R E S T R I C T E D RETURN TO 1'Ir rrnm REPORTS DESK FILE Cply R e p o r t N o. TO-264a WITHIN ONE WEEK This report was prepared for use within the Bank. It may not be published nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF THE SHINKOKURA THERMAL POWER PROJECT KYUSHU ELECTRIC POWER COMPANY JAPAN March 7, 1961 Department of Technical Operations CURRENCY EQUIVALENTS U.S. $1 = 360 Yen 1 Yen = .278 U. S. cents 1 million Yen = U. S. $2, 778 1 billion Yen = U. S. $2. 78 million AGPFPAISAL OF THE SHINOK'URA THERMAL PCITER PROJECT KYLTSHU ELECTRIC PONER COMPANY - JAPAN TABLE OF CONTENTS Page No. SUMMY I. INTRODUCTION 1 II. THE COMPANY 1 III. ThE PO TER MARIET 2 IV. THE 1960-1965 EXPANSION PROGRAM 3 V. THE PROJECT h Present Status and Construction Schedules 4 Estimated Cost 5 Unit Construction and Generation Costs 6 VI. RITES 7 The Present Regulation 7 Rates of the Kyushu Power Conpany 8 VII. FINANCIAL ASPECTS 8 Present Financial Structure a Past Earnings 9 Capital Expenditures and Sources of Funds 10 Financial Forecasts 12 Estimated Earnings and Financial Ratios 12 VTII. CONCLUSIONS AND RECOWrZIi\TDATIOBS 14 LIST OF ANTITXDS le Actual and Estimated Sales, 1956 through 1965. 2. Actual and Estimated Kwh Gererated and Sold, Systep 9Iaximum Demand and Generating Capability, 1951 through 1965. 3. Graph Showin,g Actual and Estimated Syst-em Maximum Demands ard Generating Capability, 1951 tiarough 1965. 4. Site Plan of the Project. . Construction Schedule. 6. Generatirng Costs. 7. Balance Sheets of Kyushu Pover Coripany. 8. Funded Debt of Kyushu Power Company. 9. Sunmary Income Statements. 10. Cash Flow Forecasts. Niap of Kyushu. JAPAN APPRAISAL OF THE SHINKOKURA TI-RI'IAL PQ'TER lOJECT KYUSHU EILCTRIC PO-ER OINANY SUI'ThIARY This report covers an appraisal of a project in Kyushu, Japan, consisting of the first stage of the Shinkokura thermal power plant, with an installed capacity of 156 1TiW. The total estimated cost of the project is equivalent to US$27.744 million. The Bank has been requested to make a loan equivalent to US$12.0 million which, with the exception of about US$1.6 million required for imported equipment, would be spent in Japan. ii. As in the case of previous Bank loans for power development in Japan, the borrower would be the Japan Development Bank, who would in turn relend to the Kyushu Power Company, who will construct and operate the project. iii. Contracts have been negotiated by the Kruslhu Power Company with Japanese manufacturers for all major items of plant and equipment, and civil works on site are about 70% complete. The project is scheduled for completion in October 1961. This construction schedule is realistic. iv. The Kyushu Power Company has a large expansion program estimated to cost Yen 139.6 billion (US$390 million) for the period 1960 through 1965, of which the project is a relatively minor item. The project is justified by the sustained increase in power de-and in the Companyts service area. v. The management of the Kyushu Power Company is experienced and its engineering and operating departments are well organized. On the basis of its past performances the Company should have no difficulty in engineering, constructing and operating the project and in carrying out the remainder of its expansion program. vi. The present financial position of the Kyushu Power Company is unsatisfactory because of inadequate rates. The Corp)any has now been granted permission to increase its charges for electricity by an average of 10.5%. With this rate increase, the financial position of the Company is expected to show a satisfactory improvement. vii. The project is considered suitable for a Bank loan of d'l2 million equivalent for a period of 20 years including a grace period of 1-1/2 years on amortization payments. I. IiITRODUCTION 1. This report covers the appraisal of the first stage of the Shinkokura thermal power project, writh an installed capacity of 156 t^P, which is being constrrcted by the Kyushu Power Company near Kokura in northern Kyushu. Contracts have been negotiated for all major items of plant and equipment with Japanese manufacturers and civil works on site are about 70% complete. The Company plans to expand the plant, in the future, to an ultimate capacity of 532 iMl. 2. The estimated cost of the project is Yen 9,988 million (US$27.7hh million). The Bankc has been requested to assist in the financ- ing of the project with a loan equivalent to US$12.0 million. With the exception of approximately US$1.6 million which -would probably be spent on imported equiprment, the proceeds of the loan would be spent in Japan on labor, ma-terials and locally manufactured plant and equipment. As Is the case of previous power loans to Japan, the Japan Development Bank (JDB) would be the borro-wer and would in turn relend to the Kyushu Power Company. 3, The estimated cost of the Company's expansion progran, of which the Shink"okura project is a relatively minor item, during the period April 1, 1960 to M4arch 31, 1966, is Yen 139.6 billion (US$390 million). 4. The Bank made a loan of US11.2 million to the JDB for tine Kyushu Power Company in 1953 (Loan 90-JA) to assist in financing the in- stallation of the first 75 NJ generating unit in the Karita Thermal Power Station. The unit has been in operation since mid 1956 and two further units, each of 156 NTJ, have been installed. The actual cost of the unit was slightly less than originally estimated and US$749,689 of the loan was subsequeritly cancelled. 5. This report is based on information submitted to the Bank by the Company, the findings of a TCD mission iwhich visited Japan in July and August 1960 and on information subsequently received. II. THE COMPAIff 6. The Kyushu Electric Power Company was incorporated on Ilay 1, 1951 as a privately-owned public utility, when the Government-controlled National Power System was returned to private ownership. The Company serves the entire island of Kyushu and neighboring small islands, wirith a total area of 15)748 square miles and a population of about 13.5 million. The area served is approximately 11% of the total area of Japan, and the population about 1l4.h% of the natioral total. More than 50$ of Japanese coal and 35% of Japanese steel are produced in Kyushu. 