RESTRICTED Report No. TO-336a
Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracyor completeness.The report may not be published nor may it be quoted as representingtheir views.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized
APPRAISAL OF POWER PROJECTS
FINLAND Public Disclosure Authorized
August 1, 1962 Public Disclosure Authorized
Department of Technical Operations CURRENCY EQUIVALENTS US$1 = 320 Fink 1 Fmik = 0. 31 US cents FmTk 1 million = US $3, 100 FINLAND
APPRAISAL OF POWERPROJECTS
TABLEOF CONTENTS Page SUNkhARY i
I. INTRODUCTION 1
II, THE BORROWER 1
III, FINNISH POW'ERINDUSTRY 2 Organization 2 Existing Facilities 2
IV. POWERMARKET 3
V. EXPA,NSIONPROGRAM 4
VI. POWERRATES 4
VII. IIALTRANVOIMA OY. 5 General 5 Management 5 Existing Facilities 5 Power Market 5 Expansion Program and Future Operations 6 The Project 6 Engineering and Design 7 Schedule of Construction 7 Procurement 7 Cost Estimate 8 Financial Aspects 8 Capitalization 8 Rates and Recent Earnings 8 Capital Expenditures and Sources of Funds 9 Estimated Financial Results 10 Audits 11
VIII. CITY OF HELSIIKI 11 General 11 City Administration 11 Electric Power Department 11 Power Market 12 Expansion Program 12 The Project 12 Design and Supervision 13 Procurement 13 Page
VIII. CITY OF HELSINKI (Continued) Schedule of Construction 13 Cost Estimates 13 Financial Aspects 13 Capital Requirements and Sources of Funds 14 hudits 15
IX. KOTKANHOYRYVOIMh OY. (KOTKATHERMAL POTTER CO.) 16 General 16 Management 16 Power MIarket 17 The Project 17 Design and Supervision 18 Procurement 18 Present Status and Schedule of Operation 18 Estimated Cost 18 Operating Costs 18 Financial Aspects 18 Proposed Financing 18 Estimated Expenses and Revenues 19 Estinmated Financial Results 20 ProjectedBalance Sheets 20 Audits 20
XI ECONOMIC ASFECTS 21
XI. CONCLUSIONS 21 LIST OF ANNEXES
1a Mortgage Bank of Finland Oy Purpose and Organization - Page 1 Powers - Page 1 Capitalization - Page 2 Operations - Page 2 Financial Position - Page 3 Prospects - Page 5 2. Finland - Energy Balance - Records and Forecasts 3.* Finland - Imatran Voima Oy - Forecasts of Sales and Generation 4. Finland - Imatran Voima Oy - ConstructionCost Estimate 5. Imatran Voima Oy - Condensed Balance Sheets 6. Imatran Voima Oy - Condensed Income Statements 7. Imatran Voima Oy - Forecast of Receipts and Expenditures 8. Finland - PoNwerDepartment - City of Helsinki - Power Sales and Demand 9. Finland - Power Department - City of Helsinki - Construction Cost Estimatg 10. City of Helsinki Power Department - Forecast of Income and Cash Flow Statements 11. Finland - Kotkan Hoyryvoima Oy - ShareholdersPower Demand 12. Finland - Kotkan Hoyryvoima Oy - ConstructionCost Estimate 13. Finland - Kotkan Hoyryvoima Oy - OperatingCosts 14, Kotkan Hoyryvoima Oy (Kotka Thermal Power Co.) - Forecast of Operating Results and Cash Flow Statements 15. Kotkan Hoyryvoima Oy (Kotka Thermal Power Co.) - Estimated Balance Sheets
Map FINLA'ND
NPPRAISALOF POWERPROJECTS
SUMMARY i.. The Bank has been asked to consider a loan of $25 million to help finance an expansion of power generating facilities in Finland. Following established practice for Bank lending in Finland, the proposed loan would be made to Mortgage Bank of Finland Oy., a subsidiary of Bank of Finland. ii. The proceeds of the loan would be relent, on terms satisfactory to the Bank, to three beneficiaries as follows: Million $
Imatran Voima Oy. (Governmentowned power company) 12.0 City of Helsinki (Municipalpower supply) 5.0 Kotkan HoyryvoimagOy. (Private power company) 8.0 25.0 iii. The projects to be financed consist of the expansionof two existing thermal power plants located near Turku and in Helsinki and the construction of a new thermal power plant at Kotka. Total new generating capacity amounts to 303 W. Total cost is estimatedto $53.5 million. iv. The projects are technicallysound. Suitable arrangementshave been made for their execution and operation. The managementsand organizations of the three beneficiariesare good. v. The financing plans proposed for the constructionof the projects are reasonable, Forecasts, prepared on the basis of reasonable assumptions show that the twrocompanies and t1hePower Department in Helsinki can be ex- pected to remain in sound financial condition. vi. The thermal generating capacity to be provided by the projects is required to meet estimatedincrease in power demand over the next few years. The sizes of the generatingunits are consistentwith estimated system loads. to permit their full utilizationto meet base load requirements.
vii. The projects form a suitable basis for a loan of $25 million. A term of 20 years, including a period of grace of 31 years would be reasonable. FINLAND
APPRAISALOF POWERPROJECTS
I. INTRODUCTION
1. The Bank has been asked to make a loan of $25 million to help finance an expansion of power generating facilities in Finland. On the basis of infor- mation submitted by the Finns and on a field appraisal carried out by Bank sta2f in April/May 1962, three projectswere found suitable for Bank financing. The proposed loan would be made to M4ortgageBank of Finland Oy, which in turn would relend the following amounts to the power undertakingsconcerned:
Million $
Imatran Voima Oy (Governmentowned power Company) 12.0 City of Helsinki (Municipalpower supply) 5.0 Kotkan Hoyryvoima Oy (private power company) 8.o 25.0
2. During the period 1949 to 1956, the Bank lent to Finland a total of $30.4 million to help finance the constructionof ten power plants with a total capacity of 621 IiWand associatedtransmission lines. These projectshave all been completed except the 100 MlVSeitakorva hydro plant which will be ready for operationearly in 1963.
II. THE BORROWER
3. The borrower, the Mortgage Bank of Finland Oy, a subsidiaryof Bank of Finland, was establishedin 1956 as the channel for Bank loans. The Mort- gage Bank, accordingto its statutes,is required to limit its liabilitiesto twenty times the total amount of its share capital, reserves and debentures, which are held by Bank of Finland and consideredas equity. Total own capital at the end of 1961 amounted to Fmk 2.13 billion, giving a debt ceiling of Fmnk 42.6 billion. Total indebtedness,assuming all present loans to be fully with- drawn, would amount to Fmk 32.55 billion, leaving a margin sufficientfor con- tracting the proposed loan equivalentto Fmk 8.0 billion. (Details on the Mortgage Bankts powers, operationsand financial position are given in Annex 1i.
4. The Mortgage Bank would relend the proceeds of the loan in foreign exchange to the beneficiariesin the amounts and on terms satisfactoryto the Bank. Thc loans would be secured by mortgages in amounts not exceeding 60% of the appraisalvalue of the relative properties. According to Finnish law, these mortgageswould have to be deposited with the Finnish Bank Inspectorate,which would hold them for the benefit of the Bank.
5. The Bank of Finland has agreed to give the Bank an undertaking to nake the necessary funds available to Kotkan Hoyryvoima Oy and the City of Helsinki to complete thair projects as scheduled if they could not obtain the necessary financing elsewhere on reasonable terms, The Republic of Finland has agreed to give a similar undertakingwith respect to Imatran Volma Cy, -2-
III. FINNISH POWER INDUSTRY
6. The Finnish power industry consists of a large number of individual companies and entities. Practicallyall generatingplants are, however, con- nected by an extensive transmissionnetwork. Because of the interconnections and existing coordinationbetween individual companies in operatingthe coun- trywide system, the planning for additional capacity can be related only to the system as a whole. This report, therefore,discusses first the total in- dustry and then in more detail the three beneficiariesof the proposed loan.
Organization
7. Finnish power companiescan be divided into four groups: a) The three associated companies,Imatran Voima Oy, Oulujoki Oy and Kemijoki Oy. Imatran, which is fully government-owned,is one of the beneficiaries of the proposed loan and is described later in this report. The two others, in which the Government and government entities hold majority interests, operate hydro plants on the Oulu and Kemi rivers. The produc- tion of these three companiesaccounts for close to 40% of total power generationin the country. b) Municipaland rural power supply and distributionentities, usually organ- ized as part of local administrations. This group includes the Power De- partment of the City of Helsinki. The main cities operate their own gen- erating plants; total production accounts for some 6% of total generation. c) Private power companies,including Kotkan Hoyryvoima,largely owned by'in- dustrial companies and supplying power to their own shareholders. These companiesaccount for about 14% of total generation. d) Finally, industrial companies,which operate their own plants to meet energy requiremnents. These plants account for the remaining 40% of total annual generation.
8. The operation of the facilitiesof the various companiesis coordin- ated by agreements,which remain in force for shorter or longer periods and provide for firm supplies or interchangeof occasionalenergy. Most of the interchangeof energy is arranged through Imatran Voima Oy wrhichoper- ates the main part of the transmission system and therefore plays a dominant part in the operation of the national power system.
Existing Facilities
9. Total installed generating capacity of the system at the end of 1961 amounted to 2,917 MW consisting of 1,663 1MTof hydro, 775 MI of conden- sing thermal and 479 MWrof back pressure thermal (used to produce process steam). - 3 -
10. The hydro plants would, under average hydrolo-icalconditions, permit an annual generation of 8.5 billion kwh. The natural lakes in the main watercourses provide seasonal regulations, but variations in precipitation cause considerable change in hydro generation from one year to another. Based on past records, generation in a dry year is about 60% of generation in an average year, or with present capacity about 5 billion kwh. The firm hydro capacity at the time of winter peak load is estimated at about 950 MW.
