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C. H. Duncan, Chairman

PENINSULA ELECTRIC POWER CO. LTD.

ST. GEORGE'S BUILDING • ICE HOUSE STREET • HONG KONG · TELEPHONE: H-227104

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May 5, 1977.

China Resources Company

Bank of China Building

HONG KONG

Attn: Mr. Yeh Ping, Deputy General Manager

Dear Mr. Yeb,

Sir Lawrence Kadoorie and I were very grateful for the opportunity of visiting with you this morning and pleased that Mr. S. Y. Young and Mr. Yia Hui-P1 could also join in our discussion.

As you requested, I am confirming in writing the information we gave you concerning the plans of our Company (or possibly a new company we will establish) to build a coal burning power plant in Hong Kong.

With the projected growth in electric power domand An Hong Kong, we expect thật a new generation plant at en entirely new site will ba required by the year 1982. We are moving alead urgently with the required planning work, since it is expected that four to five years will be required for site formation, equipment procurement and construction before the first unit of such a facility can be placed in operation. Our planning is based on providing facilities capable of burning coal (as well as oil) under the boilers. Wa have concluded that this will be justified, primarily in order to have better assurance of continuity of supply, but also bacause we expect that over the life of the power station) coal vill ba a significantly noro economical fuel than oil. Under our tariff arrangement, the full amount of these expected savings in fuel costs will be passed on to the consumers in Hong Kong, thereby creating a widespread economic benefit.

It is planned that the new power station will consist of four generation units, each having a capacity of 330 megawatts. The completion dates of each unit and the total long tons per year of coal required (based on 100% coal utilized as fuel) are shown da the following table:

Year

Mogawatts Completed

Total WW Operating

Total Long Ton Coal Required

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1982

350

350

1963

350

700

700,000 1,600,000

1994

700

1,300,000

1955

350

1,050

2,500,000

1936

1,050

2,700,000

1987

350

1,400

3,400,000

1933

1,400

3,600,000

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