7. The Company's installed generating capacity totals 1,958 MW, consizting of 1,268 TA of therrial capacity and 690 N1,l of hydroelectric capacity. The system peak load is at present approximately 1,600 ITU anad during the year ending .larch 31, 1960 some 9,078 million kwh were gener- ated. N.lore than 70% of the total kajh sold were supplied to large power. consumers and the system, consequently, has a very high Load factor, currently about 67.7%. The system annual peak load occurs in December and i.i 1960 the margin of available generating capability over the system peak load is expected to be only 3.7%. 8. Of the nine privately-owned utilities which were established in 1951 to serve the whole country, Xiyushu is the fourth largest. It gener- ates about 10% of all the electrical energy produced in Japan, The Companyts management is experienced and its engineering and operating departments are well organized with capable staffs, out sound economic Judgment in the selection of projects for development has not always been shown. On the basis of its past performances, the Company should have no difficulty in engineering, constructing and operating the project. III. TH3 POIWER MMRKET 9. The northern part of Kyush-a is one of the most highly industri- alized areas in Japan, and sales to industrial consumers account for a large proportion of the Company's total sales of electrical energy. Sales by the Company increased from 3,819 million kwh in 1951, whlen the Company was established, to 7,920 million kwh in 1959, an increase of 107.4%. This corresponds to an average compound increase of 865% per year. The yearly increase has, however, been uneven as sales are closely related to fluctuations in the Japanese economic situation. Thus, in fiscal year 1958, the increase was only 6%, due to the general recession in economic activity, while in 1959 the general recovery from the recession resulted in an increase of 14.5%. 10. Forecasts prepared by the Company show total sales are expected to increase from 7,920 million kwh in the 1959 fiscal year to 12,572 million kwh in the 1965 fiscal year. An increase of 7.2% is expected duri-rg the 1960 fiscal year, and the average rate of increase per annum during the years 1960 through 1965 (April 1, 1960 to March 31, 1966) is estim.ated to be 8.0%. These forecasts, which have been prepared in con- siderable detail, take into account the production estimates of major industrial consuners, railroad electricication and other known develop- ments, are realistic and acceptable; if anything, they appear slightly on the low side, '1. A table siummarizing the actual and estimated sales for the fiscal years 1956 through 1965 is attached as Annex 1. This table g-ves a breakdown of sales into five main categories, the percentage increase Der annum, the nercentage of total sales of each category and the cver- all percentage increase per annum. - 3 - 12. The system peak demand is expected to rise from the present level of about 1,600 TJ to 2,h08 MiJ by the end of the 1965 fiscal year, the average rate of increase per annum during the period being 8.2%. The system load factor, which at present is very high at 67.7%, due to the large industrial load, is expected to fall slightly to 6713% in 1965e IV. THE 1960-1965 EXPfiNSION PTOGRAM 13. The Kyushu Pouer Company is the only one of the nine privately owned Japanese utilities which generates more electrical energy by thermal plants than by hydroelectric plants. Hydro resources, suitable for develop-- ment in Kyushu, are very 'i7mited and hle Company will have to rely in- creasingly on the provision of additional thermal capacity to meet future system demands. 14. in order to meet the expected rise in demand the Company has put in hand a large expansion program which should increase the installed generating capacity of the system to 2,965 314 by March 31, 1966. This wiould provide a 7.9% margin of capability over peak load. The exparnsion program provides for 1,007 NT of additional generating capacity being added between April 1, 1960 and March 31, 1966. This will consist of 636 T!' of thermal plant and 371 PM of hydroelectric plant, in addition to the necessary expansion of transmission and distribution facilities. The program also provides for work to commence on the installation o.f 527 M1W of generating capacity consisting of 447 TIJ of thermal plant, 80 1F of hydroelectric plant, which should be in commission by the end of 1967. The estimated cost of this program up to March 31, 1966 is as follows: Thermal generating capacity X 42.0 billion Hydroelectric generating capacity 37.8 Transmission facilities 22.5 Distribution facilities 33.8 Other capital expenditure 3.5 X 139.6 billion A table showing the actual and estimated kwh generated and sold, system maximum demnands, generating capability, load factor and system losses expressed as a percentage of kwh generated is attached as Annex 2. A chart is attached as Annex 3 which shows the curve of maximum derand or peak dermnd, in relation to sys-tem generating capability. 16. With its experience in engineering and constructing both thermal and hydroelectric plants, the Comipany is well equipped to carry out the expansion program. - 4 - V. THE PROJECT 17. The project proposed for Bank financing is the first Stage of the Shinkokura thermal power station, with an installed capacity of 156 IiW, which is being constructed by the Coupany near Kokura in northern Kyushu. The project is designed for future expansion to an ultimate capacity of 532 MI. A map of Kyushu shiowing the location of the station is attached as an annex. 18. The station is situated on reclaimed land on the seashore. Sea water will be used for cooling purposes and boiler make up water will be obtained from public supply mnains. Locally mined coal of low calorific value (about 8100 B.Th.U per lb.) will be used as fuel. The coal will be delivered by rail, and a siding into the station area is being prolvided for this purpose. An area adjacent to the station, which is being reclaimed, will be used for ash disposal. The output of the station will be fed into the Companyts Hiakari substation, which is located at the center of the northerri Kyushu industrial area, by three double circuit 66 KV transmission linas of 2.9 km route length. 