable etc, 27.5 Miscellaneous 15 4 2,250,2 Capital, Reserves and Liabilities Share Capital 600,0 Long Term Debts: TBPD Loan 530.7 Other Loans 1,076,3 1,6o7,o C-urrent nnd Acrued iiabliie 11-? Se iProvisions25 Balance Profit and Loss Account 27.0 2,250,2 THE V.G. NETWORK AND INTERCONNECTED PLANTS 'CHOSLOVAK1 SHOWING PROjECTS PROPOSED FOR BANK FINANCING - fil EL E P B - .W .W E N - t Ä.!.. .. ............ ..T .PT H P 1 H E ............. G BERG- MST KAPRUN T E 1A R DUND BSDORNAU . -- _.- T 11 R O L -- TL . - t j T SWITZERLAND - - - - T A Ly .A-j YUGOSLAVIA MA,i'956 IBRD-264