11i The condensing thermal capacity includesabout200 NWof small units installedbefore the war. Effective capacity is 575 11WTof which 460 NW is in units installed since 1950.
12. Of the back pressure thermal capacity, about 130 MW represents old units ready for retirement,leaving an effective capacity of 350 NDW. This capacity is owned and operated by woodworkingenterprises and forms an integral part of their production facilities. The capacity is therefore only to a limited extent availableto meet general public demand.
13. The transmissionsystem consists of nearly 7,000 kilometers of high tension transmission lines. It is interconnectedwith the Swedish system by a 220 kv line and with the Russian system by a 110 kv line.
IV. POWERMARK1A T
14. The total consumption of power, excluding sales of surplus hydro power to operate electric boilers, has increased since 1950 at an average annual rate at close to 1CE and reached 10.2 billion kwh in 1961. The wood- working industry is by far the most importantconsumer, accounting for be- tween 45 and 50/2 of the total. The breakdown of consumptionin main categor- ies for 1960 (the last year for which detailed statisticsare available)is as follows: Consumption Category million kwh %
Households 720 8O Agriculture 183 2.0 Comirnerce 485 5.4 Government,municipalities, traction 415 4.6 Woodworking industry 4,131 46.0 iIetal industry 653 7.3 Chemical industry 554 6.2 Other industry 845 9.3
Total 7,986 88.
Own consumptionand losses 1,008 11.2
Total 8,994 100.0 - 4 -
15, During the last two years the annual increase in consumption was over 13%, reflecting the substantial recent expansion of the wToodworking in- dustry. This expansion is at present still in progress, indicating that power consumption will continue to increase at a fairly high rate.
16. The Finnish power companies assume in their estimates of future con- sumption an increase of 11% for 1962 and in succeeding years it is expected that the rate would fall gradually to reach 7% by 1970. This would correspornd to an average annual rate over the period of about 9%.
17. As a result, total consumption in 1962 is estimated at 11.3 billion kwh and would increase to 17.6 billion kwh in 1967 and 22 billion kwh in 1970, The system peak load, assuming the present load factor of 0.68, would increase from 1,890 ivD in 1962 to 2,900 MWKin 1967 and 3,600 iTTIin 1970.
V. EXPANSIONPROGRAM
18. A review of present expansion programs of the main Finnish power companies shows that installed hydro plant capacity is expected to increase by about 420 IIW to reach 2,080 MW4by 1967. This estimate is based on plants now under construction or planned to be started. Possible hydro generation assuming average hydrological conditions would amount to 10.3 billion kwh in. 1967, representing about 601 of estimated energy reqfirements. The balance has to be met by thermal generation. Under dry year conditions hydro capacity would be reduced to 1,18O MHWand hydro generation would meet only 37% of total energy requirements.
19. Some 150 TTJ of new back pressure thermal capacity is expected to come into operation during the years 1962-64. In later years, however, it is expected that new capacity will maihly replace old units.
20. New condensing thermal capacity to be added consists mainly of the three plants proposed for Bank financing. These plants, with a total capacity of 303MW, togetler with other extensions planned would increase the condens- ing thermal capacity to 1,078e14 by 1966.
21. The new thermal plants are required to meet system base load re- quirements, which even under favorable water conditions no longer can be met fully by hydro generation. Under dry year conditions, total available firm capacity will only by a small margin exceed estimated peak load requirements over the next few years, and additional capacity would have to be added by 1966. Reserve capacity under these conditions would consist of old thermal units kept as standby and in addition, the existing interconnection with the Swedish grid makes possible imports of a limited amount of power. (For de- tails, see Annex 2.)
VI. POTWERRA¶1ES
22. Power rates in Finland are not subject to government control, and power companies are free to set their owm rates. Wholesale rates are in prac- tice related to the tariffs charged by Imatran Voima Gy for sales at 110 kr. They consist of a base load rate and a peak load rate, both consisting of a - 5- demand charge and an energy charge. A combination of these rates, known as the Y-tariff, results in an averagewholesale rate between Fmnk4/kwh and Fmk 5/kwh (12 to 15 U.S. mills/kwh).
23. The rates are adjusted automatically, the demand charge is tied to the wholesale price index for domestic goods and the energy charge is tied to the lowest current price of imported fuel delivered in South Finland. The present price, wihichrelates to Polish coal is Fmk 485 per million keal ($0.38 per million B.T.U.).
24. Because most of the retail distributionis carried out by municipal departments and rural cooperatives,the retail rates are usually controlledb5 local authorities.
VII. IMATRANVOIMA OY
General
25. ImatranVoima Oy was incorporatedin 1929. It is a government-owned company; its shares are held partly by the Government directly and partly by the National Pension Fund. The company is the main electric utility company in Finland.
Management
26. The general policies of the company are decided by the Board of Directors, consistingof nine members appointedby the Government for extendeo terms. The management consists of a Managing Director and six AssistantDi- rectors. They have all a long record of service with the company and exten- sive experience in utility operations.
Existing Facilities
27. The company owns and operates the 160 1MlWImatran hydro plant and twc thermal plants, Naantali with 130 11W1and Vanaja with 60 MW. The last plant is more than 20 years old, and used only as standby.
28. Imatran also purchases the bulk of the hydro power generatedby its two associated companies,Oulujoki Oy and Kemijoki Oy. The capacity available to Imatran amounts to 581 14W.
29. The company owns and operates over 4,600 kilometers of 400 kv, 220 kv and 110 kv transmissionlines and 42 main substationswith a total capacity of 2,726 MAVA. This network connects the generating plants with all main load centers. It also includes a load dispatchingcenter. The system is well maintained and efficientlyoperated.
Power IMarket
30, Imatran sells power wholesale to industrial consumersand distribu- tors. Total sales of prime power in 1961 amounted to 3.3 billion kwh and was distributedas follows: -6-
Billion kwh %
Woodworkingindustries 0.9 27.5 Other industries 0.6 18.0 Hlunicipalities 1.1 33.5 Regional power companies and rural distribution 0.7 21.0 Total 3.3 100.0
31. These sales have over the last ten years increased at a slightly higher rate than the country's total power consumption. In 1950 Imatran's sales were 29.6% of total Finnish consumption, increasing to 37% in 1957/58 and has in recent years remained at about 33%. The company's sales forecasts are based on the assumption that this share will be maintained during the next six to eight years.
32. In years with average hydrologicalconditions, Imatrafi also sells occasionalhydro energy, normally available during the summer months. In 1961, with stream flows about 10C lower than normal, these sLaes amounted to 302 million kwh. For 1962 they are estimatedat 500 million kwh but in later years they are expected to decrease with the increasing amount of thermal capacity which will gradually firm up this energy.
33. The forecasts of Imatran's total sales show an increase from 3.6 billion kwh in 1961 to 7.4 billion kwh in 1970. The forecast is reasonable.
Expansion Program and Future Operations
34. The increase of energy requirements will mainly be met by expansion of thermal generating capacity. In addition to installation of a second 133 N1 unit in the Naantali plant, Imatran plans to start constructionof a 100 1ANplant in 1964. This plant is being planned to burn domestic peat; the location has not yet been decided.
35. Additional supplies of hydro energy from plants to be completedbyr Kemijoki Oy, will also become availableto Imatran during the 1962-70 period. Estimated own generationand power purchasesrequired to meet total require- ments of energy in future years are given in Annex 3. Separate estimates are given assuming average water availabilityand dry year conditions. The est.i- mates show clearly the increasingshare of thermal generation;in 1961 it accountedfor 10% of total energy requirements;by 1970 it wfillhave increased to 3% with average stream flow oonditionsand to 500 under dry year condi- tions.
The Project
36. The project proposed for Bank financing includes thIeexpansion of the Naantali thermal plant with a second 133 MIVugenerating unit. The plant is located near Turku in south-west Finland. The first unit came into operation at the end of 1960. The plant was designed with provisions for the present expansion and civil works such as foundations, cooling water canals, coal yard - 7 - and harbor installationsfor two units were completedat that time.
37. Equipment specificationsfor the expansion are identicalwith those for the first stages. The boiler is designed for firing with pulverizedcoal and/or heavy fuel oil, and to produce 430 tons of steam per hour. The turbine will have a reheat cycle and will operate at 1,0000F and 2,600 pounds per square inch.
38. The hydrogen cooled generator will have a capacity of 133 Mb!. It wijl be connected to a 13/220 kv, 156 MVA main transformer which in turn is connected to the 220 kv busbar and outgoing transmission lines.
39. Sea water will be used for station cooling system. Make up water is obtained from deep wells and treated in a water purification plant. Exist- ing fuel storage and handling installation have sufficient capacity to serve the new unit.
40. The project includes, in addition to the Maantali plant expansion, the construction of 226 kilometers of new 220 kv transmission lines, connecting Naantali with Pori to the north and Virkkala to the east. Three main sub- stations in South Finland, Kangasala, Hyvinkaa and Hikia will reqpire expan- sion in connection with the increase of generating capacity.
Engineering and Design
41. The company performs all engineering and design work required for the execution of the project. Its engineeringstaff has the necessary exper- ience and qualificationsfor this responsibility. Final tests of the plant will be carried out by Ekono, a Finnish consultingfirm.
Schedule of Construction
42. Work on the extension to Maantali was started at the end of 1961. Erection work is scheduled throughout 1962 and 1963 and the new unit should bc ready for operationin June 1964. The transmissionlines and substationsare to be completedby the end of 1965.