19. The generating plant will consist of one 156 MW 3600 RPM turbo- alternator of Ishikawajima Shibaura Toshiba ranufacture and one 1.15 million lbs. per hour boiler manufactured by the Nagasaki Shipyard Company. 20. The turbine, which will be of the tandem compound triple f'Low type with a reheat cycle, will be designed to operate with steam conditions of 2400 lbs. per square inch 1050OF/loo0oF reheat. 21. The boiler will be of Combustion Engineering (USA) design wTith forced circulation and twin furnaces and will be suitable for operation on pulverized coal or Bunker C fuel oil. Automatic boiler control equip- ment of Bailey (USA) manufacture will be fitted. 22. The output of the generating set will be stepped up from 18 KV to 66 KV by one 3-phase transformer of Hitachi manufacture and al'l switch- ing will be carried out at 66 KV by means of Hitachi air blast circuit breakers. 23. The station will be used as a base load plant and the estimated annual output, when in full operation, is 1,093 million kwh, which is equal to an annual load factor of 80Z. 24. A site plan of the Shinkokura station is attached as Annex 4. Present Status and Construction Schedules 25. In accordance with the K,ushu Company's standard practice, the project has been designed and is being constructed b-y the engineering staff of the Company who have had considerable experience on similar projects and are well equipped to carry out the work. -5- 26. Contracts 'or the supply and erection of all miajor items of plar.t and equipment have been negotiated with Japanese contractors and manu- facturers. Construction work on site commenced in July 1959 and is now about 55% complese, progress being about two months ahead of schedule. The project is scheduled for completion in October 1961 and to be in cor-mercial operation on December 1, 1961. Present indications are the project is likely to be completed slightly ahead of schedule. 27. The scheduled dates for the commencement and completion of the main features of the project are as follows: Commencement Completion Civil works and structures July 1959 Sept. 19gT Boiler plant Oct. 1960 Aug. 1961 Turbo-alternator set Dec. 1960 Aug. 1961 Electrical works Dec. 1960 Aug. 1961 A Par-Chart of construction schedules is attached as Annex 5. Estimated Cost 28. The total estimated cost of the project and the estimated cost of the main features are shown in the following table: Estimated Cost of the Project Yen Equivalent Item (thousands) US)p 1. Land rights and acquisition 63,720 177,000 2. Land formation and development 228,240 634,000 3. Bt'ildings 801,360 2,226,000 4. Circulating water tunnels 248,400 690,000 5. Structures 191,520 532,000 6. Steam generating plant, including boiler pulverizers, coal, oil and ash handling 4,470,201 12,417,000 eauipment, feed pumps and piping 7. Electrical generating plant, including turbo-alternator, condenser switchgear, transformers and control equipment 2,438,798 6,774,000 8. Miscellaneous, including yard services and miscellaneous equipment 76,694 213,000 9. Temporary construction and construction equipment 138,507 385,000 10. Employees housing 62,230 173,000 11. Engineering and administration 308,400 856,667 12. Contingencies 30,000 83,333 9,058,120 25,161,0O0 Interest during construction 929,880 2,583,000 Totals 9,988,000 27,744,000 -6- 29. The sum included for contingencies, 1ren 30 million (US183,333), appears very small, being only about 0.35% of the total cost of the proj- ect if engineering and administration costs and interest during construc- tion are omitted. It must, however, be borne in mind that contracts for all major works and the supply and erection of plant and equipment have already been placed, mostly on a fixed price basis, and in the circum- stances the sum included for contiiągencies, although small, will probably be sufficient. 30. As all maior items of plant and equipment are being manufactured in Japan, the amount of foreign exchange required for the project will be relatively small, about US$1.6 million. Most of this sum will be used to pay for highly specialized equipment not available in Japan. ITnit Construction and Generation Costs )1 The estimated cost of the project, including interest during construction is Yen 9,°88 million or US$27.744 million, wrhich is equal to a cost of Yen 6h,o00 or US$177.8 per kw installed. The cost appears high Ntien compared with costs for similar projects in other industrialized countriesX having regard also to Japanese labor costs. This is undoubted- ly due in part to the fact that all major equipment was bought on the basis of negotiations without obtaining comoetitive bids. The Company claim that the plant and equipment is so specialized that the few Japanese companies capable of manufacturing it are working so closely together that competitive bidding would not have resulted in lower pricese While this may be true when obtaining quotations from Japanese manuf'acturers only, it is probable that lower prices would have been obtained had international competition been invrited. One other reason for the cost anpearing high is that it includes sizeable sums for employees housing and interest during construction which are not usually included elsewhere when calculating iunit costs. If these sums are deducted the total cost. becomes Yen 8,996 million or US$2h4988 million, which is equal to a cost of Yen 57.666 or US$l602 per kw installed. This cost corresponds approdimately to the ulpper renge of costs for similar projects in the USA and is not unreason- able for a high efficiency plant constructed in Japan, designed to burn low grade coal. 32. The cost of energy generated by the project is estimated at 3.09 Yen per kwh or US 8.58 mills per kwh. This compares favorably with generating costs for other thermal plants in Japan. Details of generating costs are shown in Annex 6. - 7 - VI. 2ATES 33. A new and substantially improved rate regulation has recently been approved by the Japanese Government. The 3overnment is planning to implement the new regulation over a period of time (fall impl.ementation would be reached by the end of 1962). This would be done bv authorizing each company to adopt the new regulation when its rates need revising. The Present Regulation 31L. Under the regulation introduced in 19;51 and now still in effect, tariffs are computed on the basis of covering overall costs including operation and maintenance expenses, depreciation, taxes, interest on all borrow,ing and a return on the par value of the share capital. From 1953 to 1959, the return on share capital was fixed at 12%; it was reduced to 10% early in 1959. Dividends were paid at these rates. 