C.
3.
3 -
An annual charge will accrue which shall be equal to 8% per annum of the average of the opening and closing balances of the Development Fund for each year. As referred to in paragraph B.1 above, this charge will be deducted from the Permitted Return and will be credited to a Rate Reduction Reserve which will be liquidated by reductions in charges to consumers. Ordinarily, reductions will be applied by means of discounts or rebates in the immediately following year. Amounts carried in the Rate Reduction Reserve shall not exceed the charges for the current year and the preceding three years.
4.
The balance in the Development Fund may be reduced by rate reductions whenever revenues would otherwise be at a level such that after meeting all foreseeable obligations and earning the Permitted Return surplus cash would accumulate in the combined enterprise.
Provisions for Financing
1. China Light and Esso will provide the equity capital of the
proposed New Generating Company in amounts to be agreed.
2.
The financing arrangements for the future expansion of the Companies shall be subject to review and agreement with the Government in accordance with the provisions set out in Annex I.
D.
Term
1.
2.
This Scheme shall become effective 1st October, 1978, and shall continue in effect until 30th September, 1993.
Each of the Companies and the Government will have the right during the year ending 30th September, 1983, 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.
ཀྭ.
During the three years prior to 1st October, 1993, it is intended that the Companies and the Government will institute discussions regarding a revision of this Scheme embodying such terms and conditions as are then found to be mutually acceptable.
E. Transitional Arrangements
1.
Provisions governing initial arrangements, i.e. for the period preceding 1st October, 1978, for the New Generating Company and related China Light transmission facilities will be set down in a separate letter. The balances at 1st October, 1978, of the Development Fund and of long term borrowed capital will also be stated in such letter.
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