Procurement
43. The equipment orders for the first unit were placed on the basis of international competitive bidding. Because the second unit is of identical design as of the first, the company was able to obtain substantialprice re- ductions by placing orders with the same suppliers. This also provides an advantagewith respect to spare parts and ease of operations.
44. Orders valued at about $3.5 million equivalenthave been placed with qualified Finnish manufacturers at competitive prices. Customs duties on powur plant equipment are about 1G% of the price quoted by foreign suppliers. In tUe circumstances,the procurementprocedure used is reasonable. -8-
Cost Estimate
45. The total cost of the project proposed for Bank financingis esti- mated at Fmk 7,710 mil1ion ($24 million). Of this, about $8.3 million is calculated to be required in foreign exchange. (For details, see Annex 4).
46. The estimate includes engineering,overhead and supervisionand in- terest during construction. Since all main orders have been placed with firm prices, contingencieshave been limited to 5% of total costs. The cost for the new unit amounts to $140 per installed kw This is a reasonable cost.
Financial Aspects
Capitalization
47. At the time of its creation in 1931, the company had a capitaliza- tion consistingexclusively of shares,held by the Government of Finland. The share capital was increased several times to its present level of Fmk 5.92 billion, still entirely controlledby the Government,either directly (54% of the stock) or through the National Pensions 'und (46%).
48. Balance sheets of the company as at the end of the last 5 years are given in Annex 5. At December 31, 1961, total equity includingreserves was about Fmk 12.9 billion and the long term debt totalled about Fmk 202 billior, resulting in a debt/equity ratio of 61/39.
49. The long term debt was made up as follows:
Billions of Fmk
Outstandingbalance of previous IBRD loans 2.3 National Pensions Fund 14.8 Other long term loans 3.1 Total 20.2
50. Loans from the National Pensions Fund have maturities of 25 to 35 years and interest rates ranging from 62% to 7i%. Other domestic loans have slightly shorter maturities and carry interest rates of 7r to $%. These loans are unsecured. Rates and Recent Earnings 51. Imatran power sales are based on contractsvalid for one to two years. These contractsare normally renewed automatically. About 50% of the sales are made at the standard tariff described in paragraph 22, averaging between Fmk 4 and Fmk 5 per kwh. Another 10% of the sales are surplushydro power sold during the sumer at the low rate of about Fmk 0.5/kwh, The balance of the sales are based on special contractswith large industrial cO.1- sumers operatingtheir own plants and with other power companies.
52. Average revenue per kwh sold during the last four years has remained at about Fmk 3.35 except for 1960 when it reached Fmk 3.91. This was a very - 9 - dry year and no surplus hydro power was available. For the future, present wholesale rates are expected to prevail. Because of the expected gradual re- duction of surplus power sales, the average revenue per kwh is expected to increase from Fmk 3.35 in 1961 to Fink 3.52 in 1967.
53. A summary of Imatran's operating results for the last 4 years is given in Annex 6, The figures are adjusted to take into account normal straight-line depreciation based on an average life of 28 years for all the company's fixed assets, which is conservative. They are, however, different from the depreciation shown in Imatran's audited accounts, because the comparrny, for tax purposes, is allowed to charge accelerated depreciation. As a result, Imatran has been able to minimize incorme tax liabilities.
54. Variations in hydrological conditions have had a strong impact on the company's operating results. After being very favorable in 1958, they returned to normal in 1959 and became very unfavorable in 1960 and 1961. In 1960 particularly, Imatran had to purchase high cost thermal power from other companies to supplement its own production.
55. Taking depreciation on an accelerated basis, Imatran's audited accounts showed a small loss for 1960 and 1961. Adjusted figures based on straight-line depreciation (see Annex 6) show a decline of gross income to a low of Fik 1 .37billion in 1960, recovering slightly to Fink1 .81 billion in 1961, leaving net profits, after interest, of Fik 0.10 billion and Fmk 0.35 billion respectively for these two years. No dividends were paid in 1960 and 1961 nor are any planned to be paid in 1962 and 1963.
56. The return on Imatran's investment in operation went down from an exceptional 23.'f in 1958 to 15.6% in 1959, 7.0% in 1960 and 7.2% in 1961. Interest coveragc dropped to the low level of 1 .1 in 1960 and increased slightly to 1.2 in 1961.
Capital Expenditures and Sources of Funds
57. Imatran Voima's total capital requirements for new construction over the 6 years from 1962 to 1967 are estimated at Fik 19.1 billion (US $59.7 mil- lion) of which FEnk7.7 billion (US $24 million) is for the Naantali project.
58. The following table gives a comparison between the company's require- ments of funds and its estimated internal resources:
Billions of Fnk 196245 1962-67 Construction expenditure 12.42 19.11 Increase in working capital 2.23 3.32 Total (A) 14.65 22.43 Net receipts from operations 16.18 26.88 Less: debt service charges 11.68 18.58 Available for reinvestment (B) 4.50 8.30
B/A 3 0Q-r1% 37.,C - 10 -
59. After meeting its debt service and paying dividends from 1964, Imatran could thus during the six year period 1962-67 cover out of its own re- sources 37% of its capital requirements, both for new construction and for a sizeable increase in working capital.
60. Sources of funds for the capital expansion program would be approxi- mately as follows, expressed in percentages:
1962-65 1962-67
Internal cash generation 31% 37% Proposed IBRD loan 26% 17% Loans from National Pensions Fund 43% 41% Share capital - 5% 100% 1ocf
61. Borrowings during the 6-year period would consist of (a) Imatrants share ($12 million, equal to Fik 3.85 billion) of the proposed IBRD loan, and (b) loans from the National Pensions Fund totalling Fnk 9.2 billion (equivalent to about $28.7 million). These will be unsecured 30-year loans at 7%interest.
62. A share capital increase of Fik 1.08 billion (US $3.4 million) has been assumed for 1966. Dividends are expected to be paid at the rate of 3% in 1964 and 5% in 1965 and later years.
Estimated Financial Results
63. A forecast of income statements for the years 1962-67 is given in Annex 6 and a projection of receipts and expenditures for the same period is attached as Annex 7. The estimates of revenues are based on growth of sales discussed in paragraphs 30 to 33.
64. Depreciation allowances shown in the forecast are estimated on a straight-line basis, at the same rates as those used in the tables for the past four years. For purpose of calculation, the proposed IBRD loan has beeil assumed to carry interest at 5 3/L4% per annum and to have a term of 20 years with amortization beginning in January 1966. In passing on the proceeds of the loan to Imatran, the Miortgage Bank of Finland adds a commission of 0.2% per annum.
65. Gross income after depreciation is expected to increase from Fink 2.14 billion in 1962 to Fink4.19 billion in 1967. The return on net fixed assets in operation would show a gradual increase from 8. 4% to 12.5% over the 6-year period. The interest coverage would also increase from 1.5 in 1962 to 2.3 in 1967.
66. Debt service coverage would change from 1.26 in 1962 to 1.78 in 1967. The overall financial position of Imatran would thus tend to improve over the 6-year period. - 11 -
67. Projected balance sheets as at the end of each year from 1962-67 are shown in Annex 5. Net fixed assets in operation would increase from Fmnk25.5 billion in 1962 to Fmk 36.5 billion in 1967. Total long term debt would increase comparatively less from Fmk 21.3 billion to Fmk 24.5 billion. The debt/ecuity ratio would improve from 61/39 in 1962 to 53/47 in 1967, mostly as a result of an expected increase in earned surplus.
Audits
68. The accounts of Imatran Voima Oy are regularly audited by indepen- dent external auditors chosen by the Board of Directors.
VIII. CITY OF HELSINKI
General
69. The power supply service in Helsinki was started in 1909. The pre- sent organization, Helsinki Power Department, forms a part of the municipal administration. It is responsible for the supply of electricity within city limits. In addition it operates a district heating system and maintains street lights.
City Administration
70. Helsinki, the capital of Finland, is governed by a City Council con- sisting of 54 representativeselected for a three year term. The daily admin- istration is carried out by the City Board consisting of 14 members. The Iiayorand four Assistant ,iiayorsare permanentappointments, while the remain- ing nine members are appointed by the City Council for one year. Following usual Scandinavianpractice, municipal administration includes the operation of public utility services such as supply of water, gas and electric power,
71. The annual budget of the City is prepared by 'he Board and submitter to the Council for approval. Municipal statutes provide that the budget has to be balanced. Existing legislation permits the City to raise loans to meet capital expenditures. Borrowing requires the approval of the Council with two thirds majority.
Electric Power Department
72. The Power Department operates three thermal plants with a total capacity of 160 1A1. This includes an old unit of 30 Tl^,used as standby The largest unit of 75 MW is equipped for extraction of l7w pressure steam for the Departrnent'sdistrict heating system. With full steam extrac- tion the generator capacity is reduced to 65 '>M. Through participationsin other companies, 17 T4Wof hydro capacity is available.
73. The Power Department also purchasespower from ImatranVoima Oy. The supply is partly firm power, contracted on a two year basis, and partly seasonal surplus hydro power.
74. The existing distributionnetwork consists of about 1,000 kilometers - 12 - of high tension (110 kv and 30 kv) transmissionlines and cables, 12 main substationswith a capacity of 300 MNVA,about 2,500 kilometers of low tension lines and 420 MVA of distributiontransformer capacity.
75. The generating plants and transmissionand distributionsystems are well maintained and efficientlyoperated.
Power Market
76. Helsinki has a population of about 450,000. It is the main ad- ministrationand business center of the country. Industrial activity is also substantialand plants suppliedby the Power Department include shipyards, electricaland mechanical equipment manufacturing,food processing and a variety of light industries.