35. No return is allowed on the revaluation reserves representing successive write-ups of assets authorized in 1951, 1952 and 1954 followilig tle devaluations of the currency which the companies carry on the liability side of the balance sheet as a part of the equity. 36. Two consequences of the present regulation are of particular importance in app)raising the financial position of the Japanese power companies: a. The retention of earnings is, in effect, discouraged since no return is allowed on earned surplus. Electric utilities dis- tribute in cash dividends a high percentage of their net profits (about 90% in 1959). This essentially limits internal cash generation to depreciation accruals, and the companies have to rely heavily on external financing, particularly on borrowings, to cover their capital requirements. These borrowing needs are made even heavier by the fact that the average maturity of the debt is only about 10 years. This results in the need for re- funding sizeable amounts of matured debt. b. ,Tlhereas the allowable rate of return on the face value of the companies' share capital is 10%, the return on total equity (including revaluation reserves and surplus) is very much lower, averaging about 3A in 1959 for the nine private power companies. 37. These considerations led the Japaniese Government to accept the conclusion that the present rate regulation is no longer adequate to per- mit the electric power industry to remain financially sound while carrying out a large expansion program. 38. In March 1958, the Ministry of International Trade and Industry convened a special Powqer Rate Investigation Council composed of 20 members representing consumers, the power industry and the Government to study - 8 - possible improvements in the rate regulation. The main objective of the Council was to find ways of helping the companies decrease their reliance on long-term borrowings for the supply cf their capital needs. 39. Following the recommendations of the Council, the 2inistry pro- mulgated a new set of regulations in an official decree dated February 29, 1960, a copy of which was received in the Bank. Probably the most sipni- ficant of the new provisions is the introduction of a "rate base" concept. While maintaining the principle that rates should cover the overall cost of operation, it is provided that instead of a fixed return on the nominal value of outstanding shares, the return shall be on a "rate base" consist- ing of the average depreciated value of all assets in operation, 50% of construction work in progress, and a small allowance for working capital. 40. The rate of return on this "rate base" is fixed at 8%. In order to ease the transition frorm the existing to the new system, the return is reduced to 4% on that part of the rate base which corresponds to the reva- luation reserve. At some later da'te, the return is to be restored to 8% on the full rate base. 41. Although the effects of the application of the new rate regula- tions will vary from one company to anothier, the introduction of a rate base concept represents a major improvenent which should help solve some of the industry's long-range financing problems. Rates of the Kyushu Power Company 42. The present rates of the Kyushu Power Company have been in effect since 1954. Tlhey resulted last year in an average revenue per kwh of Yen 5.64 (equivalent to about US 16 mills), which was slightly above the national average for Japan (Yen 5.38, equivalent to 14.9 mills). 43. On the basis of the new regulation, the Company applied in July 1960 for a rate increase averaging 17%. Public hearings were held in December and the Goverrmuent has now -ranted permission for the Company to increase its rates by an average of 10.5%. VII. FITAJNCIAL ASPECTS Present Financial Structure 4h. Upon being established in 1951, the Kyushu Electric Power Com- pany received the greater part of its assets from the state electric authority. The total share capital was then Yen 760 million. Fixed assets were written up to take into account postwar inflation and a revaluation reserve was set up in the capital account. Further revaluations which took place in 1952 and 1954 increased the amount of the revaluation reserve to Yen 37.7 billion, or 5.2 times the then amount of the share capital. Since then there have been some changes in the revaluation reserve due mainly to five relatively small issues of bonus shares. 45. Summaries of balance sheets 1or the last h years are given in Anrnex 7. The debt/equity ratio changed from 57/43 in 1957 to 62/38 in 1960.1/ As of Mar'ch 31, 1960, capitalization of the Kyushu Power Company was approximately as follows: Billions of Yen % Share capital 24.3 15. Capital reserve and surplus .9 .6% Revaluation reserve 33.8 21.5p Total Equity 759.0 37.6 Long-term debt 97.9 6_2_4___ 156.9 100.0% 46. A breakdowTn of the Companyts funded debt as of March 31, 1960 is given in Annex 8. Borrowings from Government sources amounted to 'en 33.9 billion or 35/'O of the total long-term debt, and carried an interest rate of' 6.5% with a term of 30 years in most cases. Borrowings from non- Goverrnment sources in Japan totalled Yen 55.1 billion of which Yen 27.4 billion were mostly in 7-year bonds and debentures. 'With one small exception, the balance is in 5 or 10-year loans from private banks and insurance companies. The average interest rate on domestic borrowing from non-Government sources is about 8.2%. Foreign loans amounted to Yen 8.9 billion comprising Yen 3.2 billion for IBRD Loan No. 90-JA, Yen 4.7 billion for the Export-Import Bank loan of 1956 and Yen 1 billion in the form of a credit from Westinghouse International. Interest on foreign loans ranges between 5% and 5.75%. The interest paid on the entire funded debt last year was at the average rate of approxismately 7.4%. Past Earnings 47. Summaries of income statements for 1956/57 to 1959160 are given in Annex 9. Net profits before extraordinary depreciation2/increased from 1/ Only long-term debt taken into account. 