The administration sent Congress details yesterday of the proposed Engery Security Corporation that would use $88-billion worth of federal financial incentives to get private industry to produce at least 2.5 million barrels of oil substitutes a day by 1990.
The independent, government-sponsored organization would be free to meet the goal by choosing whatever mix of projects it wishes -- so long as they involve producing liquids and gas from coal, oil from shale, liquids mass), and unconventional sources of natural gas.
Money for the ESC would come from the energy security fund that Carter earlier proposed, which in turn would be supported by the proceeds of the Windfall profits tax on domestic crude oil.
The new corporation, which would be run by a seven-member board, could help the various synthetic fuels projects it chooses through direct loans, loan guarantees, price guarantees, or argreements to purchase a plant's output. It could not make an equity investment in any plant. It would be permitted, however, to build no more than three plants which the government would own outright.
Loan guarantees could not exceed 75 percent of a project's estimated costs. If during construction there are cost overrruns, new guarantees could cover no more than 60 percent of the overruns.
The corporation will have very board discretion in deciding how to help a project. For instance, if it chose the price guarantee route it normally would pick projects on a competitive basis to minimize potential costs to the corporation. On the other hand, it could pick a more costly project on the basis of its technical merits or other criteria.
Price guarantees could be changed also after construction of a plant has begun, but no changes would be permitted "which will in any way guarantee profits to the contractor," a White House fact sheet said.
Purchase guarantees normally would be made after competitive sealed bids are made, but the board could also follow other procedures if it found that approach unsatisfactory.
In short, the administration has sought to give the new corporation the widest possible latitude and insulate it as much as possible from outside political pressures. The President would control the board through appointment of the chairman and three board members, all of whom would be subject to Senate confirmation. The other members would be the secretaries of Treasury, Energy and Interior.
The Treasury would buy $100-million worth of stock in the corporation to give it operating funds. Initially, $22-billion worth of its lending and price-guarantee authority would be available to it, and an additional $22 billion every 18 months thereafter.