77. In 1961, total sales amounted to 629 million kwh. Of these, re- sidentialconsumers accountedfor 24%, commercial 27% and industrial 28%. The balance went to various government and municipal buildings and services, in- cluding street lighting and streetcars.
78. DDuring the last five years sales have increased at average annual rates ranging from 7.6% for residentialsales to about 10% for industrial sales Total sales have increased at an average of 8.Vi% per year.
79. The sales forecastsprepared by the Power Department assume a con- tinued growth at the same rates over the next years, with total sales in- creasing to 870 million kwh in 1965 and 1,300 million kwh in 1970. The fore- casts are reasonable. (For details see Annex 8.)
Expansion Program
80. To meet the increase in demand the Power Departmentplans to expand its existing Hanasaari plant with a 90 NW unit and its Salmisaariplant witlha 35 IW back pressure unit. In addition, necessary expansion of the distributior network will be carried out and additions made to the district heating systen. The total cost of the 1962-67 constructionprogram is estimated at Fmk 18.4 billion ($58 million).
81. The new generating capacity will help to meet tne demand which is estimated to increase from 168 NW in 1961 to 300 NW in 1967. The balance of capacity required will be contracted from Imatran Voima Oy.
The _Project
82. The project proposed for Bank financing is the planned expansion of the Hanasaari thermal plant. It is located in the eastern port area of the city.
83. The existing 75 21Wplant, which was comTpletedin 1960, will be ex- panded by installation of a 90 1V' turbo generator unit and associated boiler plant. The boiler is designedfor burning pulverized coal and/or heavy fuel oil and to produce 300 tons of steam per hour.
84. The turbine is desigrnedto operate at 2,GOC pournds por square inchan9 - 13 -
995°F. The turbine will be equipped for tapping low pressure steam for sup- ply to the district heating system. At the maximum tapping of 60 million kcal per hour, the electric capacity of the unit is reduced from 90 IlWto 75 NOW.
85. Most of the civil works required for the expansion of the Hanasaari plant was carried out during the initial stage. This includes the main build- ing and coolingwater canals. For the new stage, the coal yard and unloading pier will be extended and a fuel oil tank will be constructed.
86. A 115 IvIAthree phase 10/110 kv transformerwill be provided to be connectedwith the new unit and with the existing Suvilahti switching station.
Design and Supervision
87. The preparationof specificationsand detailed design will be carried out by the Power Departmenttsown engineeringstaff who also will supervisethe constructionwork. The Finnish consultants,Ekono, will assist in the evalua- tion of bids and carry out performancetests. These procedures are the same as those used for the successfulcompletion of the first stage of the plan+.
Procurement
88. The Power Department intends to obtain bids from qualified suppliers on a wide internationalbasis for all main pieces of equipment.
Schedule of Construction
89. The principal orders for equipment are scheduledto be placed to- wards the end of 1962. Wfithabout 40 months for manufacturing,delivery and erection, the new unit should be ready for operation by the middle of 1966. The schedule is reasonable.
Cost Estimates
90 The cost of the Hanasaari plant expansion is estimated at Fmk 4,150 million ($13 million). The foreign exchange cost is estimated at Fmk 1,850 million ($5.8 million). Details of the cost estimate are given in Annex 9.
91. The estimated cost is based on actual costs incurred for the first stage of the plant. Allowances have been made for engineering,overhead and interest during construction. Contingencies amounting to 15% for civil works and 1lg for equipment have been added. The unit cost for the second stage of the Hanasaari plant amounts to $140/kw, which is reasonable. Financial Aspects
General 92. While tho power Dopartimnt is part of the municipal administratior, it maintains separate accounts. All funds, however, remain in the City Trea- sury, with the exception of a reasonable allowancefor working canital. - 14 -
93. The financial management of the municipality is conservative. Be- cause of the limited potential of the capital market in Finland, municipal finances are based on the "pay as you go" principle: taxes and other current revenues are in general sufficient to cover all the City's current expenses as well as its entire capital budget for non-revenue producing investments such as schools, hospitals etc. 94. Capital expenditures for revenue producing services such as public utilities and the harbour, are also largely met out of the Municipality's own resources. In the past 11 years, only 25% of the cost of new investments in revenue producing projects had to be obtained from borrowings.
95. The City's total debt outstanding is thus relatively modest, amount- ing to Fik 7 billion ($22 million) compared to a net book value of revenue producing investments (utilities and harbour) of over Fink50 billion. Of the total debt, Fmk 5.2 billion is an account of the Power Department.
96. Electricity rates ,are established by the City Board and approved by the City Council. The policy followed is that revenues should be sufficient to cover all operating expenses including depreciation at conservative rates, and to produce a substantial surplus for reinvestment by.the City. The cri- terion in this connection has been that the Power Department should be able T,O return to the City in the form of profits and depreciation allowances about 75% of capital requirements for power expansion projects. 97. This percentage was reached or exceeded from 1949 to 1956. It fell to about 6CS in 1957 and 49% in 1958. As a result, the City Board increased power rates by 10/ in March 1959 from an average of about Fmk 8.9 per kwh to about Fmk 9.8 (2.8 and 3.06 U.S. cents/kwh). 98. This rate increase coincided with a substantial reduction in the coal of fuel. Furthermore, the first stage of the Hanasaari plant was completed at the start of a dry period and a substantial amount of power could be sold to Imatran Voima Oy and other power companies.
99. These factors resulted in exceptionally favourable financial results for 1959 and 1960. As shown in the financial statements attached as Annex 10), the return on the Department's net invested capital (including work-in-progres. went up from 11% in 1958 to 16% in 1959, 1 7% in 1960 and again 16% in 1961. I] the three last years, the Department paid to the City Treasury substantiallb' more than it received from it for new capital expenditures; net internal cas' generation in 1960 was 41% higher than capital requirements. 100. Although these results must be considered as abnormally favourable, profits are likely to remain high with rates kept at their present level.
Capital Requirements and Sources of Tunds 101. Estimated income and cash flow statements of the Power Depart- ment for 1962 through 1967 are shown in Annex 10. As the Department has no financial autonomy, they have to be considered as pro forma statements. - 15 -
102. The power expansion program calls for construction expenditures of Fmk 18.4 billion ($58 million) over the six years 1962 through 1967, of which Fmk 3.9 billion ($12.2 million) for the Hanasaari plant expansion.
103. As shovm in the forecast, the only borrowing which will be required during the period will be the City's share of the proposed loan. The program would thus be financed as follows:
Fmk billion %
Helsinki's share ($5 million) of the proposed loan 1.6 8.7
Net internal cash generation 16.8 91.3 18.4 100.0
104. The return on the Department'snet investment (includingwork-in- progress and current assets) is conservativelyestimated to remain within the range of 8 to 11% per year. The return on net fixed assets in operationwould be somewhathigher. For purpose of calculation,the proposed IBRD loan has been assumed to carry interest at 5 3/4h per annum and to have a term of 20 years with amortization beginning in January 1966. The Mortgage Bank adds a commission of 0.2S per annum.
105. Banance sheets of the Power Department as at the end of December 1961 and 1967 would show the following position if it were operated as an autonomousentity (in billion Fink):
Dec. 31, 1961 Dec. 31, 1967
Fixed assets, at cost 31.2 49.6 Depreciationreserve 11.8 19.9 Net fixed assets 19.4 29.7 Net current assets .4 .3 Total 19.8 30.0
Long term debt 5.2 5.0 Equity, held by City of Helsinki 14.6 25.0 Total 19.8 30.0
Audits
106. The accounts of the Power Departmentare regularly audited by in- dependent external auditors chosen by the City Council. - 16 -
IX. KOTKANHOYRYVOIMh OY.
(KOTKATHERIML POWER CO.)
General
107. The company was established in January 1962. Its purpose is to con- struct and operate thermal power plants to supply power to its shareholders. The present owners and their percentage ownership are:
Oy.Tampella lb. 22.75 A. lhlstrom Oy. 22.75 Kymin Oy. 9.0G
Etela Soumen Voima Oy. 22.75 City of Kotka 22.75 100.00
1O8. The three first owners are among the largest industrial companies in Finland. *While the main activity is the production of pulp and paper products, Tampella is also an important producer of textiles and heavy machinery. Ahl- strom's production includes also heavy machinery and, in addition, glass pro- ducts and plastics. A.ll three companies have been beneficiaries of earlier Bank loans. Their financial positions are sound.
109. Etela Soumen Voima Oy. (South Finland PowferCo.) is a regional dis- tribution company. The majority of its shares is owned by Tampella (57.5%). The other two main shareholders are the Cities of Helsinki (26.7%) and Kotka (11.1%). The company owns some 900 kilometers of transmission lines (mostly 110 kv and 20 kv) and 800 kilometers of low tension distribution lines. All energy is at present purchased, mainly from the shareholders and from Imatrar. Voima Oy. Total sales in 1961 amounted to 330 million kwh.
110. The City of Kotka operates a municipal distribution system. Total energy consumption in Kotka in 1961 amounted to 41.7 million kwh. Of this, about 30% was supplied by hydro plants of which the city is a part owner; the balance was purchased from South Finland Power Co.
Management
111. The Board of Directors of the new company consists of five members, each representing one of the owners. The Chairman is the general manager of the South Finland Power Co; he has had a long experience in public utility operations.
112. The general manager of the new company has had extensive experience in both construction m d operation of modern thermal plants, He should not experience any difficulties in assembling, in due couLrse,efficient oprrating personnel and administrative staff. - 17 -
Power Market
113. According to the statutes of the Company, the shareholdershave the right to obtain the proportionalamount of energy generatedby the company correspondingto the shareholderts participation. On the other hand, each shareholderis committedto pay its share of the company's annual costs regard- less of whether it takes its share of energyor not.