2/ The existing tax legislation allows maximum deoreciation accruals computed according to the fixed percentage or declining balance riethod. In the case of Kyushu, this ceiling is currently about 80% higher, on the average, t.han ordinary straightline depreciation. -_ 10 - Yen 1,33 billion in 1956/57 to Yen 2.14 bilJ.ion in 1959!/60. This rep- resented a net return which fluctuated between 12% ard 18% on the par value of the average amount of share capital outstanding during the year. Beca,use of the relatively large size of the revaluation reserve, the reTurn on total equity was substantially lower, ranaing from 2% to 3% over the last 4 years. 48. Gross return on depreciated ficed assets in operation was low throughout the period but rose slightly from 5.51' to 6.2w6 (largely bezause of the partial capitalization of the revaluation reserve). Total interest, other than capitalized, was on average covered by gross income only l.34 times from 1956 to 1959. Canital Expenditures and Sources of Funds O9. As the project is only part of iyushuts continuing expansion program, all financial forecasts in this appraisal deal with the Company's system and operations as a whole. T The total cost of Kyushuts construction program including interest during construction of Yen 6.2 billion over the six years from April 1960 to ilarch 1966, is estimated at Yen 139.6 billion (equivalentu to USP390 million). Expenditures on the Shinkokura project in 1960 and 1961 account for about Yen 7.5 billion or only 5O4% of the total program. Including the Yen 139.6 billion construction program, the total capital requi-ements for the six-year period will be as follows: Bialions of Yen Corstruction Program 139.7 Increase in Working Capital (including shlort-term debt decrease) 14.2 Long-term Debt lliaturities 64.1 Total 218.0 El. These funds are expected to come from the following sources: Billions of Yen New Long-term Borrowings 96. Sales of New Shares 36.7 Sales of Assets and Consumer Contributions 2.6 Intern-al i[esources (after interest and dividends) 82.2 Total 217.0 The amount of cash generated internally which can be considered to be available for direct reinvestment in the expansion program depends on the extent to which Kyushu will in fact refund maturing debt. Judging from past experience, the Company can be expected to refund substantial amounts. - 11 - 52. The Yen 96,5 billion which Kyushu plans to borrow duiring the six year period to meet its overall cash requirements are eypected to come from the following sources: Billions of Yen Sales of bonds 57.02 59% Proposed IBRD loan 4.32 4% Japan Development Bank loans 12.14 13% Other Sources 23.02 24_ 96.5o 100 53. Loans from the Japan Development Bank at 6.5% would provide a relatively smaller portion of total borrowings than in the past. Loans from "other sources", particularly from financial institutions and life insurance companies would remain substantial from 1961 to 1964. As the interest rate on loans from "other sources" is of the order of 9%, the Company wlll endeavor to increase the relative share of its bond issues in its overall borrowings, as the bonds carry a lower interest rate (about 7.85%). On the basis of past experience, Kyushu should have no difficulty in borrowing this total of Yen 96.5 billion during the period under review. 5h. Net proceeds from sales of share capital are expected to total Yen 36.7 billion over the six-year period. Although this amount appears to be large, the Company's recent experience in issuing new shares has been very favorable. The latest issue was successfully completed on December 31, 1959. Bonus shares were given to subscribers at the rate of t7wo shares with the purchase of each block of eight new shares. At a par -value of Yen 500 a share, this amounted to a price of Yea O 400 a share. The recent auotation of K.yushu shares on the Tokyo Stock Exchange was Yen 4?O a share. An amount of Yen 500 for each bonus share is charged to the revaluation reserve. 55. In future years, IKyushu plans to follow the same procedure, selling new stock below par, at Yen 4OO a share. In 1965 and 1966, however, the Company plans new stock issues with a distribution of bonus shares at a rate of one for each block of nine new shares, or an issue price of Yen 450 a share. It should be noted that the introduction of the new rate system is likely to make shares of the private power companies more attractive to Japanese investors. This should make it possible for the companies to raise more funds in the form of new share capital than in the past. 56. Although there can be no certainty as to the exact amounts which the Company will be able to raise through new stock issues and long-term borrowings, this financing program appears reasonable and realistic. 12 - Financial Forecasts 57. A forecast of income state7ients for the years 1960/61 to 1965/66 is given in Annex 9 and a projection of cash flow statements for the same period is attached as Annex 10. The estimates of revenues are based on the growth of sales corresponding to the forecast of load development and system capability discussed in Chapter III (par. 10-11) and on the proposed rate increase becoming effective on February 1, 1961. 58. No account has been taken in the projections of the additional rate increases which will result from the full implementation of the new rate policies, including the increase from L% to 8% in the return allowed on that part of the rate base which corresponds to the revaluation reserve. 59. Ordinary depreciation has been assumed to remain on the present straightline basis, assumin7 an average life of 15 years for hyldroelectric installations and 23 years for therrmal plants. As in the past, the Company otuld show a large part of its retained earnings as extraordinary deprecia- tion in order to reduce its tax liabilities. These depreciation practices are conservative. 