2.

5

Prior to the effective date of this Scheme and periodically thereafter

(as called for by the Covernment or by one or more of the Companies)

the Companies shall submit to Government their respective financing

plans and cash flow forecasts for the period ending with the forthcoming

financial year and for each of the four subsequent financial years. The

forecasts will be based on demand growth projections, inflation rates

and other significant parameters collectively agreed by the Government

and the Companies to be the most probable for the period in question.

After allowing for the availability of capital funds from other sources,

the Companies and the Government will collectively agree on the total

dollar amount of Development Fund additions to be budgeted by each company

for each of the financial years in question. The amounts so budgeted

shall, in the case of cach company, be added to the charge it makes for

electricity sold.

D.

Term

1.

This Scheme shall become effective October 1, 1978 or earlier if agreed

in writing by the Government of Hong Kong and all parties to the Scheme.

It shall continue in effect until September 30, 1993.

2.

Each of the Companies and the Government will have the right during the

year ending September 30, 1985 to request re-negotiation of any of the

terms hereof which the party concerned believes are no longer equitable

or appropriate. Should such request be made, the Government and the

Companies shall use their best efforts to reach agreement promptly

regarding modification of such terms, but until modification is agreed

by all parties concerned the Scheme as set out herein shall remain in

effect.

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