114. A summary of present power requirementsof the shareholdersand fore- cast of future demand is shown in Annex 11. The main increase in demand is caused by the new board mill planned by Tampella. For the twroother industrial companies,nominal increaseshave been assumed. For the residentialand com- mercial consumersserved by the South Finland Power Co. and the municipal sys- tem of Kotka, an average 1 annual growth of energy requirements has been assumed.
115. In 1966, when the Kotka plant would come into operation, the deirdnd is estimated to 258 1M and energy requirements to 1.6 billion kwh.
The Project
116. The new plant would be located on the west side of the towTn of Kotla. The site selected is on the island Mussalo close to a new oil harbor planned by the town.
117. The plant has been designed for the installationof one 80 ilgturbo- generator unit. Provisions would be made for future expansion,and ample space is available.
118. The boiler is designed for a productionof 260 tons of steam per hour at 2,000 pounds per square inch and 995°F. The burners are designed to fire both pulveriaedcoal and heavy fuel oil.
l19. The turbine will be of the condensingtype with reheat cycle. The generator will be connected to a step-up substation equipped with a 100 KUfL three phase transformer. A short (8.5 km) 110 kv transmission line will con- nect the plant with the existing substation at Kyminlinna belonging to the South Finland Power Co. transmission system. This is in turn connected to the national grid of Imatran Voima Oy.
120. Cooling water will be obtained from the sea, the intake and outlet, canal will have a total length of about 450 meters. Fresh water will be ob- tained from a desalinationplant. In addition, a pipeline will connect the plant with the Kotka water supply system. Fuel installationswill include a coal storage with associated conveyorsand a crushing plant and two oil storage tanks.
121. Civil works include, in addition to site clearing, excavations, equipmentfoundations and power house, the constructionof a coal unloading pier equipped with two coal cranes and one heavy duty jib crane, access road and housing for operatingpersonnel. - 18 -
Design and Supervision
122. The plant is being designed by the Finnish consultingorganization, Ekono, which has an extensiveexperience in constructionof thermal plants. It will also be responsiblefor invitationand comparisonof bids, supervisionof constructionand delivery tests.
Procurement
123. The company intends to place orders for major pieces of equipment on the basis of internationalcompetitive bidding.
Present Status and Schedule of Operation
124. The project plans have been prepared and the specificationsare under preparation, Bids for major pieces of equipment are expected to be invited in Septemberor October 1962 and orders placed by the end of the year. Based on delivery and erection requiring about three years, the plant should be ready for operationby the end of 1965.
Estimated Cost
125. The total cost of the Kotka thermal plant is estimated at Fmk 5,3'00 million ($16.5 million). The foreign exchange cost is estimated at Fmk 1,690 million ($5.3 million). Details of the estimates are given in Annex 12. MTey are based on present price level and on actual costs of thermal plants recently built in Finland. They include allowances for design, engineering, supervisior and interest during construction. Contingencies of 10 have also been included
126. The unit cost of the plant amounts to $206 per installed kw. This is relativelyhigh for a plant of this size. The reason lies in the substan tial costs of site preparation,access road, coal yard and coal pier construc- tion and other civil works, which also would serve later expansion of the plant
OperatingCosts
127. As shown in Annex 13, the estimatedoperating cost of the Kotka plant based on a net annual generation of 390 million kwh is Fmk 2.83/kwh (8.9 mills/kwh). The equivalent cost for power purchased from Imatran Voima Oy. at present rates would be about Fink 4/kwh (12.5 mills/kwh).
Financial Aspects
Proposed Financing
128. Capital requirements for the construction and start of operation of the new plant are estimated at Fmk 5.4 billion, including an initial allowiance of Fmk 100 million for working capital. The proposed financing is as follows: - 19 _
Millions of Fmk
Share capital (1/3 of total requirements) 1,800 Allocation of proposed IBRD loan ($8 million) 2,560 Loan from National Pensions Fund 1,040 Total 5,400
129. The share capital and the loans would be paid on a schedule consis- tent with constructionrequirements. If costs should prove higher than esti- mated, the additionalfunds required would be covered by an increase in the amount of the loan from the National Pensions Fund. The shareholdershave agreed to make payments so as to maintain the share capital at one-thirdof total reqairements of funds.
130. The Bank loan is assumed to be for a period of 20 years, of which 31 years is the estimatedperiod of construction,leaving 161 years for amor- tization. An interest rate of 5 3/IL%has been assumed for the IBRD loan. In addition, the company would pay a charge of 0.2% per annum to the Mortgage Banke
131. The loan from the National Pensions Fund would be unsecured and is expected to be for 25 years at 7% per annum, also with a grace period of 32 years. No dividends are to be paid on the share capital.
EstimatedExpenses and Revenues
132. As already mentionedin paragraph 113, each shareholderwill be charged and will pay its proportionalshare of total annual costs (based on relative share holdings) whether it takes its share of the electricityguaran- teed or not. As the companyis a co-operative,no dividendswill be paid on the share capital; the primary interest and purpose of the consumer/owners,in this joint venture, is to have their own supply power at lowest possible cost rather than to receive dividends on their equity contributionsin the venture,
133. Annual costs will include all operation and maintenanceexpenses, in- terest on the borrowed capital and straight-linedepreciation or amortization of the loans, whichever is higher.
134. It is the owners' intentionto take full advantage of the deprecia- tion provisionsof Finnish tax laws and to charge a high rate of depreciation consistent with their desire to maintain the cost of power below the price of energy sold by ImatranVoima. It is estimated that the investmentcould be fully written off in a period of 8 to 15 years.
135. Annex 14 shows a projection of operating results and cash flow state- ments for the first 7 years of operationof the company. The estimateswere prepared on the basis of the following assumptions,in addition to those al- ready mentioned:
a) The average annual plant factor has bcen taken at 60% (5,200hours); - 20 -
b) Fuel prices have been assumed to remain at their present level;
c) Depreciationhas been assumed to be on a straight-linebasis, taking a life of only 15 years of the plant. The table shows depreciation under 2 differentheadings:
- ordinary depreciationat AS a year (25 years), and
- extraordinarydepreciation (in lieu of profit) covering the differencebetween 15-year or 25-year straight-lineaccruals.
136. The average price per kwh computed on this basis would be Fmk 2.87 in 1966, the first year of operation. It would decrease slightly every year as a result of the gradual reduction in interest charges on the declining balance of the loans. This initial cost of Fmk 2.95/kwh compares favorably with the present average industrialrate of about Fmk 4/kwh chargedby Imatran Voima.
EstimatedFinancial Results
137. On this basis, the return on the company'snet fixed assets in opera- tion would increase gradually from an initial 7.1% to about 8.1% in 1972. The return would obviouslykeep increasingwith the decrease in the net value of the plant. Interest coverage would also go up gradually, starting at 1.62 in 1966 and reaching 1.80 in 1972.
138. A-nexamination of the projected cash flow statement shcws a substan- tial generation of cash, amountingto a total of over iFmk1.5 billion, over the first 7 years of operationof the company. On the assumptionsmade, the rate of cash accumulationwould enable Kotka to pay for all or a large part of the cost of future expansion,if such expansion is considered. It could also be used to prepay the long-termdebt and thus further reduce the cost of power. In such case, the average price by 1972 could be reduced to about Fmk 2.45.
Projected Balance Sheets
139. Estimatedbalance sheets as at the end of each year for 1965 to '1972 are summarized in innex 15. They do not reflect any additional plant invest- ment nor possible earlier repaymentof the two loans. The accumulatedcash is shown as net current assets without interestbeing earned, and extraordinary depreciationis considered as a special reserve. Without acceleratedamortiz1- tion of the loans, the debt/equityratio would be reduced from the initial 66/34 to 49/51 by the end of 1972, after 7 years of operation. Should the casi accumulationbe used for acceleratedredemption of the debt, the ratio by 1972 would be 29/71.
A.udits
140. The accounts of the company are regularly audited by independent external auditors chosen by the Board of Directors. - 21 -
X. ECONONIC ASPECTS
141. The planned expansion of the thermal generating capacity in the Fin- nish power system is a consequenceof the fact that the remaining underdevel- oped hydro energy resources in the country are located far from the main local centers and constructioncosts are relatively high. Furthermore,at present fuel prices, includinga 1C% import tax, generating costs of a modern thermal plant are substantiallylower than the estimated cost of power to be delivered from hydro plants now under constructionin North Finland.
142. The plants proposed for Bank financing are located close to load centers and at existing ports to minimize fuel transport costs. The sizes of generating units are consistent with estimated system loads, to permit their full utilization to meet base load requirements.
XI, CONCLUSIONS
143. The three projects proposed for Bank financing are technically sound and suitable arrangements have been made for their construction. The new gen.- erating capacity is required to meet estimated increase in power consumption. The financing plans proposed for the construction of the projects are reason- able. Financial forecasts, prepared on the basis of reasonable assumptions show that the positionsof the two companiesand the Power Departmentin Helsinki can be expected to remain sound.
144. The projects proposed are suitablefor a Bank loan of $25 million. A reasonableterm for the loan would be 20 years, includinga grace period of 32 years. ANNEX 1 Page 1
MORTGAGE BANK OF FINLAND OY
Purpose and Organization
The Mortgage Bank of Finland Oy is a public institutionset up in 1956 under the Finnish Mortgage Credit Bank Law by a decision of the State Council of December 23, 1955. Its primary purpose is to relend the proceeds of foreign long-term loans to Finnish enterprises.
The Mortgage Bank is owned, staffed (except for one officer whose entire salary is paid by the Mortgage Bank) and managed by the Bank of Finland. The chairman and two members of the Bank?s board of five are representatives of the Bank of Finland. A representative of the lMlinistry of Finance and the chairman of the Supervisors of Banks are at present the other members of the board.