60. For the purpose of calculation, it has been assumed that the proposed Bank loan wiould carry an interest of 5.75% and that, in passing the loan on to Kyushu, JIB would make an additional charge of .30,%. The loan has been assumed to have a term of 20 years, with amortization begin- ning in THay 1962. 61. Future bond issues anrd long-term loans have been taken as having the terms and interest rates which Kyuslhu currently has been obtaining on simnilar borrowings. Estimated Earnings and Financial Ratios 62. The proposed rate increase would bring about a substantial irmpro- vement in earnings. Gross income would rise from Yen 10.5 billion (20% of operating revenues) in 1960/61 to Yen 20.4 billion (26% of operating reve- nues) in 1965/66. Net profits before extraordinary depreciation would also go up much faster than sales, increasing from Yen 2.9 billion in 1960/61 to Yen 10.7 billion in 1965/66. 63. This rapid increase in net profits would make it possible for the Company to conti-nue to pay 10% dividends, whaile retaining a much larger share of its earnings than in the past, in the form of extraordinary depre- ciation. 64. The return on net fixted assets in operation is expected to increase from 6.4j% in 1960/61 to 9.9% in 1965/66. It should be noted, however, that net f4 xed assets in operation shown on the estimated balance sheets for 1961 to 1966 (Annex 7) are somewhat understated as a result of the accelerated build-up in depreciation reserves encouragecd by the tax legislation. If - 13 - straightline depreciation had been taken into account, the adjusted return on net fixed assets estimated for 1966 would be about 9% instead of 9.9%. 65. Kyushu has a commitment with the Bank (Loan 90-JA) which limits the Company;s debt to 2 times the equity. In February 1958 tuie Bank agreed to a definition of equity whiereby the revaluation reserve would be included at the then current value shown iil the books. The debt/equity ratio which, for the last four years varied from 57/43 to 62/38, would remain near this ceiling of 2 to 1 at 66/34 in 1961 and 1962 and would gradually improve to 58/42 in 1966. As a large part of retained earnings is shown as extraor- dinary depreciation rather than as earned surplus, equity tends to be slightly understated. 66. Interest coverage will tend to go up from 1.34 times last year to 2.22 times in 1966, with the ratio being less than 2.0 times in all years except 1966. Debt service on long-term debt Twould be covered by net receipts from operations 1.42 times, on the average, in the six-year period. In 1964, the coverage would reach a Low of 1.17 times becauise of heavy bond redemption payments falling due in that year. The coverage would improve in 1965 aiid 1966 and it is estimated that it would stabilize at about 1.5 from 1967 on. 67. The 58/42 debt equity ratio and the 2.22 times interest coverage calculated for 1966 are the result of forecast cut-off in that year, with incomplete account taken of the system expansion work which would presum- ably have to be carried out at that tine. Actual results would probably be lower, in line with the trend shown through 1965 (respectively 61/39 and 1.84 times). 68. The financial forecasts and ratios estimated on this basis show an improvement of the Company's financial condition which will enable it to meet its ob' igations and require^,nents in the next few years. For fur- ther strengthening of the Company's future financial position, the Govern- rnent will have to allow full advantage to be taken from the new regulation by increasing the return to 8% on the Twhole rate base (see para. 40).with- out much delay. Assurances were obtained during negotiations that the Government intends to do so and complete the transition from the old to the new regulation within approximately three years. - 1 - VIII, COMCLUSIONS A& PIECOIMENDATIOMS 69. The project to be executed by the Kyushu Power Company is technic- ally sound, the estimated cost, although on the high side, is not unreason- able for a high efficiency plant designed to burn low grade coal. Construc- tion schedules are realistic. 70. The project, which is part of the Kyushu Power Con-pany's 1960-65 expqansion program, is necessary to meet part of the expected load growth in the service area. 71. The management of the Kyushu Power Company is experienced and its engineering and operating departments are well organized with capable staffs. On the basis of its past periiornances, the Company should have no difficuLty in engineering, constructing and operating the project, and other projects included in its 1960-65 expansion program. 72. Tariff rates now in force are insufficient for the Company to remain in a sound financial position. The Government has agreed, however, to a rate increase averaging 10.5 which will result in a satisfactory financial position. Further iaprovement is expected when the Government allows the rate of return provision of the new regulation to be fully implemented. 73. The project is suitable for a Bank loan of US$12 million equi- valent for a period of 20 years, including a grace period of 1-1/2 years on amortization payments. The borrower would be the Japan Development Bank. 17ushu Electric Power Cw fly Actual azd Fetimated Salee (Million of Kwh) T lihtlnw _ Cosswrcisl Liitiir & Power Sall ndatal Powier tart Induetrial Powers Otber Conearers Total % increase average of v% icreaerageverage of ,Case rease ,1 avrage of rinorease 8 average of X increase - arage of , increase Kwh per annum Total Sales lwh per annum Total Sales Kwh r Total Salee Kwh per nnm Total Sales Kwh per ar,n Total Sales Kwh per annum -1956 832 - 14.5 172 - 3.0 685 - 12.0 3956 - 69.2 75 - 1.3 5721 - 1957 904 8.7 13.8 180 1.7 2.8 756 10.4 11.6 4595 16.2 70.4 89 18.7 1.4 6524 14.0 1958 995 10.1 14.4 201 11.7 2.9 787 4.1 11.4 4830 5.1 69.8 106 19.1 1.5 6919 6.1 1959 1131 13.7 14.3 216 7.5 2.7 857 8.9 10.8 5586 15.7 70.5 132 24.5 1.7 7920 14.5 Estimated -w- 12i8 10.3 14.7 220 1.9 2.6 886 3.4 10.4 6014 7.7 70.9 121 - 1.4 8489 7.2 1961 1375 10.2 15.1 234 6.4 2.6 934 5.4 10.3 6437 7.0 70.6 127 5.0 1.4 9107 7.3 1962 1501 9.2 15.2 25B 10.3 2.6 979 4.9 9.9 6991 8.6 71.0 122 - 1.3 9851 8.2 1963 1629 8.5 15.3 292 13.2 2.7 1024 4.6 9.6 7580 8.4 71.3 118 - 1.1 10643 8.0 1964 1756 7.8 15.2 330 13.0 2.8 1079 5.4 9.3 8306 9.6 71.6 130 10.2 1.1 11601 9.0 1965 1883 7.2 15.0 372 12.7 2.9 1145 