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The Board announces that on 26 August 2008, the Company entered into the Investment Agreement with Tangshan Investment Company to establish the Fengrun Thermal Power Company for the purposes of constructing and operating the Fengrun Thermal Power Project. The Company and Tangshan Investment Company agreed to contribute by way of cash to the establishment of Fengrun Thermal Power Company in the proportion of 84% and 16%, respectively.

As at the date of the Investment Agreement, Tangshan Investment Company held approximately 20% equity interest of the Company’s subsidiary, Tangshan Thermal Power Company. Accordingly, Tangshan Investment Company is a Connected Person of the Company under the Listing Rules and entering into the Investment Agreement constitutes a connected transaction of the Company. As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. The Company will disclose the relevant details in the next published annual report and accounts of the Company in accordance with the relevant requirements as set out in Rule 14A.45 of the Listing Rules.

A circular containing details of the Investment Agreement, a letter from the independent board committee of the Company and a letter from the independent financial advisor both advising the terms of the Investment Agreement, and the notice of EGM will be despatched to the Shareholders as soon as practicable.

26 August 2008

1. The Company

2. Tangshan Investment Company

Pursuant to the Investment Agreement, the Company and Tangshan Investment Company agreed to contribute by way of cash to the establishment of Fengrun Thermal Power Company in the proportion of 84% and 16%, respectively, for the purposes of constructing and operating Fengrun Thermal Power Project.

The Fengrun Thermal Power Project involves a total investment of approximately RMB2,576,190,000 (equivalent to approximately HK$2,937,502,850.62). The registered capital of Fengrun Thermal Power Company, i.e. approximately RMB515,238,000 (equivalent to approximately HK$587,500,570.125 will account for about 20% of the total investment of the project. The Company’s total capital commitment in Fengrun Thermal Power Project is in he sum of RMB2,163,999,600 (equivalent to approximately HK$2,466,959,544). After negotiation between the parties, the Company and Tangshan Investment Company will be responsible for contributing a total of RMB200,000,000 (equivalent to approximately HK$228,050,171.037) by way of cash in the proportion of 84% and 16%, respectively, to the initial registered capital of Fengrun Thermal Power Company upon the registration of Fengrun Thermal Power Company. There is no time limit specified in the Investment Agreement within which the parties shall contribute in full to the registered capital of Fengrun Thermal Power Company and it is expected that the parties to the Investment Agreement will contribute their respective shares by way of cash to the remaining registered capital of Fengrun Thermal Power Company in stages in line with the construction progress of the Fengrun Thermal Power Project. As at the date of this announcement, the parties to the Investment Agreement have not made any contribution to the registered capital of Fengrun Thermal Power Company. The Company’s contribution to the registered capital of Fengrun Thermal Power Company will be funded by the Company’s internal resources.

The Investment Agreement will become effective once the parties to the Investment Agreement have obtained their respective internal approvals for the investment set out in the Investment Agreement.

The term of operation of Fengrun Thermal Power Company shall be 30 years from the date of issuance of the relevant business license.

Fengrun Thermal Power Company will become a subsidiary of the Company upon its establishment and its results will be consolidated into the accounts of the Company.

The Group is principally engaged in the development and operation of power plants, the sale of electricity and thermal power, and the repair, testing and maintenance of power equipment and power-related technical services. The Group's main service areas are in the PRC.

The Fengrun Thermal Power Project is located in Tangshan Fengrun District, Hebei Province, the PRC, and involves the construction of two 300 MW critical coal-fired heat supply and power generation units. Upon completion of construction, the project will provide an annual heat supply of 7,370,000 GJ and will be able to reduce the number of small coal-fired boilers in Fengrun District, thereby easing the pressure of heat supply of Tangshan City. All of the power generated by the Fengrun Thermal Power Project will be transmitted to the Northern China Power Grid. The Fengrun Thermal Power Project is subject to the approval of the National Development and Reform Commission of the PRC.

