XN000022-1995-05-24 — Page 66

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Reply:

Mr President,

The Guangdong Nuclear Power Station (GNPS) at Daya Bay is owned and operated by the Guangdong Nuclear Power Joint Venture Company, Limited (GNPJVC). GNPJVC is a joint venture between the Hong Kong Nuclear Investment Company Limited (HKNIC), which has a 25% equity share and the Guangdong Nuclear Investment Company, Limited (GNIC) which holds the remaining 75% equity.

Under the terms of the joint venture contract, HKNIC is committed to purchasing 70% of the total output of the GNPS of which 25% is purchased directly from GNPJVC and 45% by way of resale from GNIC. The nuclear electricity purchased by HKNIC is resold, without any mark-up, to its holding company, the China Light & Power Company Limited (CLP) for distribution to CLP customers. CLP's purchase of nuclear electricity via the HKNIC is monitored by the Administration through the annual Auditing Reviews.

With this background, the answers to the specific questions are:

(a)

(b)

unless the parties agree to an extension, the joint venture contract will be effective until 5 May 2014, i.e. 20 years after the commissioning of the second nuclear unit;

HKNIC and GNIC are required to purchase electricity from GNPJVC at full economic cost, which includes an element of profit. The following conditions apply in respect of the resale of electricity from GNIC to HKNIC:

(i)

(ii)

no mark up is permitted during the resale of electricity from GNIC to HKNIC;

the amount of electricity purchased under the resale arrangement cannot exceed 4.5 billion units per annum for the first five years of operation up to 31 December 1998; and

(iii) during the first five years of operation the sale price per unit cannot exceed the notional cost of a unit of electricity generated by a coal fired station constructed in Hong Kong and commissioned in 1991.