Powers
Under its Articles, the Mortgage Bank is authorized to make loans secured by mortgages in amounts not exceeding 601 of the appraised value of the mortgaged property. It may also accept provisionalsecurity in the form of guarantees of the Finnish Government, banks or corporations.
Until 1960, the Mfortgage Bank's loans have been made mainly with fund obtained from long-term foreign loans, and only to a minor extent from its own equity funds. It secures itself against losses arising from fluctuations in foreign exchange by passing on the exchange risks to its borrowers. In 1960, however, its Articles of Associationwere amended by shareholderdecision, con- firmed by the Council of State, to allow it to borrow domesticallyas well as abroad. Although the 11ortgage Bank does not expect to borrow dornestically or a large scale, it plans, if conditions permit, to obtain medium and long-term loans from savings banks and Insurance companies, and relend the proceeds for s suitable power and industrialprojects.
Under Section 5.04 of the IBRD Loan Agreements (Loans 142-FI, 222-FI and 291-FI), the M4ortgageBank may not, without IBRD approval, borrow or engage in operations other than the relending of the proceeds of the IBRD loans9 Howr- ever, the proceeds from sales by the MIortgageBank to its shareholdersof its own debentures,which are subordinatedto all its other liabilities,are not treated as borrowed funds. Such debentures are considered to be the equivalent of equity. In 1957, the IBRD authorized the Mortgage Bank to invest its own equity funds without prior approval,on condition that the IBRD be informed of the investments and that payments of interest and amortizationfor each invest- ment be guaranteedby the Bank of Finland.
The Mortgage Bank is required to limit its total long and short-term liabilities (excludingshareholders' subordinated debentures) to twventytimes the total amount of its share capital,reserves and subordinateddebentures, Liabilitiesare interpretedas meaning the amounts actually drawn down and net total loans contracted. The Mortgage Bank may also contract short-term credits up to twice the amount of its own eqiity funds. ANNEX 1 Page 2
FinancialPosition
A summary of the Mortgage Bank's financial position as shown by the balance sheet at December 31, 1961, is given below (in million Fmk):
Assets Liabilities
Deposits with Bank of Finland 1,248.9 Foreign Exchange Loans 24,303,5 Deposits on the Postal check Delcredere Reserves 75.8 account 10.5 Transitory Items 309.1 Investment of Foreign Shareholders'Subordinated Exchange Loans 24,551.0 Debentures 1,300.0 Domestic Loans outstanding 730.0 Share Capital 750.0 Investments in Securities 211.7 Regular Reserve 60.0 Other Assets 69.9 Unallocated Profits 23.6 Total Assets 26,822.1 Total Liability and Equity 26_822.1
Equity Capital
The MIortgage Bank has a subscribed and fully paid share capital o7 Fmk 750 million, represented by seven hundred and fifty shares of Fmk 1 mill!3n each; 748 shares are held by the Bank of Finland, one by a subsidiary of the Bank of Finland (Tervakoski Paper Mill) and one by the National Pensions Fund. The Mortgage Bank is authorized to issue an additional Fmk 150 million in share capital. In connectionwith the existing IBRD Loan Agreements (142-FI, 222-FI and 291-FI) the Bank of Finland undertooknot to dispose of any part of its holding of Mortgage Bank shares nor to take or permit any action which would deprive it of its effectivecontrol of the Mortgage Bank without the consent of the IBRD during the life of these loans. This undertakingwill be extended .^ cover the life of the proposed new loan.
The Mortgage Bank has issued five series of debentures for a total of Fmk 1,300 million. They are subordinatedto all other debt and are all held by Bank of Finland. They bear interest at 5% and are repayableover ten year periods starting in 1974 for three of the series and in 1976 for the other two. Equity, including subordinateddebentures, the regular reserve and unallocated profits totalled Fmk 2,133.6 million which, at twenty times, gives a present debt ceiling of Fmk 42,672 million comparedwith total foreign loans outstanding of Fmk 24,303.5 million. When the present loans have been completelydrawn down the total foreign indebtednesswill be about Fmk 32,550 million.
Foreign Exchange Loans and their Utilization
Since its establishment, the M4ortgage Bank has contracted for five foreign loans equivalent to about Fmk 33 billion, of which Fmk 24.3 billion had been drawn down on December 31, 1961 as shown on the preceedingbalance sheet. These comprisedthree loans from IBRD, one from U.S. export-ImportBank and one from the German Kreditanstaltfuer Wiederaufbau. ANNEX1 Page 3
The first IBRD loan (142-FI of May 22, 1956) of $15 million at 4-3/4% was for five power projects.
The second IBRD loan (222-FI of March 16, 1959) of $37million at 5-3/1,% was for nine woodworking enterprises.
The third IBRD loan (291-FI of August 9, 1961) of $25 million at 5-3/4% was for seven woodworking enterprises.
The net aggregate amount of IBRD loans outstanding December 31, 1961 was Fmk 16,353.7 million.
The loan from the Export-Import Bank (from ICA-PL 480 funds) was made on February 18, 1958, and amounted to $14 million. It was for a power project and a woodworking enterprise (Kemijoki and Tampella). The loan is for 40 years; the interest rate is only 3% and the loan was free of interest up to IIay 1, 1961. The amount outstanding on December 31, 1961 was Fmk 4,480 million.
The Kreditanstalt fuer llTiederaufbau loan of Dink 50 million was made in 1959 to assist Outokumpu Oy, the largest mining concern in Finland, to open up a new ore deposit. This loan bears interest at 6-1/4% and is for 15 years, The amount outstanding on December 31, 1961 was Fmk 3,469.9 million.
The difference of Fmk 247.4 million between the amounts of foreign exchange loans shown on the Liabilities and the Assets sides of the balance sheet is attributable to advances made by the Mortgage Bank under these loans to ultimate beneficiaries in advance of its drawing these amounts from the lenders.
Investment of Equity Funds
In addition to investing proceeds of foreign exchange loans the Mor'- gage Bank, at the end of 1961, had invested Fik 730 million of its own equity funds in six different companies. Two loans totalling Fnk 60 million went to oil companies, mainly for storage facilities. Two loans totalling Fmik 270 mil- lion went to power companies, of which Fnk 250 million went to Kemijoki Oy for the expansion of power generating facilities. Two loans totalling 400 million went to woodworking companies. The loans to Kemijoki and to woodworking com- panies are for ten years; the other loans are for five years.
The Mortgage Bank charges currently 7% on loans from its own funds and mark-ups of 1-1/2 to 2-1/2% on loans financed out of Export-Import Bank funds and 0.2% on loans financed out of IBRD and Kreditanstalt funds. For IBRD loans, a fee of 0.15% is also charged on the total amount of the loan when it is credited to the borrower.
Earnings
In 1961, the Mortgage Bank showed a profit of Fmk 21.8 million (com- pared with Fik 24.9 million in 1960 and Fik 21.6 million in 1959); most of this was allocated to reserves. The M4ortgage Bank has not paid any dividends. ANNEX1 Page 4
Prospects
The IMIortgage Bank was set up in 1956 as a vehicle for IBRD loans, but, as has been noted, it has been used since then, with the authorization of the Bank, to take up and relend other foreign loans. It has now been authorized to borrow domestically,but it does not expect its domestic bor- rowings to be large. Its major activity will remain the channeling of for- eign loans, mainly from the IBRD. PEX_ 2
FINLAND
Energy Balance - Records and Forecasts (in millions of kwh)