6.1 9.1 9042 8.9 72.0 130 - 1.0 12572 8.4 1960-1965 A-erag perenatage Increass per anom 8.9% 9.6% 4.9% 8.4% 2.5% 8.0% 1960.1965 Average percentage of Total Sales 15.1% 2.7% 9.8% 71.2% 1.2% Notes Years are fiscal pars i.e. April 1 to March 31 of following year. ji Kyushu Electric Power Company Actual and Estimated Kwh Generated and Sold. System Maximum Demand, Generating Capability, Load Factor and System Losses % average Kwh Sold (Millions) Kwh Generated (Millions) System Losses Maximsm Demand (MW) Generating Capability (MW) System Load Factor Actual 1951 3819 5215 26.77% 773 773 77.02% 1952 4370 5518 20.80 852 852 73.94 1953 4718 5852 19.38 923 932 72.38 1954 4808 5929 18.91 970 1000 69.78 1955 5007 6115 18.12 1079 1101 64.69 1956 5721 6855 16.54 1207 1250 64.83 1957 6524 7667 14.91 1282 1362 68.27 1958 6919 8021 13.74 1324 1360 69.16 1959 7920 9078 12.76 *l508 1628 68.53 Estimated 1960-- 8489 9656 12.09 1630 1690 67.70 1961 9107 10317 11.73 1746 1876 67.45 1962 9851 11129 11.48 1887 2042 67.31 1963 10643 12009 11.37 2040 2227 67.23 1964 11601 13075 11.27 2222 2438 67.18 1965 12572 14153 11.17 2408 2599 67.13 Note: / fears are fiscal years i.e. April 1 to March 31 of following year. 2/ System losses are expressed as a percentage of Kwh generated. KYUSHU ELECTRIC POWER COMPANY ANNEX 3 ACTUAL AND ESTIMATED SYSTEM MAXIMUM DEMANDS AND GENERATING CAPABILITIES MEGAWATTS 30001 ACTUAL EST IMAT ED SYSTEM GENERATING 2_ 5_ 0_ 0 _ _ __CAPABILITY 2500 _ SYSTEM MAXIMUM DEMAND 2000_____ _ 1500 _/ 500 - _ _ _ 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 FISCAL YEARS (I April to 31 March of Following Year) OCTOBER 1960 IBRD-751 ANNEX 4 Y KYUSHU ELECTRIC POWER COMPANY SHINKOKURA THERMAL PLANT GENERAL SITE PLAN I t X I i::':'X'0=]F4 I t~~~~~~~~~~~~~~II__ C-' ~ ~ ~ ~ ~ ~ ~ 5 L=, - CL _-- ___ _ 90_ I~~ ~~ ~~~~~~~~ _ - A - \ -i- OCT09ER~~~~~~~.. 1960c 13R-75 9A~~~ L,, L OCTOBER 1960 (S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IRO - 753 ANNEX 5 KYUSHU ELECTRIC POWER COMPANY SHINKOKURA THERMAL POWER PROJECT CONSTRUCTION SCHEDULE 1958 1959 1960 1961 1 2 3 4 5 6 7 8 9101112 1 2 3 46 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 Land Formation and Development CIVIL WORKS Circulating Water Tunnels Railroad Siding Coal Handling Plant STORUCTURES Foundations Steel Fabriration and ErectionI Main Building Smoke Sta ck STEAM GENERATING PLANT Main Boiler Plant Auxiliary Equipment Pulverized Coal Equipment TURBO-ALTERNATOR SET Main Plant Condenser Auxiliary Equipment ELECTRICAL WORKS Control Equipmnent Switchgear and Main Transformer FII MISC E1 LANEOUS WORKS OCTOBER 1960 IBRD- 752 ANNEX 6 SHINKOKURA THERMAL PROJECT Generating Costs Total Construction Cost Y 9,988 Million or US $27.744 Million Plant Capacity 156 MW Annual Utility Factor 80% Annual Generation 1,093 Million Kwh Kwh Used in Plait 6.9% of Total Generated Annual Average Gross Thermal Efficiency 35% Heat Value of Fuel 4500 Kcal/Kg. or 8100 BThU/Lb. Unit Cost of Fuel 1 2,458 per Metric Ton or US $6.83 Fuel Consumption Rate 0.578 Kg/kwh or 1.276 lb./Kwh. (Allowing surface moisture 6%) Annual Fuel Consumption 631,754 Metric Tons Annual Costs (Millions of Yen) CAPITAL CCBTS Interest 261.360 I 4,320 Million of Capital Ccst at 6.05% per annum. Interest 513.407 1 5,668 Million of Capital Cost at 9.058% per annum. Depreciation 428.485 At 4.29% per annum of Capital Cost. Fixed Assets Tax 46.5 At 0.466% per annum of Capital Cost. 1,249.796 BrDT COSTS Repairs and Maintenance 156.612 1.568% of Total Capital Ccst. Salaries and Wages 64.ooo Lubricating Oils, etc. 6.o 1 5.57 per Mwh. 22670 INDIRMT COSTS General Administration 45.340 20% of Direct Costs. Enterprise Tax 46.432 1.5% of Total Costs. 91.772 FUEL COSTS Coal 1,552.851 Heavy Oil 4.994 Used for Starting-Up Purposes Coal Handling and Ash Disposal 15.794 X 25 per Ton of Coal. 1.573.639 TOTAL ANNUAL GENERATING COSTS 908 Cost per Kwh Generated -- 3.09 or US 8.58 Mills KYUSHU POWER OOMPANY Condensed Balance Sheet (in millions of Yen) A C T U A L F O R E C A S T As at March 31 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 ASSETS Fixed Assets in Operation (at cost) 116,396 130,382 1)40,857 168,ooo 195,355 217,828 236,513 271,725 290,429 299,680 Less: Depreciation Reserve 12,394 16,080 20,163 25,036 31,851 41,664 53,174 65,228 77,814 93,407 Net Fixed Assets in Operation 10)4,002 114,302 120,694 142,964 163,504 176,164 183,339 206,497 212,615 206,273 Construction Work in Progress 8,423 12,407 25,334 21,722 20,202 24,154 31,832 12,649 11,184 24,137 Investment and Funds 1,010 1,247 1,861 2,459 2,460 2,711 2,979 3,257 3,527 3,815 Current Assets: Cash and Deposits 2,143 2,216 3,512 4,922 5,104 5,702 6,191 6,264 7,393 10,572 Other Current Assets 4,459 6,523 6,403 5,760 5,760 5,760 5,760 5,760 5,760 5,760 Total Current Assets 6,602 8,739 9,915 10,682 10,864 11,462 11,951 12,024 13,153 16,332 Deferred Accounts 361 570 726 961 1,083 1,273 1,430 1,498 1,660 1,786 Total Assets 120,398 137,265 158,530 178,788 198,113 215,764 231,531 235,925 242,139 252,343 CAPITAL AND LIABILITIES Long-term Debt: Bondsand Debentures 13,613 17,336 21,980 27,434 34,224 42,277 48,931 53,319 58,488 62,623 IBRD Loans 3,674 3,526 3,359 3,184 5,771 7,155 6,828 6,483 6,120 5,736 Other Long-term Loans 40,982 46,642 56,382 67,314 76,215 76,147 77,136 76,238 70,011 64,316 Total Long-term Debt 58,269 67,504 81,721 97,932 116,210 125,579 132,895 136,040 134,619 132,675 Short-term Bank Loans 6,358 9,320 12,700 8,600 9,300 9,200 9,300 9,100 2,000 0 Current Liabilities a/ 5,097 6,384 5,498 7,483 7,666 8,071 8,408 8,476 9,151 9,451 Special Provisions 5,840 6,074 5,887 5,758 5,794 7,124 8,470 9,638 11,264 12,662 Equity: Share Capital 7,182 10,800 16,200 24,300 24,300 32,400 40,500 40,500 54,000 67,500 Revaluation Reserve 37,157 36,584 35,797 33,851 33,851 32,231 30,611 30,611 29,261 27,911 Capital Reserve 65 66 66 67 67 67 67 67 67 67 Earned Surplus 430 533 661 797 925 1,092 1,280 1,493 1,777 2,077 Total Equity 44,834 47,983 52,724 59,015 59,143 65,790 72,458 72,671 85,105 97,555 Total Liabilities and Capital 123 137,265 158,530 178,788 2 4 231,531 25 2,343 Debt/Equity Ratio 57/43 58/42 61/39 62/38 66/34 66/34 65/35 65/35 61/39 58/42 a/ Including customers' deposits and dividends to be paid for the last 6-month