The Fengrun Thermal Power Project is located in Tangshan Fengrun District, which is 30 km away from the downtown area, with a self-contained urban development system. The demand for centralised heat supply rises in line with the economic development of Fengrun District. The current heat supply in the area is mainly provided by small coal-fired boilers, and this causes a waste of resources and air pollution to the district. Upon the completion of the Fengrun Thermal Power Project, the area with centralised heat supply in Tangshan Fengrun District will be increased and the pressure of the demand for heat supply can be eased. Meanwhile, the power generated will be directly transmitted to the Northern China Power Grid in which the Beijing-Tianjian-Tangshan region is the load centre for electricity consumption of Northern China. Therefore, the Company may benefit from the rising demand for electricity consumption in the Beijing-Tianjian-Tangshan region, thereby enhancing the Company’s overall profitability. The Directors believe that entering into the Investment Agreement will enhance the profit growth of the Company.

The terms of the Investment Agreement were negotiated on an arm’s length basis between the Company and the parties thereto and were determined on normal commercial terms. The Directors (excluding the views of the independent non-executive Directors whose views will be contained in the circular after considering the advice from the independent financial advisor) consider that the terms of the Investment Agreement are fair and reasonable and in the best interest of the Company and the Shareholders as a whole.

As at the date of the Investment Agreement, Tangshan Investment Company held approximately 20% equity interest of the Company’s subsidiary, Tangshan Thermal Power Company. Accordingly, Tangshan Investment Company is a Connected Person of the Company under the Listing Rules and entering into the Investment Agreement constitutes a connected transaction of the Company. As the consideration ratio (as defined in Rule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. The Company will also disclose the relevant details in the next published annual report and accounts of the Company in accordance with the relevant requirements as set out in Rule 14A.45 of the Listing Rules.

An independent board committee comprising all the independent non-executive Directors (who have no material interest in this transaction) will be formed to advise the Independent Shareholders on the terms of the Investment Agreement.

The Company will appoint an independent financial advisor to advise the independent board committee of the Company and the Independent Shareholders on the terms of the Investment Agreement.

A circular containing details of the Investment Agreement, a letter from the independent board committee of the Company and a letter from the independent financial advisor advising the terms of the Investment Agreement, and the notice of EGM will be despatched to the Shareholders as soon as practicable.

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

“Directors” directors of the Company

“Fengrun Thermal Power Company” Hebei Datang International Fengrun Thermal Power Company Limited, which the Company and Tangshan Investment Company intended to jointly establish pursuant to the Investment Agreement

“Fengrun Thermal Power Project” the Hebei Datang International Fengrun Thermal Power Project Phase 1, which the Company plans to construct and operate the two 300 MW coal-fired heat supply and power generation units

"GJ" giga joules

“HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“H Shares” the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each, which are listed on the Stock Exchange and the London Stock Exchange

“Independent Shareholders” the Shareholders other than the Connected Persons of the Company. Tangshan Investment Company and its associates have to be abstained from voting in approving the Investment Agreement at the EGM

“Investment Agreement” the investment agreement in relation to the joint establishment of Fengrun Thermal Power Company, for the purposes of constructing and operating the Fengrun Thermal Power Project, dated 26 August 2008 entered into between the Company and Tangshan Investment Company

“Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange

“London Stock Exchange” The London Stock Exchange Limited

“PRC” the People’s Republic of China

“Shareholder(s)” the holder(s) of the Share(s)

“Shares” the ordinary shares of the Company with a nominal value of RMB1.00 each, comprising Domestic Shares and H Shares

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Tangshan Investment Company” Tangshan City Construction Investment Company, a state-owned enterprise established in accordance with PRC laws. It is a substantial shareholder of Tangshan Thermal Power Company, a subsidiary of the Company. It held 20% equity interest of Tangshan Thermal Power Company

“Tangshan Thermal Power Company” Hebei Datang International Tangshan Thermal Power Company Limited, a limited liability company established in accordance with PRC laws. It is a subsidiary of the Company and 80% of its equity interest is owned by the Company

“%” per cent

By Order of the Board

Beijing, the PRC, 26 August 2008