Fpst Records 1956 1957 1958 1959 1960 1961
Consumption Industrial 4,449 4,923 5,121 5,424 6,183 7,022 Residential,Commercial a~ndother 1,248 1,352 1,465 1,608 1,803 2,036 LIsses and own consumption 796 864 925 884 1,008 1,142
Total primary consumption 6,493 7,139 7,511 7,916 8,994 10,200 Electric boilers 156 566 451 119 33 332
Total Consumption 6,649 7,705 7,962 8,o35 9,027 10,5?2
Generation Hydro plants 5,206 6,622 6,964 5,563 5,269 7,739 Back pressure thermal plants 860 715 740 1,280 1,606 1,6146 Condensing thermal plants 583 368 258 1,069 1,730 979 Imports - - - 123 422 168
Total 6,649 7,705 7,962 8,035 9,027 10,532
Estimated peak load (NJ) 1,080 1,190 1,250 1,320 1,500 1,700
Fo-ecasts 1962 1963 1964 1965 1966 1967 1970 Total primary consumption 11,300 12,500 13,750 15,000 16,300 17,600 22,GCO
Generation A erage hydrological conditions .'qydroplants 8,500 8,700 9,300 9,500 10,100 10,300 11,0C0 Back pressure plants 1,800 2,000 2,200 2,300 2,400 2,500 2,700 Condensing plants 1,000 1,800 2,250 3,200 3,800 4,800 8,300_
Total 11,300 12,500 13,750 15,000 16,300 17,600 22,0CC) AiTNEX2, p. 2
1962 1963 1964 1965 1966 1967 1970
Dry year conditions Hydro plnts 5,300 5,500 5,900 6,ooo 6,400 6,500 79000 Back pressure plnts 2,000 2,200 2,500 2,700 2,900 2,900 2,900 Condensingplants 4,000 4,00 5,350 6,300 7,000 8,200 12,100
Total 11,300 12,500 13,750 15,000 16,300 17,600 22,000
Fstimeted peak load (MrT) 1,890 20080 2,280 2,500 2,700 2,900 3,600
Available capacity (NnJ) Dry year conditions Hydro plants 950 970 1,040 1,070 lgl4o 1,180 1,2L40 Back pressure plants 400 450 500 520 520 520 520 Condensing plants 635 700 790 875 1,025 1,025 1,025
Total 1,985 2,120 2,330 2,465 2,685 2,725 2,785 ANNEX3
FINLAND
Imatran Voima Oy
Forecasts of Sales and Generation (in millions of kwh)
1961 1962 1963 1964 1965 1966 1967 Sales Primary energy 3,333 3,730 4,120 4,540 4,950 5,430 5,800 Occasionalenergy 302 424 333 201 162 160 160
Total Sales 3,635 4,154 4,453 4,741 5,112 5,590 5,960 Losses and own consumption 334 381 443 505 540 590 620
Energy Requirements 3,969 4,535 4,896 5,246 5,652 6,180 6,58G
Supply (AverageYear) Hydro generation 890 1,000 1,000 1,000 1,000 1,000 1,000 Hydro purchase 2,915 3,185 3,396 3,646 3,716 4,000 4,00c "thermal generation 164 350 500 600 936 1,180 1,53C
Total 3,969 4,535 4,896 5,246 5,652 6,180 6,580
Supply (Dry Year) Hydro generation 700 700 700 700 700 700 Hydro purchase 2,220 2,370 2,540 2,600 2,800 2,8C0 Thermal generation 1,000 1,000 1,700 2,060 2,060 2,6to Purchases from other companies 191 493 105 130 460 360
Total 4,111 4,563 5,045 5,490 6,020 6,b20
I:ote:Under dry year conditionsno salesof occasionalenergy have been assumed. ANNEX4
FINILAI-
IIATRAN VOIMA OY
ConstructionCost Estimate (in million Fmk)
Foreign Local Item Exchange Currency Total
Boiler Plant 1,090 821 1,911
Turbo generator 1,lu0 725 1,825
Piping 160 108 268
Instrumentation 75 31 106
Substationequipment 51 189 240
Auxiliary installations 2L5 215
Civil Llorks 795 795
Engineeringand supervision 100 100
Transmission lines 169 731 900
Substations 800 800
Contingencies 15 315 330
Interest duuring construction 220 220
Totals 2,660 5,050 7,710
Million U.S. $ equivalent 8.3 15.7 24.0 IiUTRAti VOIMAOY
CondensedBalance Sheets
Figures in Billions of Fmk
-A C T U A L F O R E C A S T
1958 19S9 1960 1961 i962 1963 1964 X 1966 1967
ASSETS Fixed assetsat costV 17.67 19.84 30.16 32.16 33.17 34.66 42.26 43.54 44.33 51.69 Less: depreciationV 3.81 4.47 5.28 6.45 7.66 8.92 10.45 12.02 13.60 15.45 30.73 36.24 Net fixed assetsin service 13.86 15.37 24.88 25.71 25.51 25.74 31.81 31,52 0.10 Constructionin progress 1.86 5.17 0.65 0.53 1.92 5.04 0.08 1.57 4.71 35.44 36.34 Total fixed assets 15.72 20.54 25.53 26.24 27.43 30.78 31.89 33.09 10.10 Net currentand other assets 11.35 6.39 4.83 6.78 7.49 7.82 8.3_9 9.01 9.34 46.44 Total assets 27.07 26.93 30.36 33.02 34.92 38.60 40.28 42.10 44.78
LIABILITIES
Long-tern debt 4.65- 1.68 2.30 2.37 2.25 2.21 4.02 5.21 5.33 5.oa IBRD loans 19.43 19.89 19.83 Other loans 13.84 12.23 15.49 17.92 19.14 20.14 19.46 24.89 24.48 Total long-termdebt 15.52 14.53 17.86 20.17 21.35 24.16 24.67 24.76 5.92 7.00 7.00 Share capital 5.92 5.92 5.92 5.92 5.92 5.92 5.92 14.96 Earnedsurplus 5.63 6.48 6.58 6.93 7.65 8.52 9.69 11.42 12.89 19.89 21.96 Total equity 11.55 12.40 12.50 12.85 13.57 14.44 15.61 17.34 42.10 44.78 46.44 Total liabilities and capital 27.07 26.93 30.36 33.02 34.92 38.60 40.28 53/47 Debt/Equity ratio 57/43 53/47 59/41 61/39 61/39 63/37 61/39 60/40 56/44
JV Partly revalued to reflect the change in exchange rates applicable to foreign loans
/ Straight-line depreciation
Of which Fmk 0.02 billion in cash and banks IMATRANVOIMA OY
Condensed Income Statements
Figures in Billions of Fmk
A C T U A L J _ E T I M A T E D-
1958 1959 1960 1961 1962 1963 1964 1965 1966 1967
Sales of energy (millions of Kwh) 3,090 2,960 3,084 3,635 4,154 4,453 4,741 5,112 5,590 5,960 Average price per Kwd (Flak) 3.34 3.65 3.91 3.35 3.28 3,37 3.47 3.5i 3.49 3.52
Revenues from sales of power 10.33 10.79 11.67 12.17 13.65 15.UQ 16.44 17.90 19.51 20.96 Other operating revenues .90 .99 .81 1.09 .90 .81 .82 .84 .71 .73
Total revenue 11.23 11.78 12.48 13.26 14.55 15.81 17.26 18.74 20.22 21.69
15.65 Operation and maintenance expenses J 7.40 8.85 10.30 10.27 11.20 12.12 12.80 13.61 14.96 1.85 Depreciation .61 .67 .81 1.18 1.21 1.26 1.53 1.57 1.59
4.19 Gross income 3.22 2,26 1.37 1.81 2.14 2.43 2.93 3.56 3.67 1.79 Interest (other than capitalized) 1.15 1.16 1.27 1.46 1.43 1.56 1.58 1.56 1.94
2.40 Net profit 2.07 1.10 .10 .35 .71 .87 1.35 2.00 1.73 .27 Dividends .27 .25 - - - .18 .27 .33
Retained earnings 1.80 .85 .10 .35 .71 .87 1.17 1.73 1.46 2 7 2.3 Interest coverage 2.8 1.9 1.1 1.2 1.5 1.5 1.8 2.3 1.9
Return on avera;,enet fixed assets 12.5% in operation 23.7% 15.6% 7.0% 7.2% 8.4% 9.5% 10.2A 11.3% 11.8%
I/ Adjusted to take into account straight-line rather than accelerated depreciation
2I Including purchased power L4ATRANVOXM. oY
Forecast of Receipts and Expenditures (Billions of Fmk)
1962 1963 1964 1965 1966 196?
RECEIPTS
Net revenues from operations 2.14 2.43 2.93 3.56 3.67 4.19 Less dividends - - 0.18 0.27 0.27 0.33
2.14 2.43 2.75 3.29 3.40 3.86 Depreciation allowances 1.21 1.26 1.53 1.57 1.59 1.85
Net receipts from operations 3.35 3.69 4.28 4.86 4.99 5.71
New share capital - - - - 1.08 - Borrowing: Proposed IBRD loan 0.15 2.00 1.40 o,30 - - Other borrowing 2.25 2.20 o.60 1.25 1.70 1.20
Total borrowings 2.40 4.20 2.00 1.55 1.70 1.20
Total Receipts 5.75 7.89 6.23 6.41 7.77 6.91
EXPHNOITURES
Construction IBRD project 1.54 3.81 1.62 0.74 - - Other power plants - - 0.23 0.99 2.27 1.20 Transmission network 0.55 0.51 0.49 0.74 1.36 1.30 Land and water rights 0.30 o030 0.30 0.30 O.30 0.26
Total construction 2.39 4.62 2.64 2.77 3.93 2.76
Debt service (Amortizationand Interest) Xxisting IBRD loan 0.29 0.29 0.29 0.26 0.26 0.26 Proposed IBRD loan - - - - 0.37 0.37 Existing other loans 2.28 2.41 2.44 2.30 2.24 1.97 Proposed new loans 0.08 0.24 0.34 o.46 o.64 0.79
Total debt service 2.65 2.94 3.07 3.02 3.51 3.39
Total Expenditures 5.04 7.56 5.71 5.79 7.44 6.15
CASH
Cash surplus of year 0.71 0.33 0.57 0.62 0.33 0.76 Cash balance beginning of year 0.02 0.73 1.06 1.63 2.25 2.58 Cash balance end of year 0.73 1 .06 1 .63 2.25 2.58 3.34 ANNEX 8
FINLAND
Power Department- City of Helsinki
Power Sales and Demand (in rillions of kwh)
1956 1957 1958 1959 1960 1961 Records
Residential 99.2 111.5 125.2 130.3 142.2 152.8 Commercial 120.8 12746 135.8 136.4 153.2 172.5 Industrial 117.9 130.6 135.4 148.8 166.1 176.7 Traction 29.9 25.1 25.6 26.5 29.0 28.6 Publiclight 11.1 12.1 13.2 13.9 15.9 16.5 Otherpublic 51.7 53.5 57.9 69.3 74.7 80.7 Distributors 2,9 4.4 5.1 4.7 2.2 1.6 TotalSales 426.5 ,64..8 498.2 529.9 583.3 629.4 Peakload (MT) 114 124 133 142 156 168
