Dianchi Chenbao / Translated by Kevin Li

April 27, 2004

According to the Yunnan Provincial Development and Reform Committee, State Council recently approved the Jinghong hydropower project on Lancang River. This will be the fourth huge dam to be built on Lancang River. This project serves as an extension for the Yunnan-to-Guangdong Power Transfer initiative, meeting the huge demands from
China Southern Power Grid.

Southern Power Grid supplies power to Guangdong, Hainan, Guangxi, Guizhou and Yunnan provinces. By the end of 2002, the total installed capacity of Southern Power Grid reached 61,020 MW. In 2010, the target-installed capacity of the West-to-East Power Transfer for Guangdong Province alone will reach 20,000 MW. Thus more power
construction is necessary.

Jinghong dam is originally planned to supply power to the neighbouring Thailand. However, in order to speed up the power construction and power sales between Yunnan and Guangdong,¹Yunnan Huaneng Lancang Hydropower Company reached a consensus with Thailand and Southern Power Grid Company. Jinghong and the forthcoming Nuozhadu dam will be considered a group of powerhouse, selling power to Guangdong first. The power sale to Thailand will be made between Thailand and Southern Power Grid Company, instead of Huaneng Group.² The 1,500 MW-Jinghong dam project costs 17 billion yuan. Yunnan Huaneng Lancang Hydropower Company will be solely responsible for the project construction. The joint venture between Yunnan Huaneng and Thailand GMS on both Jinghong and Nuozhadu dams will be formed when all the necessary conditions are ratified.

Note:

¹ Yunnan now competes with other western provinces like Guizhou and Guangxi in selling electricity to Guangdong province. The “power shortage” last year spurs such competition.

² The power sector reform in China separates the assets of power plants and power grid, which originally belong to the State Power Corporation. In future, all power plants will belong to the six major power producers, and the power grid will belong to two major grid
companies, National and Southern.