4.4

(a)

흐흐

(c)

23

earning money through profit sharing and taxation;

improvement in supply security of the Guangdong power system through a stronger interconnection with Hong Kong; and

(e)

establishment

of

a

technical team developing nuclear power stations.

The benefits to Hong Kong and CLP are:-

(ii)

(a)

(b)

capable

of

ability to obtain electricity from the nuclear power station at a cost cheaper than coal-fired generating units at Castle Peak Power Station and to lessen the effect of future inflation;

diversification of energy sources thus increasing the stability of electricity supply in Hong Kong;

(c)

earning money through profit sharing;

(a)

improvement in supply security of the Hong Kong power system through a stronger

interconnection

with

Guangdong;

(e)

establishment

of

a

team capable developing nuclear power stations; and

technical

of

(f)

a joint venture involving the Hong Kong Government and Guangdong Government would add to confidence future of Hong Kong thus attracting new capital.

in the

Commercial Risks

It should be pointed out that the following commercial risks would affect future company finance and profit:

(i)

any delay in

in construction and commissioning will not only lose revenue income but increase capital cost. For example, it would cost GNPC about US$300 million on price escalation and loan interest alone if the project is delayed by one year;

(ii)

revenue

equipment

income and

due outages

profit

to

poor

would be

construction

affected

by major quality

and

(iii)

improper operation and maintenance; and

the price of nuclear fuel may escalate at a higher rate than that forecast in this report.

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