1962 1963 1964 1965 1966 1967 1968 1969 1970 Forecasts Residential 163 175 188 200 215 231 249 265 285 Commercial 182 198 215 233 253 275 300 325 350 Industrial 196 217 236 263 284 315 327 369 403 Traction 29 29 29 29 29 29 30 30 30 Publiclight 18 19 20 21 22 23 24 24 25 Otherpublic 90 100 110 122 135 150 168 185 205 Distributors 2 2 2 2 2 2 2 2 2 TotalSales 680 740 800 870 940 1,020 1,100 1,200 1,300 Peakload (IS4) 187 206 226 250 274 300 330 362 40C ANNEX9
FINLAND
Power Department- City of Helsinki
ConstructionCost Estimate (in million Fmk)
Item Foreign Exchange Local Currency Total
Civil works 300 300 Boiler plants 690 490 1,180 Turbo generatorplant 810 350 1,160 Feed pumps and piping 170 50 220 Transformers 135 135 Electricalequipment 10 20 30 Cables 25 25 Cranes 80 80 Fuel oil tanks 110 110 Overhead and engineering 290 290 Contingencies 170 210 380 Interest during construction - 240 240
Total 1,850 2,300 4,150
In equivalent million us$ 5.8 7.2 13.0 CIEX OF HELSLNKI PUWER DEPARTrMEMT
FORECAST OF INCU-:E AND CASH FLOW STATtMENTS
Actual ESTIMATi)
1959 1960 1961 1962 1963 1964 1965 1966 1967
Sales of Rkergy (millions of Kwh) 530 585 630 680 740 800 870 940 1020 Average rate per Kwh 9.7 9.8 9.2 9.0 8.7 8.4 8.1 8.o 7.9
______Millions of F. Marks_
Income Statements
Revenues from power sales 5270 6140a/ 6000 610U 6400 6700 7100 7500 8100 Other revenues 980 1000 1200 1200 1300 14a) 1600 1700 1800
Total revenues 6250 71)40 72U0 7300 7700 8100 8700 9200 9900 Operating expenses 3060 3400 3300 4000 4400 4700 510t 5400 5700 Depreciation 900 9O 1000 1100 1200 1300 1400 1500 1600
Gross Income 2290 2840 2900 2200 2100 2100 2200 23u0 26UO
Sources of Funds
Gross income, as above 2290 2840 290Q 2200 2100 2100 2200 2300 26U0 Depreciation 90o 900 1000 10UO 1200 1300 1)4u 1500 16uo
Net receipts from operations 3190 3740 39uo 3300 3300 3)400 3600 3800 4200 Borrowings IBRD loan 142 FI 170 4o - - - - Proposed IBRD loan 500 500 600 Other borrowings 1260 750 ------
Total Sources of Funds 4620 4530 3900 3300 3800 3900 4200 3800 42l0
Application of Funds
Construction, (excluding interest during construction) Project to be financed by IBRD loan 600 500 1500 1000 300 Other construction 2510 2390 2800 2800 2300 2400 1900 22(0 2900
Total construction expenditure 2510 2390 2800 2800 290u 2900 3400 3200 3200
Debt Service
IBRD loan 142 FI 72 72 72 72 72 72 72 72 72 Proposed IBRD loan 151 151 Other borrcwings 660 710 710 710 680 650 620 590 560
Total Debt Service 732 782 782 782 752 722 692 813 783
Total Application of Funds 3242 3172 3582 3582 3652 3622 4092 4u13 3983 o
Cash balance 1378 1358 318 (-282) 148 278 108 (-213) 217
Return on invested capital 15.9% 17.2% 16.1% 11.1% 9.8% 9.1% 8.9% 8.6% 9.1%
i including bulk sales of a non-recurring nature to Imatran Voima and other hydroelectric conpanies. ANNEX 11
FINLAND
Kotkan Ioyryvoima t
ShareholdersPower Demand (in 4V)
Actual Forecast,
Shareholder 1959 1960 1961 1962 1964 196611968
Oy Tampella Ab l/ 27 31 43 o0 56 67 70 A. Ahlstrom Oy 2/ 22 25 26 26 28 30 32 Kymin Oy 3/ 52 58 75 75 80 90 100 City of Kotka 8 9 10 11 13 15 17 Etela - Soumen Voima Oy 4/ 37 39 43 45 5o 56 64
Total 146 162 197 197 227 258 283
1/ Wood processingmills at Anjala, Inkeroinenand Heinola. 2/ Karhulaworks. 5/ Kuus&nkoski.- nd Voikka mills. Lw' Excluding demand of other shareholders of Kotkan 1Joyryvoima Oy. ANiEX 12
FINLAND
Kotkan HoyryvoimaOz
Construction Cost Estimate
(in million Fmk) Local Item Foreign exchange Currency Total
Boiler plant 400 785 1,185
Turbogenerator plant 943 307 1,250
Piping 120 45 165
Instrumentation 57 23 80
Fuel oil plant 40 40
Coal handling plant 10 90 100
Cranes 180 180
Electrical equipment 300 300
Transmission line 45 45
Auxiliary plant 35 35
Civil works 1,050 1,050
Overhead, engineering 120 120
Contingencies 160 290 450
Interest during construction - 300 300
Totals 1,690 3,610 5,300
Equivalentmillion US$ 5.3 11.2 16.5 ANNEX13 FINLAND
Kotkan Mpyryvoima Oy
Estimated Operating Costs
Capacity: 80 MW Net annual generation: 390 million kwh Capital Cost: Fmk 5,300 million ($16.5 million) Price of coal, cif. Kotka, including 1C% purchase tax: Fmk 2,920/ton ($9.10/ton) Heat value: 6,000 kcal/kg (10,800B.T.U./lbs.) Coal unit price: Fmk 485/millionkcal (38 U.S. cents/ mil- lion B.T.U.) Plant heat rate (net): 2,400 kcal/kwh (9,500 B.T.U./kwh)
Annual OperatingCosts:
Million Fmk 1,000 U.S.$
Administration 15 47 Operation 45 140 Maintenance 45 140 Depreciation 212 660 Insurance and taxes 11 34 Fuel costs 454 1,420 Capital charges 320 1,000
Total 1,102 3,441
Net unit cost Fmk 2.83/kwh 8.9 mills/kwh KOTKANH0YiYVDIMA OY
(KUTKA THWiAL PUWIWVCO.)
Forecast of Uperatin esults and Cash Flow Statements V zl'tlioof FImk)
Calendar yew 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972
Operating Statesmnts
Knergy deliveries (million of Kwh) 390 390 390 30 390 390 390 Average payment per Kwh delivered (Ftc) 2,95 2.94 2.91 2.e8 2.66 2.84 2.93
Payments by the first owner-consumers 150 1142 1134 112$ 11I8 l109 1102
Fuel Costs 454 454 454 454 454 454 454 Other operation and maintenance costs 116 116 16 116 116 116 116
Depreciation (25 year straight-line) 212 212 212 212 212 212 212
Gross income 366 360 352 344 336 327 317
Interest payments 227 219 211 203 195 186 176 Extraordinary depreciatioa 141 141 Il2 11 141 141 141
Sources of funds
Grco s income 368 360 352 344 336 327 317 Depreciation (ordinary) 212 212 212 212 212 212 212
Net receipts from operations 580 572 564 556 548 539 529
Share capital 200 400 600 600 ------Proposed IBRD loon 100 800 800 860 ------Loan from National Pensions Fund 100 400 400 140
Total sources of funds 400 1600 1800 1600 580 572 564 556 548 539 529
Application of funds
Construction expenditures (including interest) 400 1600 1800 1SO0 ------Interest (ther than capitalized) Proposed IBRD loan 154 148 141 135 129 122 114 Loan from National Pensions Fund 73 71 70 68 66 64 62
Amortization Proposed IBRD loan 92 98 105 111 117 124 132 Loan from National Pensions Fund 21 23 24 26 28 30 32
Total debt service 340 340 340 34 340 34J 340
Total application of funds 400 1600 1800 15lo 340 34U 34 340 34L 340 340
Cash surplus fbr year - - - 100 240 232 224 216 208 199 189 Cash at beginning of year 100 340 572 796 1012 1220 1419 1 Cash at end of year 343 572 796 1012 1220 1419 16J8
Return on net fixed assets in service (based on 25 year life) 7.1% 7.2% 7.4% 7.5% 7.7% 7.9% 8.1% Interest cherage 1.62 1.64 1.67 1.68 1.72 1.76 1.80 KOTKAMH0YRYVUIi4A QY (K0TKA THIRMALPOWSR CO.)
Esti.nated Balance Sheets
December 31 1965 1966 1967 1968 1969 1970 1971 1972
ASSETS
Fixed assets at cost 5300 5300 5300 5300 530 5300 5300 5300 Less; Depreciation reserve - 212 424 636 848 1060 1272 1484
Net fixed assets in operation 5300 5088 4876 4664 4452 4240 4028 3816
Net crrent assets 100 340 572 796 1012 1220 1419 1608
Total assets 5400 5428 5448 5460 5464 5460 5447 5424
LIABILITIES
Long-term debt
IBRD loan 2560 2468 2370 2265 2154 2U37 1913 1781
National Pensions Fund 1040 1019 996 972 946 918 888 856
Total long-term debt 3600 3487 3366 3237 3100 2955 2801 2637
Share capital 1800 1800 1800 1800 1800 1800 1800 1800
Reserve (extraordinary depreciation) - 141 282 423 564 705 846 987
Equity 1800 1941 2082 2223 2364 2505 2646 2787
Total liabilities and capital 540o 5428 5448 5460 5464 5460 5447 5424
Debt/Equity ratio 66/33 64/36 62/38 59/41 57/43 54/46 51/49 49/51 XW'''zEil ~ ~~~~~~~~~ A'%\
F I N L A N D -S'
/ Power p '
F IN L AND 3 /
h Projects to be financed by proposed loan / Rovaniemi ^* O Power plant ( Petaj6skoskip o Substation Pirtiikoski 400 kv transmission line To
220 kv SW
To be constructed \
Ouu* Pyhbkoski t ~~~~~~Pikkarala / D~ ~~~~~V Nuju eitenoeteikeaI
b~~~~~~~~~VO-(3,4v~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5 A
JUNE 1962101100 2009 g *! b\\ /f ~~~~~~~~~ImatraC
t~~~~~ I L 0M E
JUNE 1962 IBRD-1019