term KYUSHU POWER COMPANY Funded Debt as at March 31, 1960 (in millions of Yen) Rate Amount % I. Secured Debt Outstanding Bonds and Debentures Kyushu Electric Power Company 7 issues of 5-year bonds, due 1960/62 8.5% 1,191 "I Ii II tI 3 issues of 7-year bonds, due 1962/63 8.0% 828 ' I " 2 issues of 7-year bonds, due 1963 7.5% 920 " " " " 9 issues of 7-year bonds, due 1963/64 7.3% 7,022 It I t " t 33 issues of 7-year bonds, due 1964/67 7.5% 17,473 27,434 28.0% Long-term Loans IBRD (Loan No. 90-JA) 1 20-year loan, due 1956/73 5.3% 3,184 3.2% kxport-Import Bank 2 18-year loans, due 1959/76 5.75% 4,675 ) 5.8% Westinghouse 2 6-year oredits, due 1959/63 5.0% 984 Japan Development Bank 11 30-year loans, due 1983/90 6.5% 33,212 ) n I,, n 1 12-year loan, due 1954/64 6.5% 428 ) =34.7% "I "t 1 15-year loan, due 1953/67 6.5% 275 42,758 43.7% Total Secured Debt 70,192 71.7% II. Unsecured Debt Industrial Bank of Japan 8 10-year loans, due 1953/70 9.1% 7,879 ) 13.3% Long-term Credit Bank of Japan 7 10-year loans, due 1954/'69 9.1% 5,125 ) Private Trust Banks 81 5-year loans, due 1957/65 9.1 and 9.5% 8,648 8.8% Life Insurance Companies 3 10-year loans, due 1958/67 9.5% 53534 5.6% Bank of Fukuoka 2 10-year loans, due 1968/70 9.1% 450 ).6% Prefecture of Kumamoto 1 25-year loan, due 1959/71 104 ) Total Unsecured Debt 27,740 28.3% Total Long-term Debt 97,932 100.0% V Including a charge of .3% by J.D.B., through which the loan was channeled KYIISHU PGCWER COMPANY Condensed Income Statements (in millions of Yen) A C T U A L F O R E C A S T Year ending March 31 1957 1958 1959 1960 1961 1962 1963 1964 1965 1906 Kwhs Sold (in millions) 5,721 6,524 6,919 7,920 8,s89 9,107 9,851 10,643 11,601 12,572 Average Revenue per Kuh (in Yen) 5.75 5.66 5.74 5.64 5.72 6.23 6.23 6.23 6.23 6.23 Revenues from Sales of Power 32,886 36,978 39,732 44,641 4 ,560 56,735 61,372 66,306 72,274 78,324 Other Operating Revenues 828 1,417 878 1,132 1,233 760 1,132 1,128 1,143 1,159 Other Income (Net) 436 129 627 366 378 378 378 378 378 421 Total Revenue 34,150 38,524 41,237 46,139 50,171 57,873 62,882 67,812 73,795 7Y,904 Purchased Power 1,330 1,469 2,110 2,522 3,029 3,051 3,666 4,602 6,383 7,707 Operating Expenses 23,057 26,375 26,516 27,742 28,234 30,359 32,053 32,932 34,278 36,321 Ordinary Depreciation 3,692 3,771 4,431 5,324 6,467 7,427 8,306 9,523 10,248 10,892 Corporate Income Tax 347 713 1,058 1,695 1,970 2,573 2,900 3,283 4,378 4,621 Total Revenue Deductions 28,426 32,328 38,115 37,283 39,70C 43,810 46,925 50,340 55,287 59,541 Gross Income 5,724 6,196 7,122 8,856 lC,471 14,463 15,957 17,472 18,508 2C,363 Interest on Long-term Debt 4,405 4,614 5,395 6,660 8,0o6 9,085 9,674 10,213 10,091 9,882 (less) Capitalized Interest 252 548 1,031 1,178 1,333 1,324 1,696 598 454 770 Net Interest on Long-term Debt 4,153 4,066 4,364 5,482 6,673 7,761 7,978 9,615 9,637 9,112 (add) Interest on Short-term Credits 200 649 962 950 666 682 682 679 409 74 Total Interest, Otrer than Capitalized 4,353 4,715 5,326 6,832 7,339 8,443 8,660 10,294 10,046 9,186 Amortization of Bond Discounts and Capital Stock Expenses 34 71 1i1 285 211, 283 316 372 428 846 Total Income Deductions 8,387 8,786 5,437 6,717 7,553 8,726 8,976 10,666 10,474 9,65C Net Profit 1,337 1,410 1,6P5 2,139 2,918 5,737 6,981 6,806 8,034 10,713 Extraordinary Depreciation 378 216 49 149 348 2,386 3,208 2,531 2,338 4,701 Available for Dividends 963 1,194 1,636 1,990 2,570 3,351 3,777 4,275 5,696 6,C12 Dividends and Management Bonus 872 1,091 1,508 1,854 2,882 3,184 3,S89 4,062 5,412 5,712 Undistributed Earned Surplus 91 103 128 136 128 167 188 213 284 300 harned Surplus at Beginning of Year 339 430 533 661 797 925 1,092 1,280 1,893 1,777 Earned Surplus at End of Year 430 533 661 797 925 1,092 1,280 1,493 1,777 2,077 Times Interest Covered by Gross Income 1.31 1.31 1034 1.38 1.4L3 1.71 1.84 1,70 1.84 2.22 Return on Depreciated Fixed Assets in Operation 5.5% 5.4% 5.9% 6.2% 6.4% 8.2% 8.7% 8.5% 8.7% V KYUSHU POWME COMPANY Forecast of Cash Flow Statements (in millions of Yen) Fiscal Year Ending March 31 1961 1962 1963 1964 1965 1966 Sources of Funds Gross Income, as per income statements 10,471 14,463 15,957 17,472 18,508 20,363 Add Backt Ordinary Depreciation 6,467 7,427 0,306 9,523 10,248 10,892 Other Non-cash Deductions from Revenues 710 1,976 1,907 1,450 2,523 1,902 Net Receipts from Operations 17,648 23,866 26,170 28,445 31,279 33,157 Sles of Assets 220 220 220 220 220 220 Contribution in Aid of Construction 270 200 200 200 200 200 Sales of New Share Capital (net proceeds) - 6,367 6,367 - 12,000 12,000 Long-term =orrouings: Sales of Bonds (net proceeds) 8,064 8,640 8,640 10,560 10,560 10,560 Proposed IBRD Loan 2,757 1,563 - - - - Japan Development Bank Loans 2,482 2,644 2,694 1,093 1,243 1,984 Other long-term Loans 10,423 2,100 4,800 5,700 - - Total Long-term Borrowings 23,726 14,947 16,134 17,353 11,803 12,544 Short-term Bank Credits 9,300 9,200 9,300 9,100 2,000 - Total Sources of Funds 51,164 54,800 58,391 55,318 57,502 58,121 Application of Funds Expenditures on Shinkokura Project (incl. capitalized interest) 3,934 3,612 - - - - It Other Construction ( n n n ) 22,883 23,725 27,275 16,941 18,151 23,116 Total Construction Expenditures 26,817 27,337 27,275 16,941 18,151 23,116 Service of the Long-term Debt: Net Interest on Long-term Debt 6,673 7,761 7,978 9,615 9,637 9,112 Redemption of Bonds 1,610 947 2,346 6,612 5,831 6,865 Repayment of IBRD Loan 90-JA 170 179 188 197 207 218 n Proposed IBRD Loan - - 139 148 156 166 n Japan Development Bank Loans 1,164 1,237 1,299 1,383 1,384 1,519 n Other Long-term Loans 2,840 3,575 5,206 6,308 6,086 6,160 Total Long-term Debt Service 12,457 13,699 17,156 24,263 23,301 24,040 Interest on Short-term Credits 666 682 682 679 409 74 Repayment of Short-term Credits 8,600 9,300 9,200 9,300 9,100 2,000 Dividends and Management Bonus 2,442 3,184 3,589 4,o62 5,412 5,712 Total Application of Funds 50,982 54,202 57,902 55,245 56,373 54,942 Increase in Working Capital 182 598 489 73 1,129 3,179 Times long-term debt service covered by net receipts operations 1.42 1.74 152 1.17 1-34 1.38 SHINKOKURA Thermal Power Stotion KARA T k~~~~~~~~~~~~~~~~~~~~~Tora Poe StKalo C.?3A a a S NAGASAKI o~~S Pa Orn.ut~ ~ ~~~LOATONO D~~~~~~~~~~~~~~~~~C Nobe/ 2 t 7 (