国际合作建议书(英文版).doc

Confidential

Memorandum to:

Proposal for International Cooperation

Dear :

This memorandum represents an inquiry of Jiangsu Electric Power Company

(“Jiangsu Power”) for establi shing an international cooperation with with the over-arching objective of developing a sustainable, trust-based, and mutually beneficial, long-term relationship.

INTRODUCTION TO JIANGSU POWER

Jiangsu Power is the monopoly transmission & distribution electricity company of China’s Jiangsu province, an administrative region with 74 million people, and an GDP of EUR123bn in 2002. Jiangsu Power today is a leading transmission &

distribution company with 2002 revenues of EUR4.9bn, total assets of EUR10.6bn, and an installed base of 24 million customers.

Over the past three years, Jiangsu Power has enjoyed rapid development, with revenue growing at a compounded annual rate of 18% and fixed capital investment in grid construction totaling EUR1.4bn in 2002. In 2002, Jiangsu

province’s power consumption was 124.5 TWh, growing over 15% from the previous year. Currently, Jiangsu Power has 3,933 kilometers of 500 KV lines, 9,078

kilometers of 220 KV lines and 11,909 kilometers of 110 KV lines. The Company is ranked China’s third largest provincial electricity company in terms of

capacity (20.7 GW) and China’s second largest provincial electricity company in terms of power consumption (124.5 TWh).

As in many developing countries, China’s electric ity industry is undergoing broad and fundamental reform. By the early 1990s, foreign investors were allowed to invest in independent power producers. In year-end 2002, the State Power Corporation, the government operator of China’s electricity industry,

was separated into five gencos and two gridcos, each with individual P&L responsibilities. This separation of the transmission & distribution business from generation business and the associated corporatization of transmission & distribution companies bring a new set of

challenges to Jiangsu Power. In recognition of the increasingly competitive nature of its business environment, Jiangsu Power is undertaking systematic measures to comprehensively enhance its commercial capabilities.

THE OBJECTIVE

Jiangsu Power has a grand and ambitious vision: to be one of the world’s leading transmission and distribution companies by 2010. Mr. Kou Shi Qing, the company’s top leader is committed to realizing that vision through the cultivation and development of world-class leadership and managerial processes, technology, and human talent. Despite challenges such as regulatory uncertainty in tariff pricing and social responsibilities in employment and network build-out, Mr. Kou believes Jiangsu Power has the intrinsics to achieve its goal.

Furthermore, Jiangsu Power believes partnering with will accelerate the realization of its company vision because it can learn and benefit from ’s first-rate managerial processes, technology, and operational best practices to continuously elevate the quality of Jiangsu Power’s people and processes. The company also believes that could benefit from cooperation with Jiangsu Power by gaining the following:

¶Opportunity to pa rticipate in China electricity industry’s rapid development –China is already the world’s second largest consumer of

electricity at 1,326bn KWh, and its power consumption is growing at

10+percent every year, far ahead of the pace of other nations. On the supply

side, China experienced a dramatic build-out of its generation capabilities

over the past decade; by 2002, installed capacity stood at 350 GW, having

grown at a compounded annual growth rate of 8.1% since 1989. The speed

and scale of the expansion in China’s electricity industry is unprecedented.

Foreign enterprises can already invest in generation projects today. In the

future, it is anticipated that there is potential for the transmission &

distribution businesses to also be opened to foreign investment. For an

international transmission and distribution company like

name>, this creates numerous investment and cooperation opportunities. In

order to prepare and position for this impending opportunity, international

companies nee d to start now to develop a deep understanding of China’s

market conditions. Establishing relationships with a leading Chinese

partner such as Jiangsu Power will help create an

important foothold in China, heightening its profile to regulators,

government officials, and other key stakeholders.

¶Potential savings in joint sourcing/purchasing–Jiangsu Power is one of China’s best transmission and distribution companies. Its rapid growth

(power consumption in Jiangsu Province increased by 15% in 2002 vs. 2001)

has compelled the company to spend a total of EUR1.4bn in grid

infrastructure. From now to 2005, Jiangsu Power expects to invest

EUR4.0bn in network infrastructure. can cooperate

with Jiangsu Power to jointly source/purchase equipment and achieve cost

savings through economies of scale. In addition, Jiangsu Power can also

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